Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in Minnesota, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting a Minnesota LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
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What’s the least amount I have to pay to form an LLC in Minnesota?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your Minnesota LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
MN LLC Start-up costs
There are two primary start-up costs in Minnesota. The most important one is the Articles of Organization. The fee for this is $155 (just $135 if you file by mail instead). But regardless of whether that sounds like pocket change or a cost you’ll have to budget for, it’s a cost you can’t avoid. After all, the Articles of Organization is what officially forms your business in the state. Without it, you’re not a recognized business.
A lot of Minnesota LLCs will also need to get licenses in order to run a compliant business. Minnesota doesn’t have a general business license that’s required for every single entity in the state. Instead, there are a wide variety of professional and occupational licenses that could apply to your business. For example, Minnesota eLicensing lists over 750 different license types.
Unfortunately, this makes it difficult for us to list the price tags for different licenses in the state. You’ll have to do some research to learn which licenses (and in turn, which fees) will apply to your business. Because it’s reasonable to expect that you’ll pay something for your initial licenses.
Ongoing costs for an LLC in MN
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Thankfully, you don’t have to worry about renewing a state general business license, but you might have to renew your professional licenses. Unfortunately, we can’t list them here. That’s because every Minnesota licensing board has its own policies for renewals. Some might require an annual renewal while others have renewals biennially. This guide would be tedious if we listed them all. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In Minnesota, one of the biggest annual costs you’ll have will be taxes. But just how big that cost is partly depends on your taxation structure. LLCs taxed as corporations will pay a flat rate of 9.8%. But if you’re taxed as a pass-through entity, you’ll pay one of four different tax brackets ranging between 5.35% and 9.85%.
If you’re involved in sales, you’ll also need to collect and pay the state sales tax. Minnesota charges a 6.875% rate statewide, but the state also allows cities and counties to add local surcharges if they wish. Last but not least, there’s a good chance that some of the state’s miscellaneous taxes will apply to your LLC. For example, there are taxes for petroleum, gambling, mining and minerals, and more. You can read more about Minnesota business taxes at the Minnesota Department of Revenue.
Annual report
Most states require LLCs to file some version of an “annual report,” or a document that informs the state about the current standing of your business. This document is usually required in addition to annual tax reports, since it usually includes information about your business address, members, your registered agent, and so on.
In Minnesota, this annual report is called the Annual Renewal, and Minnesota keeps it pretty simple. The official due date is December 31st, but you can file it anytime during the year.
Provided you file annually as directed, there is no filing fee. But if you miss filing one year, you will have to pay a reinstatement fee.
What are the discretionary costs to form a Minnesota LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since Minnesota doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using a Business Name Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Articles of Organization, or by filing a Name Reservation. You should only file this form if you’re not yet ready to file your Certificate. Otherwise, you’d be wasting your hard-earned cash. Minnesota requires a $55 fee for this reservation (just $35 if you file by mail), but it protects your name for a whopping 12 months. That should give you plenty of time to file what you need to.
2. Obtaining an Assumed Name
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Articles of Organization, is the legal name of your business. An assumed name, sometimes called a DBA, fictitious name, or trade name, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
An Assumed Name acts kind of like a nickname for your business; some LLCs and corporations also use Assumed Names to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use an Assumed Name, if it differs from your legal name, you need to register it before you can use it.
Quick note: before you register an assumed name, there are two things you have to do. First, you need to ensure that your name is available to use. Minnesota requires all names to be “distinguishable on the record.”
Once you’ve done that, you are allowed to register your assumed name using a Certificate of Assumed Name. The fee for it is $50. The registration technically lasts for 10 years. But as an LLC, you also file an annual renewal every year. That form acts like a renewal process, so as long as you file your renewal as directed, you won’t need to worry about maintaining your Minnesota Assumed Name.
But don’t run off from your registration just yet: you need to make a public declaration of your Assumed Name. You can do so by making a statement in a local newspaper (it must be a publication in the county where your business is located). Once you’ve made the publication in two consecutive issues, you’re good to go.
3. LLC formation services
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Paperwork is a massive hassle. And unless you’re starting an LLC to help other Minnesotans with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting a Minnesota LLC: the Articles of Organization, the annual renewal, license applications—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of packages, with basic options starting at low prices like $39 from Zen Business (one company, Incfile, even offers a starter package for $0). But if you’re willing to shell out some serious cash for comprehensive assistance, you’ll find package prices going as high as $799.
These services are completely optional; you can DIY your Minnesota LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying. Some services charge one-time fees, and others tack on “free services” that will cost you next year. If you don’t read the fine print, you can get slapped with unexpected service fees. And surprise bills are never fun.
4. MN Registered agent services
Minnesota law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; Minnesota allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 Minnesota registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Expedited filing fees
In Minnesota, it usually takes about 5 business days (upon receipt) for the Secretary of State to process your Articles of Organization. If that’s too slow for your liking, you can expedite your filing, which cuts the processing speed down to 1 business day.
Expedited filing costs just $20 (more for some other documents, though). And technically speaking, Minnesota considers online filings to be expedited. So you’ll automatically expedite your filing if you file online. But if you prefer to file a paper form, you can still pay an extra $20 to get faster filing. Since that expediting fee isn’t unreasonable, it may be worth the extra expense to expedite your filings, but patience works, too. You can let your budget and your timetable be the deciding factors.
6. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search Minnesota business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting a Minnesota LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (even the $155 Articles of Organization fee is pretty manageable). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your Minnesota LLC off on the right foot. We wish you and your new business the best!