How to Qualify as a Foreign Business in Minnesota

Learn the rules for qualifying your LLC to do business in Minnesota.

By , Contributing Author

If you own a business that was created in a state other than Minnesota, you will need to qualify or register that business in Minnesota if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Minnesota) limited liability company (LLC) to do business in Minnesota.

What is a Foreign LLC?

For Minnesota purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Minnesota. In other words, foreign doesn't mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in North Dakota is a foreign LLC in South Dakota.

Transacting Business in Minnesota

According to Minnesota's LLC Act, you are required to register your foreign company with the state of Minnesota if you are "transacting business" in Minnesota. What does this mean? Well, like most states, Minnesota's LLC Act does not specifically define what the phrase "transacting business" means in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state's residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

  • a warehouse in the state
  • a store in the state
  • an office in the state, or
  • a sales representative in the state.

Certain exceptions may apply and the rules get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo's articles on Internet Sales Tax: A 50-State Guide to State Laws.

Certain Activities Are Exempt

Like most states, Minnesota's LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:

  • defending or settling a lawsuit
  • dealing with internal business affairs such as holding member or manager meetings
  • having a bank account in the state
  • having an office, agency, or persons in the state for handling your company's own securities
  • selling through independent contractors
  • soliciting or obtaining orders where the orders require acceptance outside the state before they become contracts
  • creating or acquiring indebtedness, mortgages, or security interests in real estate or personal property
  • securing or collecting debts
  • holding, protecting, renting, maintaining, and operating real estate or personal property in Minnesota acquired through securing or collecting a debt
  • selling or transferring title to property in Minnesota to any person, and
  • conducting an isolated transaction that is completed within thirty days and is not one in a course of similar, repeated transactions.

For the actual legal description of each of these items, check Section 322B.945 of the Minnesota Statutes. If your LLC's only activity in Minnesota is one or more of the listed items, you should not need to register with the state.

Certificate of Authority

To register your foreign business in Minnesota, you must obtain a Certificate of Authority to Transact Business in Minnesota by submitting an application to the Minnesota Secretary of State (SOS). You can download a copy of the blank application form from the SOS website.

To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. However, since every state is a little different, there may be items that Minnesota asks for that you did not need to provide when you first organized your LLC. More specifically, for a Minnesota Certificate of Authority, you need to provide:

  • the name of your LLC in the state where it was organized
  • if different, the alternate name under which the company will do business in Minnesota (an alternate name is necessary if another Minnesota business is already using your LLC's name in Minnesota)
  • the name of the state where your LLC is organized
  • the name and street address of your LLC Minnesota registered agent and registered office
  • the street address of your LLC's principal place of business
  • the home street address of your LLC's office in the state where it was organized, and
  • an authorized signature.

The filing fee is $185 if submitted by mail and $205 if submitted online or in person.

What If You Don't Register?

If your LLC transacts business in Minnesota without a Certificate of Authority, it cannot bring a lawsuit in the state. Moreover, if your LLC transacts or conducts business in Minnesota without authority, it will be liable for the fees it otherwise would have owed if registered. In addition, both the LLC itself, and each LLC member and manager who participates in transacting business in the state, is liable for penalties. However, not having a valid Certificate of Authority does not prohibit your LLC from defending lawsuits in Minnesota or invalidate any of your LLC's contracts. Also, members of your LLC are not liable for the LLC's debts and obligations solely because the LLC transacted business in Minnesota without a valid certificate of authority.

Registering a Foreign Corporation in Minnesota

If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Minnesota are similar. You will, however, have to use a different application form, Foreign Corporation or Cooperative/Certificate of Authority to Transact Business in Minnesota. See the Minnesota SOS website for forms, information, and filing instructions for registering a foreign corporation in Minnesota.

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