How to Start a Series LLC in Minnesota
Minnesota is a great place to start a business. Minneapolis, in particular, is the largest city in the state, with many government incentive programs to support small businesses.
Starting a series LLC in Minnesota is one of the most popular options for companies with multiple business activities, including real estate investors. The essence of such a legal structure is that it is a single business with multiple "divisions" or "child series."
It's important to know that Minnesota law provides for the formation of a series LLC but does not provide asset protection for the cells from the parent company. The same goes for each separate cell.
The state of Minnesota also recognizes series LLCs created in other states. This means you can incorporate a company elsewhere and then do business in Minnesota.
How to Form an LLC in Minnesota: Step-by-Step Instructions
In 2015, Minnesota created a Minnesota Revised Uniform LLC Act, which governs how to register and maintain a series LLC in the state. Before you find out how to form a series LLC in Minnesota, know that you don't have to reserve a name.
However, if you want, you can do it for up to 12 months. To reserve a name, you will need to fill out the Name Reservation form, which can be done online. The cost is $29 + Minnesota state fees.
Step 1: Name Your Series LLC
Before getting to your Minnesota series LLC registration, make sure that your chosen name is available for use i.e., not similar to the names of other existing businesses operating in the state. To do this, visit the Business & Liens page on the Secretary Of State's website.
Once on the page, follow these next steps:
- Select "Business Name" or "File Number";
- Enter part of your business name in the appropriate field.
If there are any companies with similar names, you will see them on the list.
The basic rules when choosing a name are as follows:
- The name must contain the designations "series LLC," "series L.L.C.", or "series Limited Liability Company;"
- Do not use designations that resemble other variations of legal structures, e.g. "Corp", "Inc", or "Non-Profit;"
- Before you know how to get a series LLC in Minnesota, keep in mind that the words "bank," "university," and "law center" may be used only by licensed professionals.
After that, it's also recommended that you conduct a domain name search, as your site URL should also be free.
Step 2: Appoint a Registered Agent to Get a Series LLC in Minnesota
A prerequisite for how to get a series LLC in Minnesota is the presence of a registered agent (RA), as it must be indicated in your Articles of Organization. This condition is stated in State Statute Chapter 5 §36.
The basic requirements for an RA are the same as throughout the entire United States:
- The agent must have a permanent physical address in Minnesota (not just a P.O. box);
- The agent must be 18 years of age or older;
- The agent must be constantly available in the office during normal business hours.
Thus, your RA can be someone you trust or a commercial entity legally providing registered agent services in the state.
To start a series LLC in Minnesota, it's advisable to use a commercial service provider. You can choose one of the national companies we have reviewed in our Best Registered Agent Services in 2022 rating.
If you need to be accompanied by a local service provider, the Minnesota Registered Agent service can become your most suitable option. For $49, you'll get your documents processed in minutes.
The company's website also states that its basic package includes instant access to an online customer service system, as well as special service professionally delivered by a friendly and knowledgeable team of Minnesota business experts.
Step 3: File Your series LLC Articles of Organization
Next, for Minnesota series LLC registration, you need to file your Articles of Organization with the Secretary of State. The easiest way to do this is online, at the Minnesota Corporations Business & Liens Portal.
After that, you will also need to pay the $155 filing fee. You can send this document by mail. For this, simply download, print, and fill out the Minnesota Articles of Organization beforehand.
Mail to:
Business Services Minnesota Secretary of State
Retirement Systems of Minnesota Building 60
Empire Drive, Suite 100 St. Paul, MN 55103.
Step 4: Draft an Operating Agreement
The next step in starting a series LLC in Minnesota is to draft an Operating Agreement (OA). Although this document is not required to complete the registration process, skipping this step is not recommended.
An OA is the main document that defines the structure of your company. A standard OA typically includes the following sections:
- Organization. Describes the business structure of the company and its members;
- Management and voting rules. Describes operating and voting procedures, as well as how changes are applied to the company;
- Capital contributions. Describes initial and subsequent capital contributions of members;
- Asset distribution. Explains how profits and losses will be distributed between members of the series LLC;
- Membership changes. Describes how members are added or removed to/from the venture;
- Dissolution. Describes the procedure for dissolving the series LLC.
It's important to know that after starting a series LLC in Minnesota, it’s this statement of information that largely takes precedence over state law.
Simply put, you should know that unless something is stated in your OA, state "default" rules will apply in resolving any business disputes, including lawsuits.
This is why it's advisable to hire a professional attorney in the process of registering a series LLC in Minnesota to help competently prepare an OA.
Step 5: Get an EIN for Your Minnesota Series LLC
The last stage is getting an EIN. To do this, you will need to complete the following tasks:
- Fill out an appropriate form on the IRS website;
- Once your details are verified by the IRS, your EIN will be sent to you in digital form or by mail.
This stage of registration does not increase the final Minnesota series LLC cost, as an EIN is obtained free of charge.
If you already have a business in the USA, you do not need to get this 9-digit code again when setting up a new company. It's enough to simply apply to the IRS to make all the necessary changes.
LLC Minnesota Cost: How Much is a Series LLC in MN
The Minnesota series LLC cost includes:
| Service | Cost |
|---|---|
| Series LLC filing | $155 |
| Registered agent services | $49 - $300 |
| Annual report filing | $135 |
| Name reservation | $55 |
| DBA registration | $30 when filed online, $50 by mail |
| Certified document copies | $8 |
So how much is a series LLC in Minnesota? The total amount partly depends on the cost of your chosen registered agent service.
Also, you want to find out if your venture requires certain business licenses and permits for your type of activity.
The approximate cost of series LLC registration in Minnesota is $339.
First Things to Do After Creating a Series LLC in Minnesota
Once you know how to get a series LLC in Minnesota, consider the following steps:
- Open a separate bank account. This step is required to protect your personal assets in the event of claims from creditors;
- Hire an accountant. Such an expert will help you write a business plan, create the wage fund, etc.;
- If necessary, apply for business licenses and permits.
You may also need to hire an attorney. Such an expert will accompany you in court in case a lawsuit is filed against the company.
Also, an attorney can be really helpful in the series LLC Minnesota formation process, e.g. when completing your Articles of Organization or preparing an Operating Agreement.
Also, after creating a series LLC in Minnesota, you will need to take care of insurance policies for your business.
A list of mandatory insurance policies in the state includes:
- General Business Liability Insurance;
- Professional Liability Insurance;
- Employee Compensation Insurance;
- Commercial Real Estate Insurance.
Business income insurance applies only when you suspend the company for a certain period of time.
Keep Your Company Compliant
Now that your company is fully operational, keep in mind that you will still need to meet certain requirements contemplated by state law.
After setting up a series LLC in Minnesota, you have to:
- Submit your annual tax report every year (must be sent to the office of the State);
- Comply with tax requirements. Some taxes must be paid not only by the owner but also by all members of the LLC;
- File tax returns. Not only the manager, but all members must declare their profits and losses to the state.
A list of mandatory taxes, payable to the Secretary of State after forming a series LLC in Minnesota, includes:
- Income Tax: from 5.35% to 9.85%;
- Sales and Use Tax: 6.875%;
- Federal Self-Employment Tax: 15.3%;
- Federal Income Tax: the rate depends on the type of your business industry, your profit, and other factors.
Also, all series LLC employees must file an individual tax return and pay Payroll Tax.