In Minnesota, you can file an application for your entity yourself through an online process. You can form the entity without an attorney by filling out the online forms, and filing Articles of Organization or Articles of Incorporation. However, we recommend that especially if your entity has more than one owner, you utilize the services of an attorney to help ensure that ownership interests are assigned as desired, and to help you implement an operating agreement that outlines the rights and responsibilities of each owner as to one another and to the company (see below for more on that).
Generally, entities are formed to protect owners from personal liability. When an entity is structured properly, the individual owners are not bound to the obligations of the entity – such as contract performance and monetary obligations, and creditors cannot pursue personal assets of owners to pay business debts. For some, forming an entity may help a new business establish credibility with potential customers, employees, vendors, investors, and partners.
This is one of the most often asked questions that we receive. There are various advantages and disadvantages associated with each type of entity, which are heavily dependent on the goals of your business. Issues that may be implicated related to taxation, credibility, potential needs for fundraising, ease of ongoing compliance, identity and status of owners, and flexibility. Our business attorneys will help you determine the appropriate structure for you during your initial consultation.
The operating agreement is an important document that outlines the rights and duties of the owners of the entity and provides guidelines for its operation. It deals with capital contributions (money in), distributions (money out), tax allocations, management, and voting rights. It also deals with important business planning matters like how transfers of ownership can occur, dissolution and winding up of the entity, and how unfortunate events with respect to owners are handled, such as death, disability, bankruptcy, or ‘bad acts.’
Your entity must include a designation like “LLC” or “Inc.” to distinguish it as an entity. Other than that, if a name is not in use by someone else, you can create your name for your entity. In Minnesota, business names must be different by at least one letter or numeral from names already on file. Many times the entity name you choose will be different from the name you are “doing business as” to the public. (Visit our EntreTrademark page for more information on protecting your brand name or logo.)
The initial filing fee with the Minnesota Secretary of State is $155. If you utilize our services to create your documentation and operating agreement through our Entre2Go Formation Package, the flat fee cost in addition to the filing fee.
Minnesota requires each entity to have a Registered Agent and a Registered Address. The agent and address must be located in Minnesota, and should be a place you know you will receive your mail and service of process as important notices may be sent to that address. We will discuss this with you during your initial consultation.
When the owners of a to-be-formed entity hire us to form the company, the firm represents both the company and the individual owners unless a conflict of interest exists. Representation of multiple interests can have implications, in that we seek to balance interests between the parties rather than vigorously assert a single individual’s interest on any issue. On formation of the company, we represent the entity rather than any owner individually. We strongly urge that individual owners seek independent counsel in the event they have any questions concerning their individual interests.
We provide a variety of legal services to entrepreneurs outside of entity formation. Check out our list of practice areas for more information on how we can help you.
Online legal services offer standardized packages with basic form documents. We have found that we often have to rewrite these documents for our clients with more complex needs, or to conform the terms to their actual business. This is especially the case for entities with more than one owner, that need to ensure that an accurate agreement as between partners is put into place. With our Formation Package, experienced business attorneys review your needs and ensure that you have the legal foundation you need to operate, raise capital, and sell your business in the future.