How to Start an LLC in North Dakota
Despite being one of the larger states in the US, North Dakota is the third least populous state. Though there are not a lot of people in The Peace Garden State, the economy remains vibrant, especially when it comes to small businesses. Almost 99% of businesses in the state are considered small businesses, accounting for just over half of North Dakota’s employees. Many of these businesses are in the form of a limited liability company, or LLC – this popular business structure offers personal asset protection for owners without high tax burdens. If you are looking to start an LLC in North Dakota, this step-by-step guide will help you launch a new business in this northern state.
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The North Dakota Secretary of State is tasked with regulating and managing all business entities in the state, including LLCs. This department requires some basic information to be provided to them in order to approve a business to operate in the state. When forming an LLC, the following steps should be taken:
Name your LLC
Have a name in mind? See if it’s already listed in the state’s business directory. If the name comes up in a search, it’s taken. If it doesn’t, it’s yours to claim.
Some people have a name for their business before they have any other plans, while others will find this creative task a difficult one. No matter where you fall in this spectrum, having a name early on in the process is critical. Not only does this let you determine if the name you’ve chosen complies with North Dakota naming guidelines, but you can also take the appropriate steps to secure the name.
Naming a North Dakota LLC
North Dakota, like other states, requires that each business entity’s name is distinguishable from all others in the state. You can use the state’s LLC name search tool to research name availability.
If your name is available but you aren’t ready to file your LLC paperwork, you can also reserve the name for 12 months with a $10 filing fee.
LLCs must have names that follow other rules as well, like containing the words “Limited Liability Company” or an abbreviation of “LLC” or “L.L.C.” Additionally, certain words are restricted for use only by licensed professionals and entities- only a licensed bank can use the word “bank,” for example. Businesses can also not have a name that sounds like a government agency, so things like “Department” and “Bureau” are not usable.
General naming considerations
A name being unique in North Dakota does not mean that the business name has never been used. Each state regulates this separately, so the name may be present in other states throughout the country. This could lead to confusion among customers when using social media or a search engine to find your business. To prevent this, it is a good idea to do some cursory internet searches prior to confirming your name.
Securing your domain name and social media handles is important if possible. This will help customers navigate to your business page and ultimately do business with you, rather than a competitor or someone else with a similar name.
You can file a name reservation form in North Dakota to hold a name for one year.
Select a registered agent
LLC owners must nominate a registered agent as a part of the process of becoming an LLC in North Dakota. A registered agent is essentially the main point of contact that can be used in legal matters, like service of process or tax paperwork, to ensure that your LLC is properly notified.
Any resident of North Dakota who is over 18 years old can be named as your registered agent. The person must have a physical address in the state, not a P.O. box. This means that a member or employee of the startup can be listed, or a trusted friend or loved one. The only additional requirement is that the registered agent is available at the listed address during all normal business hours to receive correspondence.
Because of the commitment involved in availability, some LLCs choose not to nominate an individual as their registered agent. Instead, you can use a company that operates at a registered agent service, as long as they are authorized to transact business in North Dakota. These services require an annual fee to be paid in exchange for providing full availability as your registered agent.
File Articles of Organization
To formally register your LLC in North Dakota, the main step will be to submit the Articles of Organization to the Secretary of State. This form is essentially your application to form your LLC, along with the filing fee, which allows the department to approve and recognize your business. The form can be completed online.
In order to complete the Articles of Organization, you will need to include the following information:
- The chosen name of your LLC
- Address of the LLC’s principal office
- Name and address of the LLC’s registered agent
- Date when the LLC is effective – either the date of filing or a later, specified date
- Term of existence – either perpetual or a set number of years
- Purpose of the business
- Management structure (manager-managed, member-managed, single-member LLCs)
- Name and mailing address of each organizer
- Signatures of each organizer
You may also choose to include whether the LLC will be managed by the members or appointed managers. Once the document is complete, you can submit it to the Secretary of State and await approval.
You can fill out and submit your LLC formation documents here.
There is a $135 fee due at the time of filing an Articles of Organization. This can be paid online and is not refundable for any reason.
North Dakota processing time
It can take up to 4 weeks for a business filing to be approved and completed in North Dakota.
Create an LLC operating agreement
LLCs in North Dakota are not required to complete or file an operating agreement, so this step is optional. However, it is highly recommended that any business create a strong operating agreement early in its existence. This operating agreement will be a legal document that outlines how the company should be operated on a daily basis and what happens in the case of certain events.
If there is any conflict in the future, the operating agreement will serve as a reference to make decisions. Without this kind of document in place, the state will use its default LLC laws to settle a conflict, which could lead to a negative outcome for the LLC.
There is no single version of an operating agreement that works for everyone. Very large or complex companies may need to retain a lawyer that can help to draft the agreement and be sure it is legally sound. But most LLCs can work off of a free online template and need to focus on these topics:
- Basic information about the LLC at the time of formation, like a copy of the Articles of Organization
- Member’s ownership percentages, as well as their initial capital contribution
- How business decisions are made, how voting will happen, and how votes are distributed
- Business structure, including whether members or managers will be responsible for daily management
- How profits and losses will be distributed between members
- Buyout rules and procedures, as well as how new members can be added
- What will happen if an LLC is dissolved by the members
All LLC members should sign the final agreement. It can then be kept on record in case it needs to be referenced in the future.
After the appropriate steps are followed, you will be the owner of an LLC in North Dakota. This comes with additional responsibilities, and you will need to be sure that you follow all the following guidelines. If you are not running your business according to these rules, you can find yourself with a dissolved LLC. Ensuring that you remain in good standing allows your business to operate continually.
Get your EIN
As you begin to fill out paperwork for your LLC, especially during the process of opening a business bank account, you may see a field asking for your EIN. This references the Internal Revenue Service-issued Employer Identification Number, which is used as a tax identifier for businesses in the same way a Social Security Number does for individuals. You can obtain this nine-digit EIN by going to the IRS website and inputting information on your LLC. The EIN is issued immediately.
An EIN is required for any business with employees, including LLCs with more than one member. Even single-member LLCs with no employees may need to have an EIN in order to pay excise taxes and others.
Even if your business is not required to have an EIN, it is advisable to obtain this free number from the IRS. Banks often require this in order to open an account, and vendors or customers may also need your tax ID. Being able to provide an EIN instead of your personal Social Security Number can provide additional privacy and security at no cost to you.
You can get your EIN by visiting the IRS website.
Get North Dakota business licenses
At the state level, North Dakota does not have a general business license requirement. However, almost every business will need to obtain a sales tax permit, which is often called a seller’s permit. This is required for anyone engaged in business in North Dakota that intends to sell or lease tangible personal property that would be subject to sales tax. This can be obtained through the Department of Tax and Fee Administration.
You may need to obtain other licenses or permits from your local North Dakota government in order to operate. Some towns or counties will require general business licenses, while others only require them in certain scenarios. For example, the city of Bismarck requires that food service businesses and pawnbrokers have specific licenses issued by the city.
At both the state and local levels, professional services may need additional licensing.
Review LLC tax rules in North Dakota
North Dakota does not require any additional taxes to be imposed on LLCs doing business in the state. This means that LLCs that opt to act as pass-through entities will not need to pay any LLC taxes beyond income taxes paid via the owner’s personal tax return. The owner will be responsible for paying federal taxes and state taxes.
If entrepreneurs choose to have this type of business treated as a corporation, it would be subject to North Dakota corporate tax rates. This is generally calculated at a small series of marginal rates and will vary for each business.
File an annual report
There is a requirement that every LLC files an annual report with the state of North Dakota. This is due on November 15th of each year for every LLC and there is a filing fee of $50 associated with the report. You can pay electronically with a credit card.
Some states refer to this report as a Statement of Information.
Get insurance for your LLC
LLCs will typically not be required to have any sort of liability insurance, but it is a good idea to have at least basic coverage in place. The most popular version, general liability insurance, is used as protection if your business is sued for things like bodily injury or property damage. Some professional services may also have professional liability insurance for accusations of malpractice or other business errors.
The one insurance that is required for many businesses is workers’ compensation insurance. This provides coverage for employees who are injured, made ill, or killed in their line of work. Any LLC with one or more employees, including members, must have workers’ compensation insurance in North Dakota.
Additional resources to help you set up a business in North Dakota
In order to support small business owners in the state, North Dakota has a series of resources available for those looking to start an LLC. These can be found on the Secretary of State website.
- A new business registration portal for all new business owners.
- Guides on how to start a new business, including creating a business plan and protecting intellectual property.
- A full listing of agency contact information for the state of North Dakota.
Is there a seller’s permit in North Dakota?
Most North Dakota businesses will need to apply for a sales tax permit, which is sometimes called a seller’s permit in other states. These serve the same purpose, which is to allow the business to charge and collect sales tax. It also registers them for periodic payment of these taxes back to the state.
How long does it take to get a North Dakota sales tax permit?
Businesses in North Dakota are required to apply for a sale tax permit at least 30 days before beginning business operations. The permit is issued online, with no filing fee, immediately upon application and does not need to be renewed. You can apply online using the Taxpayer Access Point (TAP) website.
Does North Dakota have a Certificate of Good Standing for LLCs?
An LLC in North Dakota can obtain a Certificate of Good Standing by contacting the Secretary of State. If all obligations have been met and the business is in good standing, the certificate can be issued by mail and used to prove compliance with all state laws and obligations. The Certificate is not yet available online.
Certificates aren’t available for sole proprietorships.
Who can be a registered agent in North Dakota?
If you are appointing an individual as your registered agent, they must be over 18 years old and reside in the state. They are also expected to have onsite availability during all normal business hours at their listed address. A registered agent service must be registered as a corporation or LLC and have an office in North Dakota.
Is an LLC the same as a Farm LLC in North Dakota?
Along with an LLC, North Dakota allows for a farm limited liability company to be formed. These cannot exceed fifteen members and they must be either related individuals, a trust for the benefit of related individuals, or an estate of an individual. The FLLC must also be engaged in farming and meet income limits for other activities.
Can I use a trade name for my North Dakota LLC?
North Dakota allows businesses to operate under a trade name, or a name other than their legally registered one. They must file a Trade Name Registration with the Secretary of State, which will give them exclusive rights to the trade name and establish the public record. While LLCs can choose to use a trade name, most do not.
Is there an EIN for North Dakota?
EINs are issued by the IRS at the federal level to track and manage tax payments. The EIN can often be used on state-level paperwork, though some states issue their own tax identification number. North Dakota has a Withholding Account Number that is issued to employers and used for many state tax purposes.
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