Minnesota LLC Operating Agreement
The Minnesota LLC Operating Agreement is the core document that is referred to when issues concerning a Minnesota limited liability company (“LLC”) need to be resolved.
The LLC Operating Agreement is the most important document for your Minnesota LLC.
In the case of a single member LLC, without the formality of an LLC Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with respect to the affairs and management of the LLC and governs the relationship amongst the members of the LLC. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon greatly reducing the likelihood of disagreement between them in the future. A LLC Operating Agreement will also greatly reduce financial and management misunderstandings, and make sure your business is governed by your own rules -- not default rules created by the state of Minnesota.
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The LLC operating agreement does not have to be filed with any state agency. All states, including the state of Minnesota will enforce valid operating agreements entered into among LLC members. The operating agreement will only be enforced against the persons who are parties to the agreement. Therefore, it is extremely important that all members of an LLC sign the operating agreement.
Your Minnesota Limited Liability Company
LLC Filing Office
Secretary of State
Business Services Division
180 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd
St. Paul, MN 55155-1299
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Entity or Franchise Level Tax
Minnesota generally does not impose its income tax on partnerships, LLCs taxable as partnerships, or disregarded single-member LLCs. In addition, Minnesota imposes a minimum fee on each treated as a partnership that is required to file a return with the state (other than a partnership that derives over 80 percent of its income from farming). The fee imposed on a partnership is a maximum of $5,000, and is based on the sum of the partnership’s Minnesota property, payroll, and sales or receipts.
State LLC Act
The Minnesota LLC Act is contained in Chapter 322B of the Minnesota Statutes
Important Statutory Rules
The Minnesota LLC Act presupposes management by a board of governors. The law specifies that LLCs must have one or more governors, elected by the members, who serve for an indefinite term of office. The Statute, however, recognizes that LLCs may want to be managed by the members. The Statute states that the LLC members may act in the place of governors as long as they make management decisions by unanimous vote. The Statute also requires the appointment or election of two persons who function as the LLC president and treasurer, but who are called managers. Typically, LLCs decide which of the members (or managers, in a manager-managed LLC) will be chief manager and function as the LLC president, as well as which member or manager will serve as treasurer.
Admission of Members
No statutory requirements exist for admitting members.
Amending the Operating Agreement
Amendments to the Operating Agreement must be approved by a majority vote of LLC members. Note: amendments to the Operating agreement are typically reserved for governors.
The chief manager of the LLC is responsible for:
· General active management of the business of the LLC
· Sign and deliver documents related to the LLC business
· Maintain records and certify all proceedings
· Preside at meetings of the board of governors
In the case of a Minnesota LLC, is it common to have all members make management decisions in place of the board of governors. Typically, most Minnesota LLCs will allow management by unanimous vote of the members.
GET A CUSTOMIZED MINNESOTA LLC OPERATING AGREEMENT IN MINUTES