Articles of Organization

Forming your Minnesota LLC means that you have to file articles of organization. The certificate must be executed (signed) by at least two of the organizers and delivered, along with a copy and the $135 filing fee, to the Business Services Division of the Minnesota Secretary of State's office. The articles must include:

• The LLC's name
• The name and address of each organizer
• Whether the LLC will be of a specified limited duration, or perpetual
• The street address of the LLC's initial registered office
• The name of the LLC's registered agent at the LLC's registered office
• Whether the LLC will be member-managed or manager-managed

It can also list other items-even ones that are included in the operating agreement-if the members so desire, as long as they don't conflict with state law.

An organizer is allowed to be any natural person, or it may be a legal or commercial entity. The organizer is not required to be a member of the LLC, but there must be at least two organizers of some type of at least 18 years of age.

A certificate of organization will be issued and delivered along with the conformed copy to the LLC's representative. The original articles of organization will in turn be filed with the Secretary of State along with the date of filing.

Registered Agent and Office

A Minnesota LLC must at all times have a designated registered agent in the state-someone to receive official state legal and administrative correspondence on behalf of the LLC. A registered agent in Minnesota may be an individual state resident whose business office or residence is the same as the registered office, or a corporation or LLC having a business office that is the same as the registered office.

The registered office may be-but does not have to be-the LLC's place of business. However, the registered agent must maintain a registered office that is identical with the business office.

Operating Agreement

The LLC's second most important document is its operating agreement, which can be changed by the members as set forth by the agreement itself or applicable state law. Having an operating agreement is not legally required by the state, but it's a vitally important internal document that sets forth how the LLC will run.

The operating agreement needs to list the LLC's members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting.

The operating agreement may also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn't have to. Usually, though, it does include operating constraints and allowances already contained in state law and policy. It also may contain constraints on the members' authority to change or repeal the operating agreement or a provision thereof. If there is more than one member, the operating agreement must initially be unanimously approved in writing.

Membership in the LLC

A Minnesota LLC must have at least one member, and each member must be a natural person. A member may be admitted to the LLC either when it is formed (by signing the initial operating agreement) or, after the LLC is formed, by complying with the operating agreement. Unless the operating agreement specifies differently, a unanimous vote of all the members is required to admit a new member.

A member can acquire an interest in proportion to their contribution, or in some other manner set forth in the LLC's operating agreement. Becoming a member usually requires a contribution of cash, property, services rendered to the LLC, or a promissory note or obligation to contribute one of these.

An LLC member can only resign as permitted in the certificate of organization or operating agreement, which usually should specify a minimum membership time before a member may resign.

Ongoing Requirements

Minnesota LLCs must prepare annual financial statements within 180 days after the close of the LLC's fiscal year. The financial statements must include a balance sheet as of the end of each fiscal year and a fiscal year-end statement of income. Financial statements may be consolidated statements of the LLC and one or more of its subsidiaries.

If audited by a public accountant, each copy must be accompanied by an opinion report of the accountant. In other cases, each copy must be accompanied by a statement of the treasurer or other person in charge of the LLC's financial records stating with reasonable belief that the financial statements were prepared in accordance with reasonable accounting methods, describing the basis of presentation, and describing any respects in which the financial statements were not prepared on a basis consistent with those prepared for the previous years.

Additionally, each Minnesota LLC has to keep the following records open to inspection at its office:

• Name and address of each member, governor, and chief manager
• Name and address of each assignee of financial rights other than a secured party, and a description of the rights assigned
• A copy of the articles of organization and any amendments
• Copies of any currently effective written bylaws
• Copies of the LLC's federal, state, and local income tax returns for the past three years
• Financial statements
• Records of all proceedings of members for the last three years
• Records of all proceedings of the board of governors for the last three years
• Reports made to the general membership during the last three years
• Member control agreements
• A statement of all contributions
• An explanation of any restatement of value
• Any written consents obtained from members
• A copy of any relevant agreements, contracts, or other arrangements

Dissolution

A Minnesota LLC is dissolved when any one of the following events occurs:

• When the period specified in the articles for the duration of the LLC expires
• By a court order
• By action of the organizers
• By action of the members
• Upon the termination of a member, but only if (a) the articles or operating agreement specifically provide that the termination causes dissolution, or (b) if the last or sole member terminates membership and at least one member is not admitted within 180 days
• A merger occurs in which the LLC is not the surviving organization

Taxes

An LLC does offer some tax advantages over a corporation, including the availability of more deductions. Additionally, an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through" entity so that the LLC owners report business losses or profits on their personal tax returns, like a partnership.

Articles of Incorporation

In accordance with the Minnesota Business Corporation Act in Chapter 302A of the Minnesota Statutes, corporations must file articles of incorporation with the Business Services Division of the Minnesota Secretary of State's office.

The articles must be delivered by at least one of the incorporators, accompanied by the filing fee of $135. There must be at least one incorporator, who must be a natural person of adult age (18). The incorporator does not have to be a director, officer, or shareholder of the corporation.

The following information must be included in the articles of incorporation:

• The name(s) and address(es) of the incorporator(s)
• The mailing address of the corporation's principal office
• The number of shares the corporation is authorized to issue
• The street address of the corporation's initial registered office
• The name of its initial registered agent at that office

Minnesota also permits optional provisions to be integrated into the articles of incorporation, such as:

• The duration of the corporation's existence, if not perpetual
• Cumulative voting for directors
• The names of the initial directors
• Actions by the board which require more than a simple majority vote
• Non-shareholder voting rights
• Regulation regarding the powers of the corporation, its board of directors, and shareholders
• The limitation or elimination of directors' liability for breach of fiduciary duty to the corporation or the shareholders

The state filing office website offers the option of "express" (one-day) filing of articles for an additional $10 fee-this service consists of sending your incorporation information in an email to the filing office instead of preparing and mailing an articles form. It should be noted, though, that this service is only available to subscribers to the state's direct access account, which costs $75 annually.

Registered Agent and Office

A Minnesota corporation may-but is not required to-designate or appoint a registered agent in its articles of organization. The registered agent may be a natural person residing in Minnesota or a business entity authorized to operate in Minnesota.

The state does, however, require that every corporation maintain a registered office in the state. The registered agent must have a business office that is the same as the registered office.

Bylaws

Bylaws describe the corporation's basic managerial and legal operating principles. Although state law does not absolutely require a corporation to have bylaws, it's a critical document that sets forth how the management of the business will be regulated and conducted. The corporation's initial bylaws should be adopted by its incorporators, its shareholders, or its board of directors, and maintained at its main executive office; again, it is not required to file them with the state. The bylaws may contain any provision for managing the business and regulating the affairs of the corporation that's not in conflict with law or the articles of incorporation.

The board of directors or the shareholders may adopt, amend, or repeal bylaws, unless the articles of incorporation or the bylaws reserve this right to the shareholders. At its initial meeting, the board of directors should adopt corporate bylaws, and then keep them updated as time goes on. Bylaws normally address:

• Shareholders and directors meetings
• The authority, number, and tenure of directors
• Voting procedures
• The duties, responsibilities, and tenure of officers
• How stock is issued
• How and when annual financial information is provided to shareholders

Directors and Officers

The corporation's board of directors must consist of one or more members. A director must be a natural person (as opposed to a legal entity such as another corporation). Normally, the corporation's bylaws or articles of incorporation will specify the number of directors and their qualification prerequisites, if any.

Officers may be named in the bylaws or elected by the board of directors; there must be at least one officer. Officers may appoint other officers in compliance with the bylaws. There must be at least a chief executive officer and a chief financial officer, each of whom must execute specific state-required duties. An officer may hold more than one office in the corporation, and may sign a document in more than one capacity only if the document indicates each capacity in which the officer is signing.

Required Reports

Your new Minnesota corporation must file an annual registration form with the Minnesota Secretary of State each year by December 31, except for the first calendar year of incorporation. This report must include:

• The corporation's name and its state of incorporation
• The address of its registered office
• The name of its registered agent at that office
• The address of its principal executive office (if different from the registered office address)
• The name and business address of the officer or person exercising the principal functions of the corporation's chief executive officer
  

Taxes

Minnesota's corporate tax structure consists of a flat rate of 9.8 percent on all corporate income.