Do's and Don'ts for LLC Owners in Minnesota
Don't Mix Business and Personal FundsDon't use business money to pay personal expenses or move money back and forth between your business and personal accounts. The court will presume that if the company can pay your personal expenses, then you can personally pay the company's debts.
Make sure you open a separate business checking account for the company. All business expenses and income must flow through this account. Only business expenses should be paid from this account and only business income should be deposited.
When you want "personal" money out of your business, you need to pay yourself a salary, dividend, or a profit distribution--all of which should be properly documented.
Do Stay Within Your PurposeMost LLC's have a purpose defined in their Articles of Organization. This may be as broad as "general business purposes" or as narrow as "family cabin ownership." It is important to know your company's purpose and operate within it. If the business conducts actions that do not fall within the Company's stated purpose, the liability limitations for Members can be reduced or lost.
Do Observe Record Keeping FormalitiesLLC's are required to maintain records and make annual filings as a normal part of business. Keep your LLC in good standing by filing an annual renewal with the Secretary of State's office. This is a one-page form that the Secretary of State sends to the company's registered address every year. It's quick (less than 5 minutes), simple to complete, and it's free.
Also be sure to follow any requirements for records, meetings, or other formalities required by the company's Bylaws and/or Member Control Agreement. Keep employment records for at least 3 years and tax records (including receipts, financial records, and other important documents) for at least 7 years.
Do Make Sure Your Company is Adequately CapitalizedDon't let your company be just an empty shell. If your company has no value to offer to creditors, a judge would be more likely to allow access to your personal assets. Having a liability insurance policy for the company is the easiest way to capitalize, but assets and funds held in the name of the Business also qualify.