FORMING A MINNESOTA LIMITED LIABILITY COMPANY
A Limited Liability Company is a form of business organization with limited liability characteristics of a corporation and the ability to be treated for tax purposes as a sole proprietorship (or disregarded entity), partnership or corporation. (It will be treated for tax purposes as a sole proprietorship (or disregarded entity), if there is a single member, or as a partnership, if there are multiple members, unless it affirmatively elects to be taxed as a corporation.) The formation and operation of a Minnesota Limited Liability Company is governed by Minn. Stat. Chapter 322C. In the case of a Limited Liability Company that is taxed as a partnership or disregarded entity, business income and losses of the Limited Liability Company are passed through to the owners of the business and are taxed to the owner’s individual tax rate. As with a corporation, liability for business debts and obligations generally rests with the entity rather than with individual owners. A Limited Liability Company that is taxed as a pass-through entity is not subject to many of the restrictions that apply to S corporations, such as a maximum of 100 shareholders, a single class of stock, and limited types of non-individual shareholders. All members of a Limited Liability Company may participate in the active management of the company without risking loss of limited personal liability. For a Limited Liability Company that elects to be taxed as a corporation, it will be taxed as a C corporation unless it qualifies and elects to be taxed as an S corporation. As of 2009, when a single-member Limited Liability Company that is taxed as a disregarded entity fails to pay federal unemployment taxes, the Limited Liability Company, not the owner is now liable. ARTICLES OF ORGANIZATION A Limited Liability Company is formed by filing Minnesota Limited Liability Company Articles of Organization with the Secretary of State and paying the filing fee. Minimum requirements for the articles of organization are provided on an articles of organization form. Forms are available at Minnesota Limited Liability Company Forms. Also available by mail from that office. The articles of organization may add to or modify many of the basic statutory provisions set forth in the Minnesota Revised Uniform Limited Liability Company Act. Many of these also may be, and typically are, modified in an operating agreement. An attorney can assist in drafting articles of organization to assure that the needs and desires of the members, as well as legal requirements, are met. An organizer of a Limited Liability Company must be at least 18 years of age. Limited Liability Company Name Requirements for the Limited Liability Company name are discussed in the section on Naming the Business Entity, earlier in this Guide. Registered Office A Limited Liability Company must have a registered office located in the state of Minnesota. The registered office may be the place where the business is located or it may be in a different location. The registered office address must be a street address – the address of a physical location where
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