Starting a Limited Liability Company is a lot of work. There are numerous different forms to fill out and applications to file. But with high risk comes high reward, as they say, and that’s true with LLCs because choosing an LLC will provide you with benefits that you won’t get with a corporation, like tax benefits and personal asset protection. But filling all of that paperwork takes time. How long does it take to get an LLC in Minnesota? We’ll cover all of that and more in this extensive guide.
Discovering Minnesota
Minnesota has the nickname “Land of 10,000 Lakes”, but in all actuality it has 11,842 lakes. There are lots of mountains, caves and hills in the state because it was formed by glaciers thousands of years ago, which also created the lakes, as well as many streams throughout the state. You can also find flat, fertile land in the Red River Valley. It’s bordered by Canada, Wisconsin, Iowa, both North and South Dakota, and Lake Superior.
As one of the northernmost states, there are some particularly frigid conditions in Minnesota, as well.
Minnesota’s natural resources mostly come from mining. The Mesabi mountains produce a lot of iron ore, and Minnesota is also known for producing manganese that’s used in batteries, and is also used to make steel and aluminum.
Economic Overview of Minnesota
The growth rate on Minnesota’s $353.7 billion GSP (Gross State Product) from 2018-2023 was 20.3k%. The top industries in the state by revenue are Life Insurance & Annuities, Health & Medical Insurance, Third-Party Administrators & Insurance Claims Adjusters, Commercial Banking, and Hospitals. The companies that hire the most people in the state are the State of Minnesota, Mayo Clinic, Walmart Inc., Target Corp, and Unitedhealth Group Incorporated. And the sectors that contribute the most to the state’s overall GDP are Manufacturing, Real Estate and Rental and Leasing, Healthcare and Social Assistance, Professional, Scientific and Technical Services, and Finance and Insurance.
The Mayo Clinic is located in Minnesota, so the healthcare industry is big in this state. And because retail trade and manufacturing are so big in the state, huge companies are headquartered there like General Mills, 3M, and Target. And because of the cold and snowy winters, winter sports and tourism businesses do well, like ice hockey, skiing, ice fishing and more.
Business Environment in Minnesota
According to a review put out by Usnews.com, Minnesota ranks #22 in the nation for Business Environment, # 8 for Employment and #31 for Growth. Under the Opportunity section, it ranked #29 in Affordability, and #2 in Economic Opportunity.
The cost of living index for the state is 98.4 (national is 100.0), the median household income is slightly above average at $77,720 (national is $69,717), and the poverty rate is 9.3% (national is 12.8%.
While being ranked #8 for employment is a good thing for the state government because they can boast an unemployment rate as low as 2.9%, it’s not good for business. And being ranked #2 for economic opportunity seems nearly contradictory with it being ranked #29 in affordability. That means you can make a business succeed there, but it will be expensive. With the state average income of $77,720, you’ll pay through the nose on payroll and other costs associated with employees and wages.
State-Specific Regulations and Incentives for Forming an LLC in Minnesota
Here’s a look at some of the programs, exemptions and incentives that Minnesota provides to ensure businesses get the help they need.
- Minnesota Job Creation Fund (MJCF): This is a program that offers financial incentives for new businesses, as well as those expanding to the state. Thes companies can receive as much as $1 million in most areas, or as much as $2 million in targeted areas. To qualify, businesses are required to make an investment of $500,000 in real property improvements, as well as create a minimum of 10 new full-time jobs within a two year period. This is lowered to $250,000 along with 5 new jobs in targeted areas. Created jobs are required to pay a minimum of $14.68 with benefits.
- Greater Minnesota Job Expansion Program: This program offers sales tax exemptions that last up to 7 years for businesses if they increase their employment by at least 10% and meet wage requirements. These refunds can be as much as $2,000,000 each year, and can add up to $10,000,000 over the seven year period. To qualify, businesses must be located somewhere outside the Greater Minneapolis and St. Paul Metro area.
- Research and Development Tax Credit: This tax credit equals up to 10% of the first $2 million in expenditures, as well as 4% of expenses over $2 million. This incentive is for businesses who take part in R&D activities.
- Border Cities Enterprise Zone Program: This is a program designed to provide tax credits for businesses locating or expanding in Dilworth, Breckenridge, Moorhead, East Grand Forks, or in the Taylor Falls development zone.
- Minnesota Job Creation Fund (MJCF) Twin Cities Region: This program will provide as much as $1,000,000 in grants over a 5-year period to companies that choose to locate in the Minneapolis-St. Paul Metro area. Companies must make an investment of at least $500,000 in property improvements to qualify. The grant awards can be issued for either $3,000 per new job-based project that meets an average wage minimum, or a rebate for as much as 5.0% for real personal property improvements. Companies that make an investment of at least $75,000,000 and create 250 jobs can receive as much as $2,000,000.
- Data Center Tax Exemptions: If a business invests a minimum of $30,000,000 in data or network operation centers that have a minimum of 25,000 square feet may qualify for a sales tax exemption for equipment. There’s another 20 year sales tax exemption for businesses that make an investment minimum of $50,000,000 to refurbish a data center of at least 25,000 square feet.
- Sales and Use Tax Exemptions: Aside from the tax exemption that manufacturers get for capital equipment, the sale of property that is delivered out of state is also exempt from sales tax. So is material used or consumed for agricultural, industrial or services production for either retail sale or petroleum products that are hit with other excise taxes.
- Minnesota Job Skills Partnership (MJSP): These are grants that the MJSP board award based on applications. The awards can be up to $400,000 to educational institutions partnering with businesses in the state to create job training programs for both existing workers and new hires.
- Minnesota Job Training Incentive Program (JTIP): This program supplies grant awards of up to $200,000 for new or expanding businesses in the Greater Minnesota area for training. This funding is made available for businesses that are creating at least three new jobs and are located in Cannon Falls, Rockfield, Hanover, New Prague or outside the metropolitan Twin Cities area. The newly created jobs are required to pay wages that are a minimum of 120% of the federal poverty guidelines for a family of four. You can use the funds to pay training costs for the workers, which includes wages for trainees during on-the-job training, delivery of training, materials and supplies, curriculum development, trainer travel and lodging, and training equipment and facilities. You can also use the funds for testing, assessment and certification. The training must be in-house and provided by higher education institutions, federal, state, or local agencies, consultants, or by equipment vendors.
Pros and Cons of Establishing an LLC in Minnesota
There are some advantages to LLC formation in Minnesota.
Minnesota provides solid limited liability protection to you as an LLC member.
Minnesota LLCs are allowed a degree of flexibility when it comes to operational procedures and management structure.
LLCs aren’t forced to pay income taxes in Minnesota.
There are a few drawbacks to owning an LLC in Minnesota.
One requirement of Minnesota LLCs is paying annual renewal fees, as well as filing an annual report.
Franchise taxes are imposed on LLCs, too, and they’re based on the company’s income. This can really be a detriment to LLCs that make significant earnings.
Procedure of Establishing an LLC in Minnesota
These are the steps you need to take to start an LLC in Minnesota, including the paperwork you’ll need to gather.
Necessary Documentation for Filing an LLC in Minnesota
These are the documents you’ll need to file for an LLC in Minnesota.
- Employer Identification Number: Every new business needs an Employer Identification Number, or EIN, even if you don’t plan on hiring employees. You can use it as an identification number on tax forms, and you need one to qualify for certain incentives or to open a business bank account. You can quickly get one from the IRS website for free.
- Name Reservation Application: One of the more important documents you’ll need to file is a name reservation application. Your business name needs to be unique. Other businesses can’t be already using the name, and it can’t be too close in nature to other business names. To find out if you can legally use your business name, you can check out the business name database on the Secretary of State’s website. Once you’ve found a name that’s legal for your company to use, you need to file a Name Registration form with the Secretary of State.
- Articles of Organization: The Articles of Organization form is considered your primary formation document. Translation: it’s really important. It includes information about your company, like its name, address, purpose, registered agent, and management structure, as well as a list of LLC members and their contact information.
- Operating Agreement: You don’t have a legal obligation to create an operating agreement, but it’s nearly as important as your Articles of Organization. It’s an internal business document that spells out how your business is going to operate, and it also functions as an agreement between your LLC members regarding things like their compensation and their duties. Some of the information included is member roles, contact information, manager names and contact information, an explanation of member contribution and their ownership shares, the distribution of profits and losses, the voting rights of each member, and meeting schedules. It will also include a section about how to add or remove members, which is quite valuable if a dispute happens that causes people to leave, or if someone dies.
- Annual Renewal: You’re required to file an annual renewal for your company every year before December 31st. You can accomplish this by filing online or by mail.
- Tax Registrations: You need to register your business with the Minnesota Department of Revenue for tax purposes, as well as if you plan to collect sales tax or sell goods and services.
- Business License: You’ll need a number of business licenses, depending on where you plan to do business, as well as the nature of your business. You can check the Minnesota Employment and Economic Development website for information about business licenses for your new business.
- Beneficial Ownership Information Report (BOIR): This is a new requirement from FinCEN. If your LLC is created in 2024, then you’re required to file a Beneficial Ownership Information Report within 90 days of its approval from the Secretary of State’s office. This is going to go down to 30 days in 2025. Head over to FinCen’s website to fill out your form. It will ask for information about your beneficial owners, which are LLC members who own at least 25% interests in the company and have a lot of control over it. It will also ask for the applicants, which are the people who filed for the LLC and have control over future filing and renewal activities.
Legal Requirements for Starting an LLC in Minnesota
These are the steps you’ll need to take to start an LLC in the state of Minnesota.
- Get an Articles of Organization Form: The first step on your formation journey is to get an Articles of Organization form. It’s essentially an application to receive an LLC, and you can obtain yours from the Secretary of State’s office in person, or online.
- Choose a Name for Your Business:
- Choose a Registered Agent: A registered agent is a person or business entity that will receive mail from government agencies, as well as service of process, on your company’s behalf during business hours. They’re required to have a physical address in the state and aren’t allowed to use a P.O. Box. Aside from that, as long as they meet the legal requirements, you’re allowed to designate anyone you want as your registered agent. But just to cover all of the legal bases, many business owners choose to hire a professional registered agent service rather than an individual.
- Choose Your Business Address: This is another important consideration. If your business has a physical address, then the decision should be quite easy. But if it doesn’t, then you’ll need to carefully weigh your options. Using your home address means it will be listed on the public record, and most people don’t want the whole world knowing where they live and being able to contact them at home. You could request the use of your registered agent’s address, or learn about virtual addresses in your area.
- Sign and File Your Articles of Organization: The last step in your formation journey is signing and filing your documents. Make sure that all of the information is included and that it’s accurate, and then you can submit it to the Secretary of State.
Time Frame for Establishing an LLC in Minnesota
How long will it take you to get an LLC? Here’s what you need to know about formation times in Minnesota.
How Long Does the Initial Paperwork Take in the State of Minnesota?
Approval times include mail time and processing time. Approval times on mail filings are around 3-4 weeks, or immediately for online filings.
Processing Times in the State of Minnesota
Processing times refer to how long it takes for the Secretary of State’s office to review the information in your documents and get it entered in their computer system. Processing times for mail filings are between 11-12 days, and immediately for online filings.
Common Delays in the LLC Formation Process in Minnesota
Some things can slow your formation times greatly. Here’s a look at a few factors that can delay your formation process.
- Time of Year: If you file either at the beginning or the end of the year, that’s when the Secretary of State experiences the highest volume of filings. It will cause a delay in your formation as workers at the Secretary of State’s office make their way through the massive volume of filings.
- Document Issues: If you leave information off of your application or you include inaccurate information then it can cause delays as you work to correct it.
- Filing Method: If you choose to file by mail, then your processing times are going to be slower than if you’d chosen to file online.
Expedited Processing for LLC Formation in Minnesota
For business owners who want speedy formation times, expedited processing can be the best option. Here’s the details about expedited processing in Minnesota.
What Are the Expedited Options Available?
Minnesota doesn’t offer expedited service options.
Additional Costs for Expedited Services in Minnesota
Usually, there’s an extra fee for expedited processing in addition to filing fees. But since Minnesota doesn’t provide expedited services, you won’t have to pay any extra fees.
Comparing LLC Formation Time Frame in Minnesota with Other States
Learning how your state’s formation times compare to other states is a key bit of information that can help you make important decisions, like whether you want to form an LLC in Minnesota, or opt for a foreign LLC. Here’s how Minnesota’s formation time frame compares to other states.
Brief Comparison with Key States
Minnesota’s processing times are 11-12 business days if you file by mail and immediately if you file online. There is no expedited processing.
Expedited processing isn’t a guarantee of lightning- fast processing. In Arizona it takes 5 days, and in Maryland it takes 7. Online processing takes 12-14 days in Washington, 2 weeks in Maryland, 13-15 days in Texas and 14-16 days in Arizona. Processing mail filings takes 3-4 weeks in Missouri and Nevada, 4-6 weeks in Oregon, 6 weeks in Pennsylvania, 4-8 weeks in Texas, 5-6 weeks in Washington, and 8 whole months in New York.
Mail processing takes 1-2 days in Alabama, Massachusetts and South Dakota, and only 1 day in Kentucky and Ohio. Alabama, Alaska, Colorado, Kansas, Kentucky, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming all have immediate processing for online filings, like Minnesota. When it comes to expedited processing, California has a 4 hour option, Louisiana has a 2-4 hour option, New York has a 2 hour option, and Delaware, Michigan, Montana, Nevada, Pennsylvania and West Virginia all have 1 hour options.
As you can see, Minnesota is sort of middle of the road. Its times are neither the slowest nor the fastest in the nation.
Why is Minnesota a Favorable Place for Forming an LLC?
Minnesota is a good place to form an LLC because it provides solid limited liability protection. LLCs in the state enjoy flexibility with their operational procedures and management structure. And it doesn’t impose an income tax on LLCs.
