How to Start an LLC in North Dakota: Step-by-Step Guide.

When entrepreneurs think about forming an LLC, Delaware and Wyoming often get the spotlight. However, North Dakota offers low filing fees, straightforward regulations, and a business-friendly environment that makes it an excellent choice for many small business owners.

However, there are some things you do need to do, deadlines you must meet, and requirements you'll want to comply with, and you don't want to be caught off guard by them when you're a new owner. This guide helps you go through all the steps, step-by-step.

Why North Dakota Is a Smart Place to Start an LLC

Here are some of the reasons the state of North Dakota is unique:

• North Dakota charges a competitive $135 filing fee.

• In some LLC pass-through structures, personal income tax does not apply to out-of-state LLC members in North Dakota. 

• The Secretary of State's online filing platform makes it easy and quick to file.

• The state provides a simple annual reporting requirement; no surprises!

North Dakota provides a clean, low-overhead organization for a small service business, a freelancer, or a real estate investor, allowing you to focus on growing your business instead of dealing with unnecessary paperwork.

Step 1: Choose Your LLC Name

The name you choose must be different from any that is already in use in North Dakota and should include the words Limited Liability Company or LLC.

When choosing a name, consider checking the North Dakota Secretary of State business search to ensure the name is available. If you anticipate time before you are ready to file, you can also file a Name Reservation, which will reserve your name for 12 months for a $10 fee.

Don't use a name that describes a value or is generic. The end goal is to have an available name, but also a representation of your brand.

Step 2: Appoint a Registered Agent

Every North Dakota LLC must designate a registered agent. A registered agent is the individual or business responsible for receiving legal notices, government correspondence, and service of process on behalf of your LLC.

You may use your own address as your registered agent, but your address will be a public record, and you will be required to be present at your address during all business hours. This isn't practical for many business owners.

A professional registered agent service can take care of that. You have a sure point of contact, greater privacy, and no risk of missing a legal notice due to being away from your registered address. Annual costs are usually $50 – $150.

Step 3: File Your Articles of Organization

This is your official LLC formation document in North Dakota. It's filed with the North Dakota Secretary of State online, by mail, or in person.

The following will need to be provided:

1. Your LLC's name

2. Name and address of registered agent

3. Management structure: member-managed or manager-managed

4. Organizer's name and signature

The filing fee is $135. There is normally an online processing time of 1-3 business days.

Professional LLC formation services can help you with this process accurately and efficiently, especially if you are doing it for your client, managing multiple filings, or if you don't want to get it wrong.

Step 4: Draft an Operating Agreement

An operating agreement is not required by North Dakota law, but all multi-member LLCs should have an operating agreement. The document is useful for any size LLC, even if it's just a single-member LLC.

Without an operating agreement, your LLC will be governed by North Dakota's default LLC laws, which may not reflect how you want your business to operate. An operating agreement should include the following:

• Ownership percentages and capital contributions

• The rights and decision-making powers to vote.

• Profit and loss distribution

• Dissolution procedures

Consider it your business rule book. If there should ever be a liability issue, it is looked at by courts as well.

Step 5: Obtain Your EIN

Your LLC's federal tax ID is called an Employer Identification Number. You'll require it to open a business bank account, hire staff, and pay taxes. Apply for one free through the  IRS website. The process lasts approximately 10 minutes and returns the number.

Step 6: Register for State Taxes

If your LLC sells taxable goods or services in North Dakota, you'll need to register for a sales tax permit with the North Dakota Office of State Tax Commissioner before making your first sale. The state sales tax rate is 5%, though local jurisdictions may impose additional taxes.

Most LLCs are taxed as pass-through entities, meaning the business itself generally doesn't pay income tax. Instead, profits and losses are reported on the owners' personal tax returns unless the LLC elects to be taxed as a corporation.

If you're unsure which state taxes apply to your LLC, consider consulting a tax professional to ensure you remain compliant.

Step 7: File Annual Reports

North Dakota LLCs must file an annual report with the North Dakota Secretary of State to keep their business in good standing. The filing fee is $50, and the report is due by November 15 each year.

Missing the deadline can result in late fees and, if the report remains unfiled, the state may administratively dissolve your LLC. Once dissolved, your business could lose its good standing and may need to go through the reinstatement process, which involves filing the required reports, paying any outstanding fees, and meeting the state's reinstatement requirements.

To avoid unnecessary costs and interruptions to your business, set a recurring calendar reminder or sign up for state filing notifications well before the deadline.

Frequently Asked Questions

How long does it take to form an LLC in North Dakota?

Filing Internet documents usually takes 1-3 business days. If you need this quicker, there may be expedited options available.

Can I form a North Dakota LLC if I live in another state?

Yes. Any type of entity can be created and owned by non-residents in North Dakota. A registered agent with a physical address in North Dakota will still be required.

Do I need a business license in North Dakota?

No business license requirement in general, but some professions like financial services, health services, and contractors must be professionally licensed. Refer to the relevant state agency for details related to your area of interest.

How is a North Dakota LLC taxed?

Single-member LLCs are taxed as sole proprietors, and multi-member LLCs are taxed as partnerships. All of the members get the income from them. Otherwise, you may choose to be S-Corp or C-Corp taxed through the IRS if it is more practical for you.

Ready to Start Your North Dakota LLC?

Getting your LLC set up correctly from the start saves time, money, and stress later. Whether you need help with formation, a dependable registered agent, or ongoing financial management, Revive Business has you covered.

Explore our services at Revive Business and take the first step toward building something that lasts.