All companies that want to do business in Minnesota have to register with the state. The process includes the submission of formal paperwork and payment of corresponding fees. You also have to comply with other state requirements. Those requirements will also depend on various factors. Companies formed outside of Minnesota can expand their operations in the state if they go through the foreign LLC qualification process.
What It Is
In this situation, “foreign” does not refer to a company from a different country. It means that the business was formed under the laws of a state other than Minnesota. For example, you started a limited liability company (LLC) in New York. Your company will then be a foreign LLC in Minnesota.
Under the LLC Act of Minnesota, all companies that transact business in the state have to register. So what does this mean? Like most states, Minnesota does not have a specific definition of the phrase “transacting business” in terms of foreign qualification.
But state laws governing the taxation of foreign businesses can give you an idea as to what transacting business means. Generally, they show that all companies that have a physical presence in Minnesota have to collect and report state sales taxes on the things that they sell to Minnesota residents.
Physical presence or nexus means having any of the following in the state:
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- Warehouse
- Store
- Office
- Sales Representative
However, you have to be aware of certain exempted activities. These do not constitute doing business in Minnesota:
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- Defending Or Settling Lawsuits
- Dealing With Internal Business Affairs Like Conducting Member Or Manager Meetings
- Maintaining A Bank Account
- Having An Agency, Office, Or Individuals That Handle The Company’s Own Securities
- Selling Products Through Independent Contractors
- Soliciting Orders That Require Acceptance Outside Of Minnesota Before They Become Contracts
- Obtaining Indebtedness, Mortgages, Or Security Interests In Real Estate Or Personal Property
Collecting Or Securing Debts - Holding, Renting, Protecting, Maintaining, Or Operating Real Estate Or Personal Property In The State Acquired Through The Collection Or Securing Of Debts
- Transferring Or Selling The Title Of A Minnesota Property
- Conducting An Isolated Transaction Completed Within 30 Days And Is Not A Repeated Transaction
How To Form A Foreign LLC In Minnesota
The foreign qualification process in Minnesota includes multiple steps. Make sure you complete all of them to prevent any issues.
Step 1: Decide on the name you will use. Since you are only expanding your business in Minnesota, your company already has a name. However, you have to check if it is still available for use in the state. You can do this by conducting a business entity name availability search. If another entity has already taken the name, you will have to come up with an alternative name to conduct business under in Minnesota.
Step 2: Appoint a Minnesota registered agent. The state requires all companies to appoint a registered agent. You can choose an individual Minnesota resident or a third-party organization like DoMyLLC. Make sure that your registered agent agrees to accept all legal correspondence on behalf of your LLC. They should also be available during normal business hours.
Step 3: File the necessary paperwork. Foreign qualification in Minnesota requires the submission of a completed Certificate of Authority to Transact Business to the Secretary of State. You can file in person, online, or by mail. The filing fee is $185 for mailed submissions. Otherwise, you have to pay $205. You can download a copy of the form from the website of the Secretary of State.
You need to provide the following pieces of information to complete the form:
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- Original LLC Name
- Alternate Name, If Necessary
- State Where You Organized Your LLC
- Name And Street Address Of Your Minnesota Registered Agent
- Principal Office Street Address
- Office Street Address In The Home State Of The LLC
- Authorized Signature
Step 4: Wait for the approval of the Secretary of State. Normal processing of mailed submissions takes around 2 to 4 business days. If you file online, the state will take approximately 2 business days to finish processing your documents. In-person filing is automatically expedited, so they will process your paperwork while you wait. You will receive a verification certificate to prove the approval of your registration.
After foreign qualification, your LLC will have ongoing compliance requirements with the state. LLCs will have to submit a Minnesota Annual Renewal, which is also known as the annual report. You have to file it on or before December 31 of every year.
Depending on your activities, you may also need to file certain taxes. The sales tax rate in the state is 6.875%. However, cities and municipalities may impose local sales taxes. You should also check with the Department of Revenue if you have other tax obligations.
Consequences Of Not Registering Your Foreign LLC
Transacting business in Minnesota without proper registration with the state has consequences. First, you cannot bring any lawsuits in the state. Second, your LLC will be liable for all the fees that it would have owed the state if it were registered. Third, the LLC as well as members and managers who participate in transacting business without authority will be liable for penalties.
Getting Help From Professionals
When you decide to transact business in other states, you are opening new opportunities for your company. It will help you achieve business growth. However, you will have to make sure that you remain compliant with all the states where you operate.
If you decide to expand your operations to Minnesota, you have to go through the foreign qualification process. It includes the submission of formal paperwork and completion of multiple steps. You will also have to pay certain fees.
If you think you need help in handling the whole ordeal or you simply do not have the time to take care of the multi-step process, then consider getting help from a reliable third-party organization like DoMyLLC. Our team of experts has experience in handling business filing and compliance requirements in all 50 states.
Business Filing Section