If you are a licensed specialist, looking for a guide on how to form a PLLC in Minnesota, don’t look any further. In this article, we will tell you everything you need to know about what is a PLLC in MN and how to get a PLLC, so it’s easier for you to get your business started.
We will also guide you through other important steps after the PLLC has already been established, which will help you plan your business from the get-go and ensure its success.
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Not all states in the US recognize a professional limited liability business structure, but Minnesota is one of those that do, meaning every specialist with a license can settle up a PLLC in MN to deliver services related to their qualifications.
Further down, we break down the process into easy-to-follow steps so you can open a PLLC with little to no effort and rest assured that you’ve not missed anything important.
One of the first things to do is to name your business. As they say, “as you name the boat, so shall it float”, so make sure that the name you choose appeals to your customers and evokes something about your business. On top of that, consider the state’s name requirements:
If you’ve found the name you like but can’t file your formation documents, in Minnesota, you have the option to reserve the name for up to 12 months. Name reservation forms can be submitted to the Minnesota Secretary of State online, in person, or by mail.
If you choose to file online, the filing fee is $55, and if you file by mail, the filing fee is only $50.
Once the company’s name is chosen, you will need to find a resident agent. A resident agent (also known as a statutory or registered agent shortened to RA) is required for every business entity by state law, which means it cannot be overlooked.
Simply put, a resident agent is a representative of a business, appointed to handle the correspondence on its behalf. The RA is responsible for notifying business owners of important notices and alerts and making sure they never miss deadlines.
Who can be a resident agent? Minnesota laws allow every individual aged at least 18 to be an agent for service of process, as long as he or she has a registered address in the state and can be found at this address during standard business hours.
This gives you a wide range of options:
Although Minnesota’s laws allow even business owners to act as their own registered agents, which may reduce the PLLC cost a bit, in most cases, it’s not the best option. Here are the reasons why:
Therefore, it’s far preferable for most PLLCs to hire a statutory agent and, instead of doing all this work themselves, focus on running the business.
The next and most important step in settling up a PLLC is filing the Articles of Organization. This is a legally binding document that officially establishes the fact of a PLLC formation. To prepare this document, you can reach out to a local attorney or file it yourself.
The information that your Articles of Organization should include is as follows:
The Articles of Organization are filed with the Office of the Secretary of State for a filing fee of $135. Depending on whether you choose to file online or by mail, the processing time can vary from up to 5 business days to 4 weeks. In general, online applications are processed faster.
You don’t have to create an operating agreement in Minnesota, but doing so is highly advisable. There are a few reasons why.
Firstly, the operating agreement gives you the right to set the rules that will apply to your company, including the duties and responsibilities of each member of the PLLC. Secondly, it is a great operational tool that can give you increased control of your business.
With an operating agreement in hand, you can specify:
It can be useful in resolving disputes with your employees if any.
Finally, you’ll need to get an Employment Identification Number (EIN). This number (also known as a taxation number) is required for all business entities for reporting and tax filing purposes. It’s also a must for companies that plan to hire employees.
The EIN number can be applied for through the Internal Revenue Service (IRS) website for no filing fee.
The cost of starting a PLLC in Minnesota will largely depend on whether you decide to delegate the duties of an RA to an agency or act as your own statutory agent. On top of that, if you use any additional services, like an assumed name, for example, it will add up to the total cost.
Overall, there are two types of costs to consider:
Here’s a detailed overview of the PLLC cost in MN, which should make it easier for you to plan your expenses ahead:
|Business license||Varies depending on the industry|
|Articles of Organization fee||$135|
|Registered agent fee||$0-$300|
|Annual report fee||$0 ($20 for in-person filing)|
|Name reservation fee (optional)||$50 if ordered by mail$55 if ordered online|
|Certified copies of documents fee||$0 for up to 10 pages$5 for 11 pages and more|
|DBA name fee (optional)||$50 if ordered online $30 if ordered by mail|
|Certificate of Good Standing fee (optional)||$30|
|Articles of Amendment fee (optional)||$30|
|Articles of Dissolution fee (optional)||$35|
Some PLLCs choose to operate under a DBA name. This can be helpful if your legal name is too long or you’re a franchise owner and want to use a distinguishable name for interaction with clients.
In Minnesota, a trade name (as it’s also known) can be filed with the Secretary of State for a filing fee of $50 if done online or $30 if ordered by mail.
On top of that, you may need to obtain a Certificate of Good Standing. Although this document isn’t mandatory, it may be needed under certain circumstances as proof that your PLLC is authorized and has been operating smoothly for its entire existence.
Generally speaking, when you get your Secretary of State’s approval of the Articles of Organization, this means that your PLLC has been formed and you’re now authorized to provide professional services in the state.
However, registering a PLLC alone isn’t enough to ensure business success. To start your business on the right foot, there are a few more things that should be taken care of right from the start. Below, we go through each of them in detail.
So, the first thing to do after creating a PLLC in MN is to open a business bank account. Did you know that the only way to take advantage of personal asset protection is to separate it from your business profits? So, opening a dedicated business account is paramount.
What’s more, having a separate account for business-related transactions makes it easier to keep track of taxes, one of the main reasons to have one.
To open a business bank, you can apply with any bank of your choice by providing your formation documents and the EIN. It usually takes from as little as a few minutes up to 2 days to set it up, depending on the bank you choose.
We won’t encourage you to manage your finances yourself. While this may seem like an easy job, there’s a lot of room for error, and finances are definitely not an area where you want errors to slip through. With this in mind, hiring an accountant can be the best solution.
The responsibilities of an accountant are much more varied than you might initially think. This person is not only responsible for paying salaries and preparing income reports, but can also be your business advisor, giving you insight into how best to use the business’s money.
Even if you decide not to hire an accountant full-time, you may still want to have someone to consult from time to time. Besides, an accountant can provide help with setting up accounting software, which can be helpful for small businesses.
If your PLLC has employees, you’ll need to obtain workers’ compensation insurance. This insurance provides protection for your PLLC by covering medical expenses incurred as a result of accidents, injuries, and illnesses at work.
Aside from that, it’s recommended to see into any other insurance coverages that your business may need, including:
Please note that malpractice insurance doesn’t cover the entire PLLC and will be required for each member whose skills are provided as professional services.
Finally, it’s important to keep your PLLC compliant by regularly updating the Secretary of State about the current status of your business, which is done by filing annual reports.
If your company’s maintained properly, and all of the account books are kept in order, the renewal of annual reports will cost you $0, which is a nice surprise. That said, make sure you don’t fall behind the compliance calendar and submit your reports before December 31.
Naturally, you will also need to get all the licenses and permits needed to conduct business. If you’re not sure what permits you need in addition to what you’ve already got, make sure to get in touch with a state lawyer for a guide.