How to Start a Limited Liability Partnership in Minnesota | 2024 Guide

Start a Limited Liability Partnership in Minnesota

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Minnesota. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Minnesota, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Minnesota LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Minnesota, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Minnesota General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Minnesota

To form a limited liability partnership in Minnesota, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Articles of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Minnesota, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Minnesota business registry. Ensure that your chosen name follows Minnesota naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Minnesota Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Minnesota- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Minnesota Secretary of State business name database and Minnesota Business Name Search. If the name is available, you may choose to reserve it for a specific period of 1 year by filing a name reservation application and paying the online name reservation fee of $35 and mail name reservation fee of $55. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by three methods, online, by mail, and in person filing, which costs around $50 for online filing and $30 for offline filing. In addition, the DBA’s validity in Minnesota is one year, which you can file in the Minnesota Secretary of State.

You can check out how to file a DBA in Minnesota for clearer understanding.

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Step 3: Designate a Registered Agent

In Minnesota, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Minnesota Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet Minnesota requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Minnesota Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Minnesota Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Minnesota laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Minnesota. The default laws in Minnesota might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Minnesota Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Minnesota Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Minnesota.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Minnesota LLP. Additionally, obtain the necessary Minnesota Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Minnesota to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Minnesota Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Minnesota, and local levels.

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Advantages of Forming a Limited Liability Partnership in Minnesota

While the specific advantages of forming an LLP in Minnesota can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Minnesota:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Minnesota.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Minnesota may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Minnesota.

Cost of Forming an LLP in Minnesota

The cost of forming an LLP in Minnesota may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Minnesota Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Minnesota instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership in Minnesota?
A limited liability partnership in Minnesota is a legal structure that offers the same limited liability protection as a corporation, with the tax benefits of a partnership.
What is the process of forming a limited liability partnership in Minnesota?
To form a limited liability partnership in Minnesota, you need to file a certificate of limited partnership with the Secretary of State.
Do I need to have a physical presence in Minnesota to start a limited liability partnership there?
No, you don’t need to have a physical presence in Minnesota to start a limited liability partnership there.
What is the filing fee for a limited liability partnership in Minnesota?
The filing fee for a limited liability partnership in Minnesota is $155.
How long does it take to form a limited liability partnership in Minnesota?
It takes typically 2-3 business days to process the filing of a limited liability partnership in Minnesota.
What are the advantages of a limited liability partnership in Minnesota?
Some advantages of a limited liability partnership in Minnesota include asset protection, shared responsibilities and less tax paperwork.
Do I need a registered agent for a limited liability partnership in Minnesota?
Yes, you are required by law to have a registered agent for your limited liability partnership in Minnesota.
Can a limited liability partnership in Minnesota be converted to an LLC?
Yes, a limited liability partnership in Minnesota can be converted to an LLC.
Do all partners in a limited liability partnership in Minnesota have to be residents of the state?
No, it’s not necessary for all partners in a limited liability partnership in Minnesota to be residents of the state.
Do I need to file annual reports for a limited liability partnership in Minnesota?
Yes, you are required to file an annual renewal for your Minnesota limited liability partnership.
Can a non-profit organization form a limited liability partnership in Minnesota?
Yes, a non-profit organization can form a limited liability partnership in Minnesota.
Can a foreign limited liability partnership do business in Minnesota?
Yes, a foreign limited liability partnership can do business in Minnesota with proper registration.
What are the requirements for naming a limited liability partnership in Minnesota?
The name of the limited liability partnership in Minnesota must have different noun(s). It must also contain the words “limited partnership”.
Can a limited liability partnership in Minnesota sell stock?
Limited liability partnerships in Minnesota cannot issue stock or profit interest.
Does Minnesota require a tax ID number to form a limited liability partnership?
Yes, Minnesota requires a tax ID number to establish a limited liability partnership.
Do I need a lawyer to form a limited liability partnership in Minnesota?
Although not required, it is highly recommended that you consult a lawyer before forming a limited liability partnership in Minnesota.
What is the statute of limitations for a limited liability partnership in Minnesota?
The statute of limitations for a limited liability partnership in Minnesota is six years from the date of cause of action.
How many partners are required to form a limited liability partnership in Minnesota?
A limited liability partnership in Minnesota requires a minimum of two partners, and no limit on the number of partners.
Can a limited liability partnership in Minnesota appoint a CEO?
Appointment of a CEO isn’t mentioned under the regulation of Minnesota Limited Partnership.
Do I need a business license to form a limited liability partnership in Minnesota?
It will depend on your city it location. Contact the relevant city or state agency to ask for allowed incorporation without a business license.
Do limited liability partnerships in Minnesota have perpetual existence?
Minnesota Limited Partnership has perpetual existence unless it states otherwise in the certificate of limited partnership.
What happens if a partner leaves a limited liability partnership in Minnesota?
Partners can withdraw, and other unauthorized withdrawal may incur penalties or force the partnership to dissolve.
Can I renew my limited liability partnership online in Minnesota?
Yes, you can renew your limited liability partnership online in Minnesota.
What is the difference between a limited liability partnership and a limited partnership in Minnesota?
The primary difference between the limited liability partnership and a limited partnership in Minnesota is the amount of liability which each partner bears as contributed in the partnership agreement.
Is it necessary to hold a meeting to form a limited liability partnership in Minnesota?
Not required to hold a meeting to start a limited liability partnership in Minnesota.
Can I change the registered agent of my Minnesota limited liability partnership?
Yes, you can change your Minnesota limited liability partnership’s registered agent by filing a form with the Secretary of State.
What are the taxes associated with a limited liability partnership in Minnesota?
Income or loss from a Minnesota have a flow-through tax status, meaning the profits or losses of the partnership are the responsibility of the partnerships’ owners.
Can a limited liability partnership in Minnesota change its business structure to a corporation later on?
Yes, a limited liability partnership in Minnesota can change its business structure to a corporation at any time.
Is a limited liability partnership the right choice for my business in Minnesota?
Choosing your business structure requires careful analysis not everyone benefits to be in an LLC, to know if limited liability partnership in Minnesota ideal for your business consult with a professional expert in business law services.
Can a limited liability partnership protect personal assets in Minnesota?
Yes, a limited liability partnership in Minnesota can protect personal assets from the business’s creditors, as business debts are separated from personal debts.
What is required to start a limited liability partnership in Minnesota?
To start a limited liability partnership in Minnesota, a document called a Certificate of Limited Liability Partnership must be filed with the state.
Can a limited liability partnership be formed by a single person in Minnesota?
No, a limited liability partnership in Minnesota requires at least two members.
Is a registered agent required for a limited liability partnership in Minnesota?
Yes, a registered agent is required for a limited liability partnership in Minnesota to receive legal notices on behalf of the business.
What are the annual filing requirements for an LLP in Minnesota?
A Statement of Information must be filed annually with the Minnesota Secretary of State for a limited liability partnership.
Can a partnership agreement be modified in Minnesota?
Yes, a partnership agreement for a limited liability partnership in Minnesota can be modified with the agreement of all partners.
Does an LLP in Minnesota need a business license?
Yes, an LLP in Minnesota must obtain a state business license and any required local licenses or permits for the business activities.
How are expenses and profits distributed in a limited liability partnership in Minnesota?
The partnership agreement will dictate how expenses and profits are distributed amongst the partners of a limited liability partnership in Minnesota.
What is the filing fee for a Minnesota limited liability partnership?
As of 2020, the filing fee for a Minnesota limited liability partnership is $155.
What taxes do limited liability partnerships need to pay in Minnesota?
Limited liability partnerships in Minnesota may need to pay state and federal income tax, as well as sales and use tax.
What is the liability limit for each partner in a Minnesota limited liability partnership?
The personal liability of each partner in a Minnesota limited liability partnership is limited to the amount of their investment in the business.
Can a foreign limited liability partnership operate in Minnesota?
Yes, a foreign limited liability partnership can conduct business in Minnesota by registering with the state.
How do I search for a company’s name availability in Minnesota?
You can search for name availability for a limited liability partnership in Minnesota on the Secretary of State website.
What happens if the partnership agreement contains conflicting provisions with Minnesota law?
Provisions outlined in the partnership agreement for a limited liability partnership in Minnesota that conflict with Minnesota law are unenforceable.
Is a certificate of insurance required for a Minnesota LLP?
Minnesota law does not require limited liability partnerships to obtain insurance, but it is advised to protect the business and its partners.
How does a limited liability partnership in Minnesota dissolve or terminate?
A limited liability partnership in Minnesota can dissolve by unanimous agreement of all partners or by court order.
What is a Minnesota professional limited liability partnership?
A Minnesota professional limited liability partnership is a specific type of LLP for licensed professionals in certain fields, such as law or accounting.
How long does it take for an LLP to be approved in Minnesota?
It usually takes 5-10 business days for a limited liability partnership in Minnesota to be approved by the Secretary of State.
Is a Doing Business As (DBA) name required for a Minnesota LLP?
No, a Doing Business As name is not required for a Minnesota limited liability partnership.
Is a banking resolution required for a Minnesota LLP?
No, a banking resolution is not required for a Minnesota limited liability partnership but is advised to clarify financial responsibilities.
What are the restrictions on who can form a professional limited liability partnership in Minnesota?
A professional limited liability partnership in Minnesota can only be formed by licensed professionals in specific fields.
What requirements are there for registered agents for LLPs in Minnesota?
Registered agents for limited liability partnerships in Minnesota must be individuals or businesses authorized to do business in the state.
Is a foreign LLP required to register with the Minnesota Secretary of State?
Yes, foreign limited liability partnerships must register with the Minnesota Secretary of State to legally conduct business in the state.
Is an operating agreement required for a Minnesota LLP?
An operating agreement is not mandatory for a limited liability partnership in Minnesota, but it is advised to outline the roles and responsibilities of each partner.
Can a Minnesota limited liability partnership convert to a different business entity type?
Yes, a Minnesota limited liability partnership can convert to a different business entity type such as an LLC or corporation.
What is the difference between a Minnesota limited liability partnership and a Minnesota partnership?
A Minnesota limited liability partnership offers personal liability protection to partners, while a partnership does not.
Can an individual be both a general and limited partner in a Minnesota LLP?
Yes, an individual can be both a general and limited partner in a Minnesota limited liability partnership.
When does a Minnesota LLP have to renew its certificate of authority?
The certificate of authority for a foreign limited liability partnership in Minnesota must be renewed biennially.

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Conclusion

Starting an LLP in Minnesota may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Minnesota.

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