Minnesota LLC costs: summary
| Item | Cost |
|---|---|
| Articles of Organization | $155 online or in person; $135 by mail |
| Food License (if applicable) | Varies with gross food sales and risk level |
| Liquor License (if applicable) | Set by your city or county; the optional state 2 a.m. permit costs $200 to $1,000 |
| Minnesota Tax ID and Sales Tax Account | Free |
| Registered Agent Service (Optional) | $50 to $300 per year |
| Business Name Reservation (Optional) | $35 by mail, $55 for in-person or online filing |
| DBA Registration (Optional) | $30 by mail, $50 for in-person or online filing, plus newspaper publication costs |
If you’re thinking of starting a business in Minnesota, you may be wondering how much it’s going to cost. While startup costs can vary from one business to the next, there are some expenses that are unavoidable. For example, if you’re forming an LLC in Minnesota, you have to pay for things like filing articles of organization and, depending on your business, registering a DBA or getting licenses.
Because these expenses are necessary to get your new venture off the ground, it’s imperative that you know what to expect so there are no surprises later on. So, with that in mind, let’s break down all the different administrative startup costs associated with forming an LLC in Minnesota.
General Steps and Costs When Forming a Minnesota LLC
For most companies, creating a limited liability company is the best option because it allows for pass-through income and limits the financial and legal liability of each founder. Thankfully, the process of forming an LLC in Minnesota is pretty straightforward, and the costs associated with this entity type are also pretty low (when compared to other states). Here’s a quick overview of each step and the total expense you can expect to pay.
Naming your Minnesota LLC
Your company name is the most important element because it’s what you’ll be using on all your paperwork and marketing materials. However, you must also make sure that your name is unique when compared to other Minnesota businesses. Fortunately, it’s free to look up your name with a Minnesota business entity search to see if it matches anything that already exists. Not only can you customize your search to look for exact or partial matches, but you can see if the companies are active or inactive.
But what if you want to reserve your name so no one else takes it before you’re ready to form your LLC? In that case, you must submit a name reservation form, along with a filing fee of $35 if sent by mail or $55 for expedited service, in-person or online filing. While other states only reserve a name for 60 or 90 days, this form secures it for up to 12 months, and the reservation can be renewed.
Another point to consider is whether you’ll be using a “doing business as” (DBA) name. DBAs can be helpful because they’re often more appealing to customers. However, because the DBA is different from your official LLC name, you must register it separately. For that, you’ll submit a Certificate of Assumed Name form, along with a $30 filing fee if sent by mail or a $50 fee if submitted in person or online. Also, while the form makes it seem like you’ll receive a certificate with your DBA on it, you’ll just receive confirmation that the Secretary of State has approved your DBA. After filing, you must publish the certificate in a qualified Minnesota newspaper for two consecutive issues, and renew it each year (free).
Filing articles of organization
The articles of organization form establishes your LLC with the state of Minnesota. You must submit an articles of organization form, along with a filing fee of $155 online or in person ($135 by mail). This form just requires some basic information about your new LLC, such as the name of the business, your registered office address, the name of your registered agent if you have one (more on that in the next section), and the names and contact information of each organizer.
We should also point out that the articles of organization are different from an operating agreement. This form simply tells the state of Minnesota about your business. An operating agreement outlines your company structure.
Appointing a registered agent
Minnesota requires every LLC to have a registered office in the state, but naming a Minnesota registered agent is optional. A registered agent receives official mail and legal notices for your business. You can act as your own registered agent, which may make sense if you’re forming a single-person LLC. However, if you’re creating an LLC with multiple organizers, it’s often best to use a third-party agent to avoid potential conflicts or legal hassles later on.
The cost of appointing a registered agent can vary depending on which service you use. Registered agent services typically charge $50 to $300 per year.
Creating an operating agreement
An operating agreement is an internal document that outlines the structure of your business, including each organizer’s responsibilities and what to do in certain events, such as the death of a founding member. Minnesota doesn’t require LLCs to have an operating agreement, and if you’re forming a single-member LLC, you probably don’t need one.
However, multi-member LLCs should have an operating agreement to avoid any legal headaches later on. While you can create your own agreement, it’s often better to use a law firm or third-party services. This way, you can ensure the agreement addresses all potential concerns regarding your business. Costs vary widely, from free templates to several hundred dollars or more for an attorney.
Other annual and additional Minnesota LLC costs
In Minnesota, the only “official” expenses associated with forming an LLC are registering your business with the Secretary of State and filing a Certificate of Assumed Name form (if applicable). However, depending on the nature of your new enterprise, you’ll likely have to secure other permits and licenses. Here’s a quick overview of the additional costs you may incur as you start your business.
Business licenses and permits
Businesses that sell taxable goods or services must register for a Minnesota Tax ID and a sales tax account. Registration is free, and there’s no separate seller’s permit. That said, there are costs associated with different types of business licenses, such as:
- Retail Food License: the Minnesota Department of Agriculture bases fees on your gross annual food sales and food safety risk, and new applicants pay a $50 pre-licensing fee.
- Liquor License: retail liquor licenses are issued by your city or county, and fees vary (Stillwater, for example, sets its own requirements and fees). Bars and restaurants that want to sell alcohol between 1 a.m. and 2 a.m. also need the state’s optional 2 a.m. permit, which costs $200 to $1,000 based on the prior year’s gross receipts.
- Residential Contractor License: residential building contractors and remodelers need a state license. The fee is $180 plus a Contractor Recovery Fund fee of $320 to $520 based on gross receipts ($500 to $700 total).
In addition to these common licenses, you may also have to obtain permits or licenses for other business types, such as massage therapy, healthcare clinics, hairstyling, and more. Typically, cities and counties require these permits or licenses, so you’ll have to do some research to determine what paperwork you’ll need and how much it will cost.
Annual report
Minnesota requires all LLCs to submit an MN annual report, which is an annual renewal that updates basic company information (no financial details). It’s free if you file it by December 31 each year. If you miss it, the state administratively terminates your LLC, and reinstatement costs $65 by mail or $85 online or in person.
LLC formation expenses you can write off
As you can see, forming an LLC in Minnesota is relatively affordable, especially when compared to other states. However, even if you spend money on third-party services like a registered agent or help with an operating agreement, you can write off these expenses on your taxes. Here’s a breakdown of what the IRS allows you to deduct.
- Costs of completing the Articles of Organization: even if you pay for expedited service, you can write off the expense. However, if you don’t keep your company in good standing by filing the annual report, you may not be able to deduct reinstatement fees
- DBA Fees: if you choose to use an assumed name, you can deduct the filing fee.
- Operating Agreement Costs: if you create your own operating agreement, there are no expenses to deduct. However, if you use a third-party service, you should be able to write off those expenses.
- Registered Agent Costs: you can claim the costs of hiring a third-party registered agent, but if you act as your own registered agent, you can’t make any deductions.
- Attorney Fees: when forming an LLC, it’s often best to consult an attorney, especially when creating legal documents or operating agreements. Fortunately, these fees are often deductible as startup costs.
Minnesota LLC Filing Fees
| Item | Mail Filing Fee | Online or In-Person Filing Fee (*in person only) |
|---|---|---|
| Domestic LLC | ||
| Articles of Organization (original filing) | $135.00 | $155.00 |
| Amendment | $35.00 | $55.00 |
| Annual Renewal | $0 | $0 |
| Annual Reinstatement | $65.00 | $85.00 |
| Change of Registered Office and Agent | $35.00 | $55.00 |
| Conversion | $60.00 | $80.00 * |
| Domestication | $60.00 | $80.00 * |
| Merger | $60.00 | Not available online or in person |
| Resignation of Agent | $35.00 | Not available online or in person |
| Statement of Authority | $35.00 | Not available online or in person |
| Statement of Authority Amendment | $35.00 | Not available online or in person |
| Statement of Authority Cancellation | $35.00 | Not available online or in person |
| Statement of Denial | $35.00 | Not available online or in person |
| Statement of Dissolution | $35.00 | $55.00 |
| Statement of Termination | $35.00 | $55.00 |
| Foreign LLCs: | ||
| Certificate of Authority (original filing) | $185.00 | $205.00 |
| Amendment | $35.00 | $55.00 |
| Annual Renewal | $0 | $0 |
| Annual Reinstatement | $65.00 | $85.00 |
| Change of Registered Office and Agent | $35.00 | $55.00 |
| Conversion | $60.00 | $80.00 * |
| Domestication | $60.00 | $80.00 * |
| Resignation of Agent | $35.00 | Not available online or in person |
| Withdrawal | $35.00 | $55.00 |
Conclusion
Overall, forming an LLC in Minnesota is a smart move for most businesses and entrepreneurs. Now that you know the administrative costs associated with this process, you can plan accordingly and budget for these expenses. That said, Minnesota’s costs are moderate, and the annual renewal is free, which keeps ongoing costs low.
Another point to consider is whether you should use third-party services. Typically, if you’re forming a multi-member LLC, it’s better to rely on professionals than handle everything yourself. This way, you can be sure everything is done correctly, and there should be no conflict of interest among the LLC organizers.
FAQ
Online filings are expedited and typically processed within 2 to 5 business days. In-person filings (by appointment) are processed while you wait. Mailed filings are processed in the order received and take longer.
Yes, if you can secure a business loan or line of credit, you can use these funds to pay for filing fees and other administrative expenses. However, most banks and lenders require a good credit score and a strong business plan to secure a loan.