How to Move an LLC to Minnesota

An out-of-state LLC can change its state of organization to Minnesota through statutory domestication. Minnesota domestication is a legal procedure that changes an LLC’s state of organization, the state whose law primarily governs the company. An out-of-state LLC, also called a foreign LLC, that domesticates to Minnesota becomes a Minnesota LLC governed by the Minnesota Revised Uniform Limited Liability Company Act (Minn. Stat. sections 322C.0101 through 322C.1205).

The LLC is otherwise the same business entity before and after the domestication process. Whether the domestication can proceed also depends on the laws of the state the LLC is leaving. To find out whether your LLC qualifies and what the process involves, request a free analysis of your LLC move.

Some states use the name conversion for the legal procedure that changes an LLC’s state of organization, also called its domicile. In many of those states, a business can complete a conversion to change its domicile or to change its entity type. The same statutory process can accomplish either goal.

Minnesota has two distinct procedures for LLCs. A Minnesota domestication changes a company’s domicile only. A conversion changes a business from one entity form to another. For example, a Minnesota corporation might convert to an LLC. This article deals with domestications that change an out-of-state LLC into a Minnesota LLC.

Why Business Owners Move LLCs to Minnesota

A Minnesota LLC domestication may make sense if a business owner moves to Minnesota or if the owners prefer to have Minnesota law govern the company. An owner might transfer an LLC to Minnesota for any of the following reasons:

• Reduced reporting. A Minnesota LLC domestication may let the company reduce the time and fees it spends on annual reporting. The LLC will not have to file annual reports in the original state if it will no longer do business there. Minnesota charges no annual reporting fee to LLCs, so a domestication could potentially reduce the business’s annual reporting fees to zero.
• Business owner convenience. An LLC owner moving to Minnesota may want to bring along the business. An LLC domestication allows the business to be governed by the law of the owner’s new state, which is often more convenient than balancing two states’ laws.
• Geographic advantages. A move to Minnesota may be a good idea if Minnesota is a hub for businesses in the company’s field. For example, many businesses in the medical technology field are located in Minnesota. Owners who move an LLC’s principal office to Minnesota may prefer to have the LLC’s principal location also be its domicile state.
• Legal benefits. An out-of-state LLC may want to transfer to Minnesota if Minnesota law is better for the company than the original state’s law. Minnesota’s LLC law may allow for more flexible management or be a better fit for how the members want to distribute profits and losses.
• Lower overall tax burden. Minnesota is generally considered a high-tax state. Even so, an LLC that domesticates to Minnesota may still save on taxes if it ends up paying in fewer states. The LLC’s original state will no longer tax the business if a Minnesota domestication ends the connection, or taxable nexus, between the company and the original state.
• Improved professional relationships. Every state has its own business laws and tax rules. A company hiring a lawyer, accountant, or other professional must find someone with experience in the correct state’s system. Owners who live in Minnesota will have a relatively easy time finding local professionals who are familiar with Minnesota law. Thus, a Minnesota LLC domestication may make hiring a lawyer or accountant easier for the company.

Minnesota LLC Domestication Requirements

Minnesota LLC domestication under Minn. Stat. section 322C.1011(1) is not available for every out-of-state LLC. An LLC domesticating to Minnesota must comply with both Minnesota law and the current state’s law. Minnesota law controls the process and documents filed in Minnesota and determines the domestication’s legal effects.

The current state’s law governs whether the LLC can domesticate to Minnesota (the state must authorize domestication), the content of the written plan of domestication if required, the standard under which the LLC’s members or managers must approve the plan of domestication, and the effective date for the domestication.

Eligibility for Minnesota LLC Domestication

An LLC considering domestication to Minnesota must confirm that it is eligible for the process. The principal requirement is that the current state must authorize LLC domestications. Not all states do. The current state may call the process domestication, conversion, or another name. The important part is that the state must have a statutory procedure that lets an LLC organized in that state change its domicile to a new state.

Business owners must also review the LLC’s articles of organization and operating agreement to ensure there are no provisions that prevent domestication to a new state. If any restrictions are present, the LLC may need to formally amend the documents to allow the procedure.

An out-of-state LLC must also confirm that Minnesota lets LLCs engage in the company’s field of business. Minnesota allows most business areas. Some states prohibit LLCs from providing professional services, which are services that require a license or comparable authorization. Minnesota recognizes professional limited liability companies, LLCs that provide professional services.

Professional LLCs are subject to additional legal requirements under the Minnesota Professional Firms Act. An out-of-state LLC must also confirm that its area of business is lawful in Minnesota in general. If Minnesota prohibits the type of business in which the company is engaged, it should not domesticate to Minnesota.

Required Documents for Minnesota LLC Domestication

The Minnesota LLC domestication process involves preparing and adopting several domestication documents that must satisfy both states’ requirements. The domestication documents memorialize the terms of the domestication and control the company when the domestication takes effect.

• Plan of Domestication. A Plan of Domestication designed to comply with the requirements of both Minnesota law and the law of the state that the LLC is moving from.
• Minnesota Articles of Domestication. The Minnesota Articles of Domestication for filing with the Business Services office of the Minnesota Secretary of State, containing all information and related documents required by law.
• Minnesota Articles of Organization. The Minnesota Articles of Organization for filing alongside the Articles of Domestication with the Business Services office of the Secretary of State.
• Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, or a similar term.
• Minnesota Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a Minnesota LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Domestication. A resolution approving the transaction and adopting the Minnesota organizational documents as the LLC’s governing documents.

The Articles of Domestication and Articles of Organization accept electronic signatures under Minnesota law. However, the Minnesota Secretary of State requires the Articles of Domestication and Articles of Organization to be filed by mail or in person, not through electronic filing.

The LLC also completes several administrative tasks to implement the domestication.

• conducting a preliminary name search with the Business Services office of the Secretary of State to determine whether the LLC’s name is available in Minnesota (if the name is unavailable
• a slight name change may be required); obtaining signatures on the Articles of Domestication and Articles of Organization; filing both documents with the Minnesota Secretary of State;
• filing domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from

Cost of Moving an LLC to Minnesota

The cost of moving an LLC to Minnesota depends on the scope of work described in the preceding sections. The documents and filings require professional preparation to comply with both states’ requirements, and coordinating submissions with two separate state agencies adds further complexity. To find out what your specific move will cost, request a free analysis of your LLC move.

In addition to professional service costs, the Minnesota Secretary of State charges a $60.00 filing fee for the Articles of Domestication. The fee increases to $80.00 for expedited processing if the domestication documents are filed in person. The domesticating LLC will also pay a filing fee to the current state for submitting that state’s equivalent of the articles of domestication.

An out-of-state LLC that domesticates to Minnesota will also incur labor costs and, if applicable, registered office fees. Labor costs are the amounts charged by the service provider the LLC retains to manage the Minnesota domestication.

Service providers may charge a flat fee or charge by the hour, with fee amounts varying by provider. Work that goes into a domestication includes obtaining and organizing information, drafting the domestication documents, communicating with the business owners and state agencies (the Minnesota Secretary of State), and filing domestication documents with state agencies.

Minnesota requires all LLCs to have a registered office on file with the secretary of state. The LLC’s registered office must be physically located in Minnesota. The Minnesota Secretary of State and other state agencies send service of process and other important communications to the LLC at its registered office.

An LLC without a Minnesota street address can meet the requirement by hiring a commercial registered agent with an office in the state. Commercial registered agents also provide a consistent, long-term notice address and help keep important official communications uniform. A domesticating LLC that decides to hire a Minnesota commercial registered agent will incur a yearly fee of around $50.00 to $150.00.

Processing Time for Minnesota LLC Domestication Filings

A Minnesota LLC domestication proceeds in several steps. The length of the process depends on how long each step takes.

Each step depends on the responsible person’s turnaround time: the business owners’ time to organize the necessary information, the service provider’s time to review the information and prepare the domestication documents, the owners’ time to approve and sign the draft documents (or request revisions), the service provider’s time to file the final domestication documents with state agencies, and the state agencies’ time to accept and process the filed documents.

The Minnesota Secretary of State’s Office offers expedited processing for domestication documents filed in person. Processing usually takes around 3 to 5 business days. The domestication becomes effective when the Articles of Organization take effect, which occurs upon filing with the Minnesota Secretary of State, unless the filing specifies an effective time and/or a delayed effective date permitted under Minnesota law.

Legal Effect and Benefits of Minnesota LLC Domestication

The Minnesota LLC domestication process officially changes an out-of-state LLC into a Minnesota LLC. After completing the process, the Minnesota LLC is for all purposes the same entity from before the domestication. The domestication process is the best approach for most out-of-state LLCs that want to officially move to Minnesota. Other methods tend to be more expensive and more disruptive to the business. Domestication offers the following practical advantages and legal effects:

• Minimal business disruption. An out-of-state LLC that domesticates to Minnesota can continue operating as normal throughout the process. Day-to-day activities can continue as usual, and employees remain employed with no break in the employment relationship.
• Consistent business identity. An out-of-state LLC that domesticates to Minnesota is still the same company after the domestication. It becomes a Minnesota LLC but remains the same entity with the same history. The Minnesota LLC uses the same Employer Identification Number (EIN) and continues to be the same taxpayer. Changing an existing business’s EIN often causes tax problems and administrative confusion.
• Same bank accounts. There is no need for an LLC that domesticates to Minnesota to change its bank accounts. The Minnesota LLC is the same company that it was before the domestication, so it can continue using the same accounts.
• Consistent business relationships. A Minnesota LLC domestication does not interfere with the company’s existing business relationships or agreements. Contracts are still valid and effective, and the company has the same rights and obligations.
• Governing law. After domestication, the LLC is a Minnesota LLC, and the Minnesota Revised Uniform Limited Liability Company Act primarily governs the company. The new Minnesota articles of organization and operating agreement take effect and bind the company and members.
• Company assets. The Minnesota LLC owns all the same real estate and other assets that the out-of-state LLC owned before domestication. There is no need to sign deeds or transfer assets.
• Company liabilities. The Minnesota LLC has all the same liabilities and owes all the same debts and taxes from prior to the domestication. Domestication does not affect members’ limited liability.
• Legal cases. Legal or administrative proceedings move forward as if the domestication had not occurred. Domestication has no effect on the status of proceedings. If the Minnesota LLC’s legal name changed during the domestication, the new name is updated for the prior name.
• Ownership interests. Domestication does not alter members’ ownership interests in the LLC unless the members expressly agreed otherwise in the plan of domestication.
• No dissolution. Domestication is not a dissolution of the company and does not trigger any requirement to dissolve the company or distribute assets unless the members decide otherwise in the plan of domestication. It exists as the same company, so it avoids the complicated dissolution process. The Minnesota LLC also need not register as a foreign LLC in its original state unless it intends to keep doing business there.

Moving an LLC Out of Minnesota

Minnesota permits outbound LLC domestication under Minn. Stat. section 322C.1011(2). A Minnesota LLC can domesticate to another state’s jurisdiction, provided that the destination state also authorizes the procedure.

Minnesota Outbound Domestication Requirements

A Minnesota LLC that domesticates to another state must file a Statement Surrendering the Company’s Articles of Organization with the Minnesota Secretary of State’s Business Services office. The outbound filing must include a plan of domestication approved by the LLC’s members or managers. The domestication effective date is determined according to the governing statute of the domesticated company, under the destination jurisdiction’s law. The destination state will require its own formation and domestication (or conversion) documents.

Filing Fees for Moving an LLC from Minnesota

The Minnesota Secretary of State charges a $60.00 filing fee for an outbound Articles of Domestication. The destination state will charge separate filing fees for its formation and domestication documents.

Minnesota LLC Laws That Apply After the Move

The Minnesota Revised Uniform Limited Liability Company Act (Minn. Stat. sections 322C.0101 through 322C.1205) imposes ongoing requirements on all domestic LLCs, including those formed through domestication from another state. An LLC that domesticates to Minnesota becomes subject to these obligations immediately upon effectiveness of the domestication.

Minnesota Annual Renewal and Compliance Requirements

Minnesota requires domestic LLCs to file an Annual Renewal with the Minnesota Secretary of State. The filing is required by December 31 starting with the calendar year after the year in which the LLC files its articles of organization. Minnesota charges no annual renewal fee to LLCs.

This reduced reporting requirement is one advantage of domesticating to Minnesota, as it eliminates the burden of annual compliance filings common in other states. An LLC that domesticates to Minnesota and no longer has to file in the original state will avoid the time and expense of annual filings.

Minnesota LLC Operating Agreement Requirements

Minnesota refers to an LLC’s internal governance document as an “Operating Agreement” under Minn. Stat. section 322C.0102(17). The Operating Agreement governs the LLC’s internal affairs, including the rights and obligations of members and managers, profit distributions, and management structure. The Operating Agreement is not filed with the state; it is maintained by the LLC as a private document.

Minnesota LLC Member and Manager Protections

Minnesota law provides fiduciary duty protections to LLC members and managers. The statute imposes a duty of care and a duty of loyalty, though these can be modified or eliminated in an LLC’s operating agreement under Minn. Stat. sections 322C.0409. Minnesota law permits members and managers to dissociate from an LLC and imposes liability on members who wrongfully dissociate. The statute also limits charging orders against members’ interests to the member’s transferable interest, not voting rights or management authority.

Alternatives to Minnesota LLC Domestication

Minnesota domestication is available for out-of-state LLCs whose current state authorizes the procedure. When domestication is available, it is the preferred method for changing an LLC’s state of organization. If domestication is not available because the other state’s law does not authorize it, a merger-based reorganization achieves the same result.

The reorganization involves forming a new Minnesota LLC and merging the out-of-state LLC into it, with the Minnesota LLC as the surviving entity. The surviving LLC succeeds to all property, contracts, and obligations of the original LLC by operation of law. For a detailed explanation of how the reorganization process works, see our guide to LLC reorganization.

For a state-by-state comparison of LLC domestication and conversion laws across all states, see our guide to alternatives to LLC domestication.

For a complete directory of states and the reorganization procedures available in each, see our state-by-state LLC reorganization directory.

For a complete directory of states and the reorganization procedures available in each, see our state-by-state LLC reorganization directory.