Minnesota LLC
Advantages and Disadvantages



Minnesota LLC and Asset Protection




Minnesota LLC:

A Minnesota llc will provide business developers and entrepreneurs like you with a corporate form of organization to meet most of the operating needs of early stage to mid-sized companies. Furthermore, your llc is a recognized legal corporate form by all fifty US states. In electing your Minnesota llc, you establish the legal platform for commencing business operations within Minnesota, as well your llc will receive the public sector support from the Minnesota Secretary of State.

An Minnesota LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership or a Subchapter S Corporation,are generally prime candidates for a business juststarting. The state of Minnesota gives public support to an Minnesota Limited Liability Corporation.

Should I form a Minnesota LLC?

An Minnesota LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Minnesota to your LLC. Your Minnesota LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Minnesota LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.

Advantages and Disadvantages of a Minnesota LLC

Advantages of Limited Liability Company

  • Limited Liability: Owners of a LLC have the limited liability protection of a corporation.


  • Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.


  • No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.


  • Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.


Disadvantages of Limited Liability Company

  • Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.


  • Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.


  • Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.


By Minnesota and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Minnesota LLC members, the name and address of your Minnesota registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Minnesota LLC formation documents assembled for application to the state of Minnesota.


Minnesota's 2008 Business Tax Climate Ranks 42nd

Minnesota ranks 42nd in the nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: North Dakota (30th), South Dakota (2nd), Iowa (45th) and Wisconsin (39th).

Minnesota's Individual Income Tax System

Minnesota's personal income tax system consists of three separate brackets with a top rate of 7.85% kicking in at an income level of $69,990. Among states levying personal income taxes, Minnesota's top rate ranks 10th highest nationally. Minnesota's 2005 individual income tax collections were $1,237 per person, which ranked 6th highest nationally.

Minnesota's Corporate Income Tax System

Minnesota's corporate tax structure consists of a flat rate of 9.8% on all corporate income. Among states levying corporate income taxes, Minnesota's rate ranks 3rd highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $207.44 per capita, which ranked 10th nationally.


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