How to Start an LLC in North Dakota

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:  

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. 

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. 

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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: 

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. 

Filing fee 

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. 

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: 

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.  

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. 

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. 

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. 

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.

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.