Forming a Minnesota professional limited liability company (PLLC) can be a challenging and exciting venture. As with every journey, it’s worth doing some groundwork before embarking. That’s why we’ve provided this helpful guide. Let’s start at the beginning.
What is a professional limited liability company in Minnesota? A PLLC is a limited liability company (LLC) formed by one or more licensed professionals to provide services related to their professions. The structure of an LLC protects individual members from liability, except in limited circumstances. Losses tend to be restricted to the member’s personal investment in the firm and to instances of professional malpractice.
Who can form a Minnesota PLLC?
An array of professionals can register their business as a professional limited liability company in Minnesota. Below is a full list of the professions who can choose this entity.
- Certified interior design
- Dentistry & dental hygiene
- Landscape architecture
- Marriage & family therapy
- Medicine & surgery
- Physician assistant
- Podiatric medicine
- Professional counseling
- Registered nursing
- Social work
- Veterinary medicine
The state allows professionals to form professional limited liability partnerships (PLLPs) and professional corporations (PCs) as an alternative.
Choose a name for your Minnesota PLLC
The state has some rules for naming a Minnesota professional limited liability company. Minnesota Statute 319B.05 says that the name must include any of the following phrases or abbreviations: “Professional Limited Liability Company”; “Limited Liability Company”; “P.L.L.C.”; “P.L.C.”; or “L.L.C.” Additionally, the name must be distinguishable from other Minnesota businesses.
To prevent other organizations from using your desired name, you can reserve your business name with the Secretary of State before you file your Articles of Organization. ZenBusiness helps you check if your preferred business name is available. If it’s available, you can reserve it for 365 days. We also offer a domain registration service to help you claim a name for your new website.
Select a Minnesota registered agent
A registered agent is required by the Minnesota Secretary of State. This party is responsible for receiving regulatory notices and important legal documents, such as subpoenas. An agent can be an individual or a business as long as they have a physical address within the state where they can be reached at any time during normal working hours. ZenBusiness’s registered agent services can help you find an experienced agent for your LLC. Hiring a registered agent is a smart choice for busy professionals who aren’t always at the office and who need help staying in compliance.
Complete and file Minnesota Articles of Organization
Articles of Organization typically include the firm’s name, its structure, the contact details of the registered agent, and how the LLC will be managed. Management requirements for LLCs are a tad different in Minnesota than most other states. An LLC/PLLC has three possible management structures: board-managed. manager-managed, or member-managed. For PLLCs, member-managed tends to be the more popular election.
It costs $135 to file the Articles of Organization by mail. In-person and online submissions cost $155. The online payment system accepts credit cards only. Paper filings should be accompanied by a check payable to the Minnesota Secretary of State.
Handle Minnesota tax obligations
You may need more than one tax ID number in Minnesota. These can include a:
- Federal Employer ID number from the IRS
- Minnesota taxpayer ID number
- Minnesota unemployment insurance employer account number
The IRS will treat the firm as either a corporation, partnership, or a disregarded tax entity. A domestic LLC will be considered a partnership for income tax purposes unless it submits IRS Form 8832 to be treated as a corporation. A single-member LLC will be treated as a disregarded or pass-through entity unless it chooses to be regarded as a corporation.
Even if you don’t have employees, your Minnesota PLLC likely requires a federal Employer Identification Number (EIN). The IRS issues this number and uses it to identify your PLLC on tax returns and other financial documents.
Your EIN allows your PLLC to open a business bank account and hire employees. ZenBusiness offers a convenient EIN service for obtaining this number.
Businesses that have obtained a Minnesota tax identification number are automatically registered to collect sales tax. This is because sales tax registration is part of the tax ID application. New LLCs get a sales tax permit that allows them to collect tax for the state if needed.
The Minnesota tax ID number also acts as an employer ID (for tax purposes) for businesses registered to withhold income tax. If the LLC has employees, it will also need to register for an unemployment insurance employer account number for unemployment taxes. The firm must register with the Minnesota Department of Employment and Economic Development.
The Minnesota Department of Revenue provides information about many local sales taxes. You can also learn more about these requirements by contacting your local government office.
Obtain Minnesota business licenses and permits
Members of your PLLC must have licenses to operate in their professions. Additionally, your PLLC may need state and local licenses depending on the type of services it offers. The LLC may also require local licenses depending on its location. Bigger cities, such as Minneapolis and St. Paul, have their own licensing departments. In smaller cities, the role is most commonly given to the city clerk. If you’re unsure of your licensing requirements, request a copy of your business license report from ZenBusiness to make sure your company has every license and permit it needs to operate legally.
Acquire insurance for your Minnesota PLLC
As with personal insurance, the type of coverage your LLC will need depends on the nature of your work and the level of risk. You should consult an insurance agent who has relevant experience.
As a guide, you should consider property, business interruption, and liability insurance, although they aren’t required. Liability insurance is helpful if clients visit your business premises, and professional malpractice insurance can protect you in case of a lawsuit related to your professional services. If your PLLC has employees, you’ll need to get workers’ compensation and unemployment insurance in Minnesota.
Open a business bank account
One of the last things you’ll need to do before you do business for the first time is to get a business bank account. The account provides a vital separation of your business and personal income. Typically, the bank will ask for your federal Employer Identification Number, Articles of Organization, and Certificate of Good Standing. This certificate proves that your business is authorized to operate in the state.
Ready to launch your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain name, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
Minnesota PLLC FAQs
What are the filing fees for a Minnesota professional limited liability company?
It costs $155 to file the Articles of Organization in person or online and $135 if filing by mail. Accepted forms of payment depend on the delivery. There may be other fees for reserving a name and completing related business registration tasks.
Do I need a lawyer to form a Minnesota PLLC?
It’s not a legal requirement, but it makes practical sense. A lawyer with experience related to a business like yours can help you avoid potential pitfalls.
Does Minnesota have a professional corporation (PC) entity?
Yes, it does. Alternatively, professionals in Minnesota can form a professional limited liability partnership (PLLP).
Can professionals from different fields form a Minnesota PLLC together?
The short answer is yes. However, it’s more common for a PLLC to restrict its services to one or two professions. This is particularly important when marketing the business, as it avoids confusing potential clients.