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Hear this out loud PauseThere are important differences between LLCs and sole proprietorships. The most significant difference is whether you have limited liability for the business' debts and obligations, as with an LLC, or whether the business' liabilities and obligations fall to you personally in the event of a lawsuit or debt collection.

Hear this out loud PauseLimited Liability Company Advantages: LLCs provide the protections of a corporation but are taxed similar to a sole proprietorship. Disadvantages: Typically more expensive to form than a sole proprietorship, LLCs require more paperwork and formalized behavior.

Hear this out loud PauseHow much does it cost to form an LLC in Minnesota? The Minnesota Secretary of State charges $135 to file the Articles of Organization by mail and $155 to file online or in-person. You can file an LLC name reservation for $50 if filed by mail and $55 if filed online or in-person.

With both an LLC and a sole proprietorship, the profit of the business passes through to the owner's personal tax return. But LLCs have more flexibility in how they are taxed, which may result in tax savings. Sole proprietors typically report their business income and expenses on Schedule C.

The biggest disadvantage of a sole proprietorship is that this business structure comes with no protection for the business's owner against business-incurred liabilities, such as overwhelming business debt or being sued.

Hear this out loud PauseMinnesota is a state that provides every start-up and small and medium sized enterprise with several advantages including a bright and sunny business climate. Forbes ranked Minnesota as the 15th best state to establish and operate a business.

An LLC is very flexible and can also be taxed as a sole proprietorship, a partnership, or a corporation. A sole proprietor also benefits from pass-through taxation, so you'll report your business's income or loss in the same way. The difference is that you don't have the option to file as a corporation.

To start a corporation in Minnesota, you'll need to do three things: appoint a registered agent, choose a name for your business, and file Articles of Incorporation with the Secretary of State's Business Services office. You can file this document online, by mail or in person.

It costs $155 to form an LLC in Minnesota. This is a fee paid for the Articles of Organization. You'll file this form with the Minnesota Secretary of State. And once approved, your LLC will go into existence.