How To Start An Llc In Minnesota

When you start an LLC in Minnesota you’ll be setting yourself up as an independent worker running your own business and have the potential to earn more than if you worked for an employer. You can still work in the corporate world, just with greater independence. In this article, we go through the steps to starting an LLC in Minnesota.

Why Start a Business in Minnesota?

If you have a particular skill set and think you could make a great business yourself you might want to start a business in Minnesota. You'll want to make sure that there is a demand for the work and skill set you can offer. A good education will help you run a successful business and you will need the qualifications to support your work.

Minnesota is a great place to set up an LLC. The costs are slightly lower than in other states, for example, housing is a bit lower than in other states by 2%. So it’s a good place to live and set up your new business.

The filing fee is $155 to set up an LLC so this is higher than the national average which is $130.38. When reserving the name, you can also benefit from a low cost reservation and reserve the name for a whole year, which is much longer than other states.

Minnesota has a good transport network for supporting logistics. It is a good state for connecting with other businesses so you can work with other businesses like fulfillment and suppliers etc.

Minnesota has a strong business culture as well. In addition to having a strong medical industry, there is a strong export and hospitality sectors in the state. However, there were significant issues during the pandemic where unemployment rates raised from about 2.5% to about 8%. Most of the businesses in the state did reduce their workforces.

In addition, the state offers benefits such as tax breaks and other aspects that can really help small businesses to build a strong business. For instance, some within the IT sector can save on 6% sales tax for over 20 years when they invest so munch into the infrastructure.

Here are some statistics comparing Minnesota to the local neighboring states.

Why Start an LLC?

There are so many reasons to start up an LLC in any state, it makes your business more formal for one and helps give your business greater prestige and respect which is great for when you are seeking investment and pitching to other businesses.

You are much more likely to get funding and investments when you are registered as an LLC as it makes you a safer investment with this additional security. This can help you in the long term.

An LLC also offers you greater protection as your assets are not regarded as part of the business. If you run into debt as an LLC your personal assets are protected, debtors cannot recover your personal assets as an LLC like they can with a sole proprietorship.

When you will need regular suppliers for your business perhaps for an eCommerce store, then you will find it easy to make good arrangements and terms and even to get suppliers to work with you if you are registered as an LLC as your business is seen as more respectful. You can open a bank account registered to your LLC that will help with your cash flow.

How to Start an LLC in Minnesota?

Here are some steps below to help you start an LLC in Minnesota. These are the essential steps you need but there may also be other aspects that are important for your particular industry.

Step 1 – Choose A Business Name

First of all, you will need to choose a great name for your new business venture. You will need to follow some rules when choosing a name for a  new LLC. To start with, you will need to use the words Limited Liability Company or an abbreviation of the words in your name. You also cannot choose a name that is associated with a government agency or that includes certain words like bank, university, etc.

It can be difficult to choose a name for your new business as you mustn’t choose a name that is the same as a business that is already registered. You can use a free tool to help you like a name generator. These will come up with lists of potential names that you can then check to make sure they’re not already in use or registered anywhere. You’ll also need to make sure that the name is available as a domain so you can set up a new website.

You can start with a Minnesota business name search, then check for name availability on Google, as a domain and associated extensions, on marketplaces like eBay, and social media. You’ll need to make sure the name you choose is unique.This is to avoid any legal complications and to prevent customers from getting confused.

To help you can use a company name generator.

It is also difficult to rank well on social media if there’s another brand with a similar or the same name as you. This is especially the case if they have been operating longer than your business and have a good SEO (search engine optimization) strategy.

Step 2 – Reserve a Business Name

You’ll need to reserve your business name through the Secretary of State website online. The name reservation costs about $35 by mail or $55 online. This lasts for a whole year. You can then work on your paperwork together and can file it within plenty of time to do so. You can purchase your domain and register your business name on social media platforms and marketplaces etc to reserve the accounts.

Remember that when you reserve a business name, you need to ensure that the name is available or the business name reservation will be rejected. A business name search for the state can be advisable.

You might also want to reserve the business name in other states, especially if you have intentions to expand your operations and operate in other states.

Step 3 – Find a Registered Agent

You can now find a registered agent to represent your business with local authorities in Minnesota for paperwork and tax purposes. Examples include ZenBusiness and Bizee. A registered agent will need to be over 18 years of age and living in Minnesota. They will need to operate the same business hours as the secretary of state.

Step 4 – Articles of Organization

You will then need to submit your articles of organization which are legal documents that make up your business. These don't take long to create and up to 15 business days to complete though there are options to get this done sooner. You will also need to make sure you have applied for any other licenses that you need for your business.

Step 5 – Operating Agreement

You should now write an operating agreement which is a document that can be very useful. It documents decision-making processes for your business and processes. This can be requested by investors but is not mandatory.

Step 6- EIN Number

You’ll need to get an EIN number from the IRS. This free number is required for LLC
businesses with more than one owner or that employs staff. You can get this free number from the IRS website.

How Much is it to Start an LLC in Minnesota?

There are various costs of starting an LLC business in Minnesota. The document filing costs $155 and the name reservation costs $35 by post or $55 online depending on your preference. You might have costs for any particular licenses or permits required for your industry.

You will need to pay for your website domain, these are about $10 per year.

The cost of starting a business in Minnesota can increase to several hundred dollars depending on your requirements.

Taxes in Minnesota?

You will need to pay taxes in Minnesota. Sales tax in Minnesota is 6.875%. There is also a 9.8% corporate income tax rate. Self-employment tax is set at 15.3% and employer tax ranges. Though it is important to always speak to an accountant to ensure that you’re maximising your tax allowances and building an effective business.

Final Word: How to Start An LLC In Minnesota

In this article, we go through all the steps you need to start an LLC in Minnesota. You may have some additional requirements depending on your business. You will need some investment money, a good plan for your business, and a great name. You’ll need to make sure you arrange all the correct paperwork and licenses. Good luck with your new business venture.