There are many advantages to incorporating a business in North Dakota. For example, North Dakota corporation owners’ personal assets are protected from liability in the event the corporation is sued or cannot meet its financial obligations.
The following step-by-step guide will show you how to start a corporation in North Dakota.
1. Select a name for your corporation
Irrespective of what type of corporation you’re forming, it all starts with deciding on a business name. Additionally, the business name must also adhere to the rules and naming requirements of the state.
General corporate name guidelines
Refer to the following North Dakota naming requirements when deciding on your business name:
- Your North Dakota corporation name cannot be the same or deceptively similar to other business entities in the same state
- Your North Dakota corporation name must contain the word corporation, company, Inc., or limited or, at the minimum, an abbreviation of any of these words
- Your North Dakota corporation name should not imply that your business was organized for any unlawful or illegal purposes or anything that’s not outlined in your company’s Articles of Incorporation
- Your North Dakota corporation name cannot contain the words limited liability company, limited liability partnership, limited partnership, limited liability limited partnership, or even an abbreviation of any of these words
Refer to the North Dakota state statute for additional guidance on deciding on a North Dakota corporation name.
Registering your business name as a trademark will protect it from intellectual property theft as well as misuse. Additionally, by registering your brand, you’ll ensure that your customers are never confused about who they are doing business with.
When it comes to trademarking your North Dakota corporation name, there are two options. The first option is to trademark the name in North Dakota, which will protect your business name only in the state of North Dakota. However, the registration process is quicker, and the fee is also lower.
The second option is to register for a trademark on the federal level, and this protects your business name across all US states. To trademark your North Dakota corporation name on a national level, visit the USPTO or the United States Patent and Trademark Office’s website.
Your North Dakota corporation’s entity name is its legal name. This name is used in all formation documents as well as all correspondence with both federal and state governments. Therefore, the entity name is simply your business’s legal name.
DBA (Doing-business-as) name
A DBA name is short for [doing business as] name. It’s also referred to as a trade name, fictitious name, or assumed name. A DBA name comes in handy if you plan on doing business under any other name aside from your entity name. In this case, according to state law, you will need to register your DBA with the North Dakota Secretary of State.
In order to start registering a DBA, you’ll first need to complete a DBA name search on the Secretary of State’s website. Once you confirm that the name is indeed available to be registered as a DBA, you can move on to the next step in the process.
One of the quickest ways to register a DBA in North Dakota is to the go to the North Dakota First Stop website, where you can complete the Trade Name Registration Form and file it either online or via mail to the following address:
Secretary of State
State of North Dakota
600 E Boulevard Avenue Dept 108
Bismarck ND 58505-0500
2. Nominate a registered agent
A registered agent is required for all North Dakota corporations. These agents are also referred to as statutory or resident agents. You’ll need to point a resident agent for your corporation prior to registering it with the state.
While registered agents are referred to by different names, these agents all serve the same purpose, and that is to accept the service of process, and government correspondence on your corporation’s behalf.
Therefore, you may register any natural person or individual to be your corporation’s registered agent. However, they must meet a few requirements:
- The North Dakota registered agent must be of the legal age
- The North Dakota corporation’s agent must have a physical address in North Dakota
- The North Dakota registered agent must remain available during normal business hours to accept important documentation on your corporation’s behalf
- The resident agent must consent to the appointment as well
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3. Appoint initial directors at the organizational meeting
The next step in the process of forming a North Dakota corporation is holding an organizational meeting where initial directors or the board of directors will be appointed. Additionally, you need to complete a few other tasks, such as executing an incorporator’s statement, determining your corporation’s share structure, and creating and approving bylaws.
When it comes to nominating directors for your North Dakota corporation, you need to appoint at least one director who will oversee your North Dakota corporation’s operations until you call the first shareholder meeting.
The corporate director is also in charge of the repeal, amendment, and adoption of operational bylaws, in addition to the removal, supervision, and election of corporate officers.
4. File Articles of Incorporation
Your North Dakota corporation is not formed until the Articles of Incorporation are filed with the state’s office. The article is a document that creates your North Dakota corporation and therefore needs to contain some pertinent information:
- The address and names of the corporation’s incorporators
- The effective date of the corporation
- The number of authorized shares your North Dakota Corporation is a large issue
- The street address and name of the corporation’s registered agent
- The street address and name of the corporation itself
You may file the Articles of Incorporation online and include an indication of how many authorized share classes or series the corporation intends to issue.
Once you’ve filed the Articles of Incorporation Form, you’ll receive a Certificate of Incorporation officially marking the creation of your North Dakota corporation.
5. Create and approve bylaws
Your corporation’s bylaws are essentially the rules and regulations that outline how the corporation is going to be operated. The bylaws are essentially a Constitution for your company and clarify the rules and policies for all involved in the corporation.
Additionally, your corporation’s bylaws must supplement any rules laid out by the federal government or the state of North Dakota.
Include the following information in your company’s bylaws:
- How the corporation will be governed, including the roles and responsibilities of corporate directors and corporate officers
- The process of holding annual meetings, voting procedures as well as electing corporate officers and directors
- How corporate records are going to be stored and kept safe
- How company disputes are going to be handled and resolved
- How the bylaws are going to be added and amended in the future
- The date of the annual shareholder meeting
- How your North Dakota corporation’s contracts are going to be negotiated
Refer to the following bylaws templates and customize them to suit the needs of your type of business.
6. Select a share structure
A share of stock indicates the unit of ownership of incorporation. Every share of stock indicates the percentage of ownership of the corporation. So if your corporation issues one share of stock to a stock owner or shareholder, then a hundred percent of your corporation is owned by that specific individual.
Additionally, shares may be structured into classes, with each class known as a share class holding a different set of rights and privileges. Your North Dakota corporation is allowed to have multiple classes, and each class may hold any number of shares.
7. Obtain an EIN
Prior to applying for an EIN, also known as an Employer Identification Number, your corporation should already be formed. This is because when applying, you will need to provide the date of your business formation as well as your business’s legal name.
An EIN is essentially a government-issued business ID, used to identify business entities in every state. It also proves that your business is a separate legal entity. You’ll need to obtain an EIN for your North Dakota corporation if your business has employees, files excise taxes, or your business withholds taxes. However, all businesses will benefit from having an EIN.
Irrespective of whether you have formed your corporation as an S corporation or a C Corporation, an EIN is necessary for tax purposes or tax returns. Requesting an EIN is 100% free of charge when you apply online on the IRS website.
This is also the quickest way to obtain your EIN, as it becomes available immediately. However, you should note that you should print your EIN prior to closing your session as the IRS website is operational during specific hours.
If you prefer to download the IRS Form SS-4, complete it, and have it mailed to the Internal Revenue Service, at the following address:
Internal Revenue Service
Cincinnati, OH 45999
8. File North Dakota state taxes
Depending on your business structure, business owners may be liable for one or more corporate taxes in the state of North Dakota:
- Corporate income tax: North Dakota corporations are liable for corporate income tax in the state. The tax rates range from between 1.4% to 4.31%.
- Employer Taxes: All corporations that plan on hiring employees will need to register for employer taxes via the North Dakota Taxpayer Access Point website.
- Sales tax: If your corporation intends to sell products or services, you’ll need to register for a seller’s permit via the North Dakota Taxpayer Access Point website. After registering, you’ll receive a certificate allowing you to collect sales tax on applicable goods.
9. North Dakota business licenses and permits
While there isn’t a general business license requirement in North Dakota, depending on the type of corporation you’re running, you may require one or more licenses and permits to legally operate in the state:
- Professional license: If you’re offering professional services such as electricians, comments, lawyers, or doctors, then a professional license is in order. Therefore, if you’re running a professional corporation, you need to ensure that you check with the relevant boards that govern professionals and obtain the relevant licenses to operate legally in the state.
10. Annual report requirements in North Dakota
North Dakota corporations must submit an annual report, which is known as a statement of information in North Dakota. The statement is due by the 1st of August every year starting the year following your corporation’s incorporation date. File the annual report on the North Dakota FirstStop website.
11. Costs of starting a corporation in North Dakota
The filing fees below apply to all North Dakota corporations:
- Name reservation: $10
- DBA name: $25
- Articles of Incorporation: $100
- Annual report/ Statement of Information: $50
- North Dakota Certificate of Good Standing: $15
Next steps after forming a corporation
After forming your North Dakota corporation, you’ll need to take a few additional steps to maintain your business and ensure it runs effectively:
Obtain a business bank account
One of the best ways to maintain your new corporation or new business is to separate your personal finances and expenses from your business’s finances. To do this, you’ll need to open a business bank account.
The business bank account also ensures that your personal assets are protected, or you have some form of personal liability protection. Additionally, another advantage of opening up a business bank account is simplifying your accounting and business tax filing processes.
To open up a business bank account in North Dakota, you’ll need to submit your formation documents along with your Employer Identification Number to the bank.
It is advisable to look into getting a business credit card to build your business’s credit score and ensure that you obtain loans with higher credit limits.
Forming a corporation offers several advantages, such as limited liability protection, corporate tax benefits, and appeal to investors. However, you also need to consider your company’s profits; capital needs as well as ownership structure to get the most out of incorporating in North Dakota.
Starting a sole proprietorship is one of the easiest business processes since there’s a minimum amount of paperwork and filing involved compared to corporations or limited liability companies. However, you’ll also need to acquire the necessary permits and licenses to operate your sole proprietorship legally.
While starting a sole proprietorship is relatively easy when compared to other business structures. Sole proprietorships have no liability protection; selling is a challenge, and so is raising capital. Additionally, securing business credit and financing is harder.
Nonprofit corporations are considered non-business entities as they are not formed to generate profit for owners. Alternatively, their purpose is to raise profits to further their cause or benefit the public.
The best business structure will depend on your goals and financial situation. Additionally, each type of business structure comes with its own set of advantages and disadvantages. For example, a C Corporation or C corp is liable for double taxation while an S corporation can pass-through income to its shareholders.