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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Relative to in many other states, starting an LLC in North Dakota follows a clear-cut process that shouldn’t give entrepreneurs much difficulty. To avoid a misstep in the filing process, follow these steps to start an LLC in North Dakota, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in North Dakota step-by-step
1. Select a name for your North Dakota LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the State of North Dakota:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the North Dakota Secretary of State.
- An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, or “L.L.C.”
Check name availability
To confirm that your chosen business name is available to use in North Dakota, perform a search with the Secretary of State Archived Business Records Search.
Reserve your LLC name with the Secretary of State
Many LLCs in the process of organizing opt to reserve their LLC name to prevent another business entity from using it before it is ready to file Articles of Organization.
2. Designate a registered agent
As in every U.S. state, forming an LLC in North Dakota requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in North Dakota OR if the individual or business is based out-of-state, they must have a business office in North Dakota.
Our picks of the best LLC services
Starting a business requires a lot of state-mandated paperwork, which can be confusing for new business owners. Northwest offers business services that can help entrepreneurs find the right documentation, fill it out, and file it on time with the right government agency. In addition to helping you set up an LLC, Northwest has a host of additional services, like registered agent services, that new owner will find useful too.
There’s no need to stress about filing paperwork when you work with ZenBusiness. This company offers a great variety of LLC services, the focus of which is to ensure your business is set up correctly with the proper paperwork filled out and delivered to the right branch of your state government. Of course, ZenBusiness does charge for their services, but customers say they get the most bang for their buck.
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3. File Articles of Organization
An LLC is formed in North Dakota through the filing of Articles of Organization with the North Dakota Secretary of State.
You can file online using the Secretary of State FirstStop application or by mail. The filing fee is $135.
The Articles of Organization must provide the following details:
- LLC’s name, principal office address
- LLC’s purpose (what business it does)
- Whether the LLC is perpetual or will end at a set date
- Registered agent name and address
- Date the LLC becomes effective (if not immediate)
- Names, addresses, and signatures of LLC organizers
Foreign LLC registration
An LLC formed outside of North Dakota that plans to do business in the state must register with the North Dakota Secretary of State.
Follow these steps to do business in North Dakota as a foreign LLC:
- Comply with North Dakota LLC naming restrictions and make sure that your LLC’s name is available for use in the states with the Archived Business Records Search.
- Appoint a North Dakota registered agent.
- File a Certificate of Authority For Limited Liability Company Application with the North Dakota Secretary of State. The form is available through FirstStop. The application can be filed online, by fax, or by postal mail. The filing fee is $135.
- The certificate must be accompanied by either a Certificate of Good Standing or a Certificate of Existence from LLC’s state of origin that is 90 days old or less.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in North Dakota, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your North Dakota LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
File annual reports
All LLCs active in North Dakota must file an annual report with the Secretary of State each year. This includes foreign LLCs doing business in the state. An LLC’s first annual report is due in the year following its legal formation.
An annual report is due every year by November 15 and can be filed online using FirstStop. The filing fee is $50.
Register with the North Dakota Office of the State Tax Commissioner
Certain LLCs active in North Dakota must register with the North Dakota Office of the State Tax Commissioner in order to satisfy state tax obligations. This includes LLCs that collect sales tax on retail goods and services and LLCs with employees.
You can register to pay state taxes online using the North Dakota Taxpayer Access Point (TAP).
Obtain business licenses and permits
LLCs active in North Dakota may be required to obtain one or more state or local business licenses, permits, or certifications depending on their type of business and the location of their principal office.
The ND.gov website provides a Business Licensing website that can aid in determining which state licenses are necessary (if any) and explains how to apply for them.
Local licensing regulations vary from area to area, so its best to contact a city or county clerk in the region where your LLC is located for instructions on how to comply with local laws.
North Dakota LLC checklist
A North Dakota LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the North Dakota Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, or “L.L.C.”
Formational documents and filing fees:
- Reserve Name Application – $10 filing fee (optional but recommended)
- Articles of Organization – $135 filing fee
- Certificate of Authority For Limited Liability Company Application – $135 filing fee (foreign LLCs, only)
- An LLC is formed in North Dakota through the filing of Articles of Organization with the North Dakota Secretary of State.
Additional legal obligations:
- File annual reports – Required for all LLCs doing business in North Dakota
- Register with the North Dakota Office of the State Tax Commissioner – Required for certain North Dakota LLCs, including those with employees and those that collect sales tax
- Obtain business licenses and permits – Required for certain North Dakota LLCs depending on business type and location