How to Start an LLC in North Dakota

One of the first steps to starting a new business is deciding on your company's business structure. To do this, you’ll need to learn how one structure measures up against the other based on your state's regulations.

Entrepreneurs hoping to start a standard or professional limited liability company in North Dakota have a few advantages over those in other states. In addition to the liability protection that both corporations and LLCs receive, LLCs also benefit from ND's low personal income tax as a "pass-through entity." Formation and annual report fees for LLCs are also relatively low in North Dakota when compared to other states.

How to form a North Dakota LLC in 6 steps

To officially start your LLC in North Dakota, you have to register your business with the North Dakota Secretary of State (SOS). But first, you'll need a distinct name, registered agent, and a few other documents.

While you can start a North Dakota LLC on your own, a business attorney can help facilitate a smooth formation process. Here’s a rundown of what to expect.

Step 1: Choose your business name

Before you can register your new LLC, North Dakota law requires you to choose a business name that no other registered entity in the state has. Simply conduct a business search through North Dakota SOS FirstStop Business Portal. You will also want to consider the availability of your desired web domain and social media handles.

The North Dakota Secretary of State also has a few other requirements to keep in mind when choosing your LLC's name:

• A limited liability company (LLC) in North Dakota must contain the words “limited liability company” or the abbreviation “L.L.C.” or “LLC.”
• All business entity names must be expressed in the English language.
• No business name can imply illegal activities or a purpose other than what’s written in its articles of incorporation.

If you've found the perfect name but aren't ready to register, no problem. You can reserve it for up to a year by filing the Reserve Name Application for a $10 fee. File through the Secretary of State’s FirstStop business portal or mail a paper form to the Secretary of State at the following address:

State of North Dakota
600 E. Boulevard Ave.
Dept. 108
Bismarck, ND 58505-0500

Step 2: Appoint a registered agent

While not every state requires your LLC to appoint a registered agent, North Dakota does. A registered agent is an individual or entity who receives legal documents and lawsuits on behalf of your LLC. To remain in good standing, every North Dakota business must have a registered agent.

Your agent must have an address in North Dakota and be on site and available to accept documents during regular business hours. Technically, you can appoint yourself to fill the role for no cost, but most businesses find it easier and more efficient to work with a registered agent service, as the documents they handle are time-sensitive. Registered agent service fees range anywhere from $100 to $500 per year. LegalZoom offers these services for $249 per year.

Step 3: File articles of organization

Now it's time to officially register your business in North Dakota. Whether a standard, foreign, or professional LLC, you need to file articles of organization. You can choose to file either through the same North Dakota Secretary of State forms portal or by mailing your application to the Secretary of State.

The North Dakota articles of organization asks you to provide basic information about your LLC, such as the following:

• The name of your LLC
• Principal office address (and mailing address, if different)
• The name and address of your registered agent
• A general statement on your purpose for forming the LLC
• Your LLCs formation date
• The duration or time period over which the LLC will exist (If your LLC exists for a limited purpose, you may specify the intended end date. Otherwise, the duration is perpetual.)
• The name and address of each organizer

Filing costs $135 and takes up to two weeks to process.

Step 4: Create an operating agreement

While North Dakota doesn't require an operating agreement, having one is very helpful to legally settle any structural or financial disagreements that could arise within your LLC. It's essentially a legal contract that outlines ownership structure, roles, and operational procedures for your business. Without one in place, courts will settle legal disputes based on state law, which may not be in the best interest of your LLC or its members.

The cost of drafting an LLC operating agreement varies. You can write it yourself for free, but as courts use this document as a basis to make litigation decisions, companies often choose to draft one with the help of a business attorney. LegalZoom’s operating agreement drafting service is $99.

Step 5: Obtain an EIN and open a business bank account

The next step is to apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). The nine-digit EIN is a federal tax identification number that allows you to file federal and state taxes, hire employees, and open a business bank account. You can apply for and EIN online through the IRS website.

LegalZoom also offers an EIN application service for $79 that saves you time and effort by letting us fill out the application and file with the IRS for you. We’ll ensure it’s filled out correctly and send you your EIN and official documentation once it’s approved. 

As an LLC, you also want to open a business bank account to separate your business spending from your personal spending. Otherwise, a court could rule that your business isn't actually separate from you, which could jeopardize your limited liability status and liability protection. Business bank accounts also provide asset protection, reduce the risk of audits, and simplify bookkeeping.

Step 6: Register for state taxes and business accounts

Registering for state taxes is an essential next step if you plan to collect sales tax on retail goods or hire employees. You can register through the North Dakota Taxpayer Access Point. When paying taxes, a single-member LLC files similarly to a sole proprietor and a multi-member LLC files as a partnership by default. Both are considered "pass-through" entities.

This means that rather than paying corporate taxes, you report your gains and losses on your personal tax returns. However, you can file with the IRS to pay taxes as a corporation instead. In North Dakota, tax rates range from 1.95% to 2.5% for individuals and 1.41% to 4.31% for corporations.

Whether or not you need a license or permit to operate your LLC depends on the type of business you'll run. Check the North Dakota licensing information page to see what license or permit applies to you. For example, by North Dakota laws, any local business that sells taxable goods needs to apply for a free seller's permit for the purpose of collecting sales tax. North Dakota sales tax is generally 5% for retail sales.

The Iowa Department of Revenue is also where you can apply for business licenses and permits. Depending on the type of business, you may need to apply for the following permits. All of these permits are free and you can apply for them online through GovConnectIowa.

• Sales and Use Tax
  • Automobile Rental 
  • Hotel and Motel 
  • Construction Equipment
  • 911 Surcharge 
• Household Hazardous Materials
• Withholding Tax
• Water Service Excise Tax
• Fuel Tax 

You can actually start collecting taxes as soon as you've registered. However, it's smart to keep copies of your registration request as proof that you applied until you receive your account number. Sales tax typically ranges from 6% to 7% depending on the jurisdiction. 

What to do after forming your North Dakota LLC

We've covered the legal basics, but there are a few other steps you should consider to ensure your new business is seen and thrives in the modern market.

Register a domain name

A website is an essential part of modern business. Ideally, you want your domain name to match your business name, which means you might want to ensure that the domain name is available before you register your business. You can check this by conducting a name search through a domain registrar’s website.

You'll typically renew your domain annually, although some companies offer longer contracts. The cost of a domain ranges from $10 to $45 per year without considering email infrastructure or website management, which may add additional monthly cost.

Obtain a certificate of good standing

Once you've officially registered your limited liability company, you may want to order a certificate of good standing, also called a “certificate of fact” in North Dakota.

You're not required to have this document, but it proves to potential partners, investors, lenders, employers, and customers that your business legally exists and has authorization to operate in North Dakota. You can order this certificate online through the SOS website for a $20 filing fee.

Consider a foreign LLC

Registering a domestic LLC in North Dakota only authorizes you to legally operate within the state. If your business is booming and you believe it could benefit from expanding into another state, consider registering a foreign LLC.

In American corporate law, a foreign LLC refers to an entity that conducts business in a state other than the one where it was originally registered. The cost of registering a foreign LLC will vary state to state, but may be worth the effort to widen your customer base.

Annual filing requirements for North Dakota LLCs

North Dakota requires all registered businesses to file an annual report. This report allows your LLC to remain active and keeps state records up-to-date. Essentially, it requires you to review and confirm your business name, address, registered agent, and member information.

You will file your annual report through the North Dakota Secretary of State for a $50 filing fee. Be sure to file by Nov. 15 of each year as failing to file on time can result in penalties and administrative dissolution.

LegalZoom can also file your annual report for you so that you can focus on your business. Working with LegalZoom can help ensure that your annual report is filed accurately and on time to avoid any penalties and protect your business’ good standing in North Dakota.

The cost of forming an LLC in North Dakota

The total cost of forming an LLC in North Dakota will vary based on the type of business you form, its scope, and operating cost. That said, it's helpful to have a clear picture of the basic costs every LLC will encounter in the state.

• Formation cost: $135 to file the Articles of Organization.
• Annual report cost: $50 per year, due by Nov. 15.
• Certificate of good standing: $20
• Workers’ compensation insurance: $600 per year flat rate, or $50 per month (required for nearly all ND businesses with employees)
• Registered agent service: $100 to $500 per year on average
• Operating agreement: $100 to $750 on average
• Website domain: $10 to $45 per year on average

These are just the basic fees for starting an LLC in North Dakota. Depending on the nature of your business and the price of industry-specific business licenses and insurance, the cost of forming your business will vary. That said, the minimum start-up cost for forming an LLC in North Dakota is $285 with only the basic legal costs. If you include additional services to make your LLC formation easier, the cost could be a little closer to $598.

How to start your North Dakota LLC with LegalZoom

North Dakota offers a lot of helpful resources to support new business in the state, but the process remains time-consuming and nuanced. For this reason, many legal services—including ours—have created streamlined LLC formation packages to further simplify the process while ensuring compliance with state laws.

The LegalZoom process takes only three steps:

1. Complete our LLC questionnaire

Take a few minutes to fill out a simple questionnaire. Tell us whether you want to form a new LLC or convert an existing partnership or sole proprietorship into an LLC, and which personal liability protection provisions you want to include.

2. We apply for your LLC

After you’ve given us all of the important information about your new business, we compile your documents and file them with the North Dakota Secretary of State. Then, we’ll create and file your articles of organization, required licenses or permits, and an LLC operating agreement tailored to your specifications.

3. Receive confirmation

Once the SOS processes and confirms your documents, we’ll send you your finished articles of organization, business registration certificate, other relevant documents, and actionable instructions on the next steps to ensure your LLC’s success.

FAQs

How long does it take to form an LLC?

It depends on factors like state-specific processing times. It can take up to two weeks for North Dakota's Secretary of State to process your formation paperwork. The IRS will also take about four weeks to process your EIN via mail, but may be able to process it immediately if you file online. The seller's permit that many businesses need to start operating takes about two to three weeks to process.

What are the benefits of filing an LLC in North Dakota?

The tax benefits of filing in North Dakota are particularly enticing. While many other states require sales tax for items like electricity, groceries, and natural gas, North Dakota doesn't. Additionally, North Dakota generally allows tax exemption for personal property outside of certain types of gas refineries and oil utilities.

How do I correct filing errors in ND?

You can file amendments through the FirstStop business portal, although there may be some fees involved depending on what amendments you need to make.

How do I dissolve a North Dakota LLC?

There are two ways you can officially dissolve your business with the North Dakota government. You can either dissolve your LLC by filing a dissolution notice with the North Dakota Secretary of State for a $20 filing fee, or file Articles of Dissolution by Organizers—as long as your LLC hasn't taken on debt. If it has, you'll need to file both. 

Working with a business dissolution service like LegalZoom’s can help ensure that your articles are filed accurately. This process avoids future fees or taxes that could arise from mistakes made during the filing process. Once filed, we’ll send your Articles of Dissolution in the mail. 

Rudri Bhatt Patel contributed to this article.