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.
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.
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:
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.
Like most states, Minnesota’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
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.
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 filing fee is $185 if submitted by mail and $205 if submitted online or in person.
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.
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.