Forming an LLC in Minnesota | How to Form an LLC in Minnesota

Your LLC’s Name

Your new LLC’s name must be distinguishable any other business name either registered or reserved with the Minnesota Secretary of State’s office. The name must include, at the end of the name, the words “Limited Liability Company,” or it must include the abbreviation “LLC.” It may not, however, include the words “corporation” or “incorporated,” or the abbreviations “inc.” or “corp.”

It is also not allowed to include a word or phrase that states or implies that it is organized for some purpose other than a legal business purpose.

You can reserve an available LLC name for up to 12 months for $35.

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.

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