Having a North Dakota LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in North Dakota.
On this page, you’ll learn about the following:
- How to Start an LLC in North Dakota
- After Starting your North Dakota LLC
- North Dakota Foreign LLC
- Why an LLC in North Dakota
- North Dakota LLC Formation Review
How to Start an LLC in North Dakota
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in North Dakota.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In North Dakota, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the North Dakota business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your North Dakota LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, North Dakota. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in North Dakota. The cost of a name reservation is $25.
Important Quick Links:
Secretary of State
State of North Dakota
600 E Boulevard Avenue Dept 108
Bismarck ND 58505-0500
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Step 2: Assign a Registered Agent in North Dakota
A registered agent, or business entity, is a person that will act or work on your behalf. This registered agent will receive significant tax forms, legal forms, legal documents, a notice of lawsuits, and other official government correspondence in North Dakota. Choosing a North Dakota registered agent for your LLC is required.
Make sure your registered agent service provider comes from a resident of North Dakota or a business registered in this state. It could also be a business. Here are the recommended agents and employees for you:
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Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in North Dakota. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years
Step 3: File Articles of Organization in North Dakota
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate or formation document with the North Dakota Secretary of State, which costs $135. You may file them online or by mail. Check out the LLC cost in North Dakota for more details.
This Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in North Dakota, like if it is a member-managed or managers-managed.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your North Dakota Limited Liability Company will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county.
Step 4: Create Your North Dakota LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to an LLC operating agreement North Dakota does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve North Dakota LLC later.
Step 5: Filing a North Dakota LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your North Dakota LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your North Dakota LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File North Dakota business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a North Dakota LLC annual report or biennial report
- Already existing LLCs that wish to operate in North Dakota must register as North Dakota foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
North Dakota Foreign LLC
To register a North Dakota foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, North Dakota. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check North Dakota Foreign LLC to know more about having a foreign LLC.
Why an LLC in North Dakota
There are plenty of tax benefits and income-boosting opportunities available in North Dakota. As such, a North Dakota Limited Liability Company enjoys several incentives. Due to these incentives, the number of companies opening up in the state is enormous. If you, as an entrepreneur, are also thinking of considering it as an option for your business, then here are some detailed benefits.
Sales and Service Tax exemptions
There are several exemptions that the government decides for those businesses that are thinking of incorporating as an LLC in North Dakota. These exemptions are based on the products and services which are mentioned in detail below.
- A sales tax exemption is provided on all livestock and poultry products, commercialized fertilizers, gasoline and fuels, food and its products, medicinal equipment, etc. The start-up, which is based on these products’ sales, is eligible to return on the sales tax that they will give to the government.
- The next exemption is provided to those giving up services like public transportation, hospital and nursing services, repairing and restoring services, and cleaning tangible personal property. They are liable to file a service tax returned to them as a business incentive by the government.
- The Hotel- Motel rental and mobile homes renting services are also exempted from sales tax but are covered under conditional exemptions.
North Dakota Renaissance Zone
There are many renaissance zones formed by the Commerce Division of Community Service in the North Dakota state. An LLC, when chooses this zone to Start an LLC in North Dakota. Then they are eligible for some incentives on tax paid. These taxes are the purchase or leasing of the property in the zone bundled and many other exemptions like state income tax, local property tax, etc. All this is provided to choose the special zone as the LLC will improve and develop in the special zone.
New Business Income Tax Exemption Program
This package is available for the tourism business or some primary sector entities. In this program, the income generated from the business is not taxable, and one can reinvest it back for their expansion. The only condition is that for application, one needs to visit the state tax commissioner and get all the business details verified to enjoy the benefits.
Wage Credit program
To boost up the company hiring procedure, the government of North Dakota is providing a 1% tax rebate on the income tax to the LLC. The value will be based on the wage that the company pays to the employees. This benefit will last for 3 years from their establishment as North Dakota LLC.
Leading Businesses in the North Dakota State
Are you looking forward to forming an LLC in North Dakota? For that, you must have complete economic statistics knowledge of the state and its top businesses. Here is the list of the best businesses in North Dakota.
The North Dakota state is known for its oil reserves along with mines of coal and shale gas. The coal that can be procured from North Dakota’s mines is lignite, out of which 90% is used in power generation of the state and nearby states. If we talk about the oil production, then the average oil, then the average production in the state is 50,000 barrels every day, which has helped the energy sector contribute $8.51 billion.
An interesting fact about the energy businesses is that there is a rise in wind energy due to the continuous wind flow at 10 miles/hr.
Tourism In North Dakota
Exceptionally few people choose the state for going on a vacation, but it is still the best economy driver. Only the state’s tourism sector contributes around $3 billion, which is huge for this small state. About 24 million visitors that North Dakota caters to, and the biggest reason for their visit are Clark’s historic tail and Theodore Roosevelt National park.
It is the leading sector that is known for trading for fur. Approximately 10% of the state is handling the farm area of North Dakota, which is around 90% of the state’s total area. State agriculture has a significant share in oilseed production also which is described below.
- 94% of flaxseed of the USA is produced in Dakota farmland.
- 92% of canola seed is grown in North Dakota
- 62% of the whole mustard seed of the USA is also produced in North Dakota, with 53% of sunflower oil.
Some small business ideas that are currently booming in the state are:-
- Home-based oil production
- Graphic designing
- E-commerce business
North Dakota LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming an LLC in North Dakota. Click on the steps in this list to read the full detail.
- Name your North Dakota LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
In North Dakota, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
If you are a resident of North Dakota, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $135 (domestic LLC) and $135 (foreign LLC), LLC costs in North Dakota include $50 for Annual Reports every year. LLCs are liable to pay sales tax of 5% every year
It takes 24 hours to get a North Dakota LLC if you file it online. For the mail filing, it takes several days to get an LLC.
Every year all the LLC have to submit an Annual Report and pay $50 to the North Dakota Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
Having an LLC is easier than other forms of business. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. On the other side, the formation of LLCs requires less paperwork and fewer legal complexities. If you have any questions, leave a comment below.