How to Form an LLC in North Dakota in 7 Steps
Forming a North Dakota limited liability company (LLC) could seem complicated, but many small business owners manage to complete the formation process independently. If you're interested in forming an LLC in North Dakota, you must become familiar with North Dakota state law requirements. Following the step-by-step guide to setting up your LLC can make your dream a reality.
7 Steps to Form an LLC in North Dakota
Name Your LLC
You'll need to pick a company name for your LLC that complies with state law and attracts potential customers to your business. If you haven't started brainstorming yet, take some time to sit down and make a list of possible names.
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There are specific naming requirements for a North Dakota LLC name. Your business should not be the same or confusingly similar to a registered business name. The LLC name that you choose must include "limited liability company" or an abbreviation such as "LLC" or "L.L.C."
Make sure that you refrain from including any terms to mislead the public. For example, don't use phrases such as "State Department" in your name, as your business may be confused with a governmental agency. Also, don't use restricted words, such as "attorney" or "bank," without the proper licensing or approval.
Search Name Availability. To check for name availability, conduct a business name search. If a potential name you type into the search is already on record, choose a different name. The state will reject your filing if you use the name of a registered business.
Check for Trademark Registration and Domain Name. You will also want to search for the name on the internet to make sure you are not infringing on a trademarked or domain name. You can look up the name on the United States Patent and Trademark Office (USPTO) website for prior registration. Search the LLC business name on the internet to see if it is in use, or check with an approved registration on the ICANN list to see if the domain name is available.
Reserve Your LLC Name. If you are not ready to file the articles of organization, you can reserve your LLC business name with the North Dakota Secretary of State. The name reservation fee is $10 and holds your name for one year.
Protect Your LLC Name. Your business name is an integral part of your brand identity. Protect your brand with trademark registration in North Dakota or with a federal trademark at the USPTO. You can register a trademark online with the Secretary of State and pay a registration fee. You can also register your business name as a domain name, so only you can use it.
Get a Registered Agent
Appointing a North Dakota registered agent is a requirement. A registered agent is an individual or a company that has the duty of accepting legal papers. For example, if someone sues your business, your registered agent is the person or company who receives the legal paperwork. Note that your registered agent must be available during regular business hours and have a physical street address in the state of North Dakota. You may want to consider using a professional registered agent if you can't think of a suitable individual to handle service of process for your company.
File Your Articles of Organization
The essential part of forming an LLC is filing the articles of organization. The articles of organization should include the following information:
- LLC name
- LLC's principal office address
- Registered agent name and address
- Purpose of the organization
- LLC effective date
- Organizer(s) name and address
North Dakota has a portal, "FirstStop," to file the articles of organization on the Secretary of State's website. The state fee for North Dakota articles of organization is $135 to file online.
Draft an LLC Operating Agreement
The operating agreement for your LLC is an internal document you don't need to file with the North Dakota Secretary of State. You keep it with your records to manage your company's operations. Additionally, a bank might request it when opening a business bank account or applying for a credit card.
An operating agreement should contain the following provisions:
- Members' ownership percentages
- Handling of profits and losses
- Rights and responsibilities of managers and members
- Procedures for holding meetings
- Methods for transferring business interest (i.e., a buy/sell agreement)
- Dissolution procedures
You can look to your LLC's operating agreement for guidance if there's a dispute.
Get an EIN
Most businesses need an Employer Identification Number (EIN) or tax identification number. You'll need an EIN to open a business bank account and hire employees.
An EIN is like a Social Security number for your business. The Internal Revenue Service (IRS) assigns these numbers to business entities for identification purposes. You can apply for an EIN online at the IRS website for free.
Set Up Business and Tax Accounts
After filing the articles of organization with the state, you will have numerous state and federal requirements for your new LLC.
The tax status you elect determines how your LLC pays taxes. If the LLC elects corporate status, you file corporate taxes for the LLC. If your LLC is a pass-through entity, the profits and losses appear on individual members' tax returns.
Investigate what state and federal tax accounts to set up for your LLC in North Dakota.
File a Beneficial Ownership Information Report (BOIR)
Once your LLC has been formed, you must file a Beneficial Ownership Information Report (BOIR) with FinCEN. The filing deadline depends on when you form your LLC. If you create your LLC in 2024, you must file within 90 days from the day your LLC received notice of its creation/registration, or 90 days from the day the Secretary of State or similar office first provided public notice of your company’s creation/registration, whichever is earlier. If you form your LLC after January 1, 2025, you must file within 30 calendar days from the date you receive actual or public notice of the LLC’s creation or registration.
File your BOIR by going to www.fincen.gov/boi and selecting “File BOIR”. Your LLC must disclose information regarding its beneficial owners and its applicants. Your LLC’s applicants are the people who filed the document that created or registered the LLC or were responsible for controlling the filing. Beneficial owners are those who have substantial control over the LLC and/or own a minimum of 25% of the ownership interests of an LLC.
Register your LLC for a state taxpayer account when starting a North Dakota business. North Dakota has a taxpayer access point (TAP) portal to register for sales and use accounts and withholding accounts.
State Business Tax
You may choose one of several different tax designations for your LLC. Consult an accountant or business attorney for what is best for you and your business. If your LLC is taxed as a corporation, your LLC pays a state tax on the LLC's taxable income. If you set up your LLC for pass-through taxation, the members pay a state tax based on their share of the income on their individual income tax returns.
State Employer Tax
If your LLC has employees, even if the employees are members, your LLC pays employment taxes. As an employer, you must do the following:
- Report any new hires to the state
- Set up withholding tax accounts (on the ND TAP portal)
- Register for an account and pay unemployment insurance
- Carry workers' compensation insurance
Sales and Use Taxes
If you sell to the public, you may have to charge a 5% sales tax to the purchaser and remit it to the state. You apply for a sales and use account on the North Dakota Taxpayer Access Point website.
Business Licenses and Permits
North Dakota regulates certain businesses through the Attorney General's office, the Secretary of State, and other departments. Depending on your type of business activities, you may need a license to operate in North Dakota. Start with the licensing information page for licensing requirements in North Dakota.
Registration in Other States
If you want your North Dakota LLC to do business in other states, contact the Secretary of State in that jurisdiction to register as a foreign LLC. That state may ask for a certificate of good standing, which you get from the North Dakota Secretary of State. You can order one online for a $20 fee. The certificate of good standing verifies your LLC is compliant with North Dakota tax filings and obligations.
There are a few things to do each year to keep your North Dakota LLC in good standing. Good standing means compliance with reporting requirements and payment of state taxes and fees.
You must file an annual report in North Dakota for your LLC by doing the following:
- Confirm and update information on your LLC
- File the report online with FirstStop
- Pay the $50 filing fee
If you fail to file the report, you face penalties or involuntary dissolution with the state.