Starting your own business can be a lot of work. If you are looking to start a limited liability company in North Dakota, it is essential to know what you need to do and how much time it will take. In this article, we'll go over the steps for forming a North Dakota LLC, as well as crucial information about setting up a new business in North Dakota.
Step 1: Find a Unique Business Name
The first step in starting your LLC is to come up with a business name.The North Dakota Secretary of State's office has specific rules about what you can and cannot name your business.
For example, it must not contain words used to name a government agency. You'll want to make sure the name you choose is unique and not already taken by another company in North Dakota.
You can search for available company names on the Secretary of State's website.
If you find a name that is not already taken, you can reserve it for up to 60 days by filing a Name Availability Request Form.
Ensure that the name you picked complies with the North Dakota naming requirements.
Step 2: Appoint a Registered Agent
In order to form an LLC in North Dakota, you must appoint a registered agent. An LLC registered agent is an individual or business entity who will act as the official representative of your business in legal matters.
North Dakota registered agents must have a physical address in North Dakota and be available during normal business hours. They can receive vital legal documents on behalf of your company at this address.
The easiest way to find an agent is to use registered agent services, but you can also look for them yourself.
To find a commercial registered agent, you can look at the list of commercial registered agents on the Secretary of State's website. The other option is to hire a noncommercial registered agent who is not registered with the Secretary of state. But don't worry, whichever one you choose, they both do the same thing.
There is also an option for you to be your own registered agent, but it is not recommended, as you might travel for business and fail to pick up a letter from the government.
Step 3: File the North Dakota Articles of Organization
The next step is to file articles of organization with the Secretary of State's office. The articles of organization are a document that officially creates your LLC.
They must include:
- The name and address of your company
- The registered agent's name and address
- A statement declaring the purpose of your LLC
- The names and addresses of the LLC's members or managers
- Signatures of organizers.
- Date the LLC begins-upon filing article or a later date
- The LLC's term of existence-perpetual or for a period of years
The articles can be filed online, by mail, or by fax with the North Dakota Secretary of State's FirstStop website. A filing fee of $135 is required.
If you are submitting North Dakota LLC articles by mail, this is the mailing address:
- Secretary of State
- Business Registration Unit
- 600 E. Boulevard Avenue Dept 108
- Bismarck ND 58505-0500
Step 4: Create an Operating Agreement
An operating agreement is a document that outlines the rules and regulations for running your LLC. It is not required by North Dakota law, but it is highly recommended that you have one. An operating agreement can help prevent disagreements among members.
It clarifies member responsibilities and establishes how profits and losses will be shared. An LLC operating agreement will help the state and the LLC members understand the company's business structure.
Another reason to get an operating agreement is that it helps separate your personal from company finances. That way, you will have more protection from legal liability.
You can find a template for an operating agreement on the Secretary of State's website.
Step 5: Obtain an EIN
An Employer Identification Number (EIN), also called a Federal Employer Identification Number or FEIN, is a nine-digit number used to identify businesses for tax purposes.
You will need to obtain an EIN from the Internal Revenue Service before opening a company bank account or filing your taxes.
You can apply for an EIN online through the IRS website. There is no filing fee, and you can apply immediately.
The EIN will be sent to the business by mail within a few weeks of applying online.
An Employer Identification Number ( also known as Federal Tax Identification Number) is required when opening a bank account and filing federal and state taxes. You also need an EIN if you want to hire employees. With an EIN, you will also be able to get a business credit card.
Open a Business Bank Account
You'll be able to open an LLC bank account once you've obtained an EIN. It is a good idea to separate accounts for your business and personal banking. That way, you will easily organize your finances during tax season and avoid commingling funds.
Commingling cash makes taxes more complex. In court, joint accounts can be used against you if someone challenges whether you and your LLC are genuinely different organizations.
Step 6: North Dakota Annual Report
All LLCs in North Dakota must file an annual report with the Secretary of State.
It is a simple form that includes your company's name, registered agent information, and address. The deadline for filing your first annual report after you have formed your LLC is November 15th. There is a $50 filing fee.
You can file your report online, by mail, or by fax with the North Dakota Secretary of State's FirstStop website.
You may be subject to fines and other penalties if you do not file your annual reports on time. It is vital to stay up-to-date on your filings to avoid any penalties.
How Much Does It Cost to Form a North Dakota LLC?
- The total cost is $145, plus $50 as a yearly expense
- The filing fee for your Articles of Organization in North Dakota is $135.
- If you wish to reserve the unique LLC name you have thought of, that will be another $10.
- A Recurring State Fee for the annual report is $50
How Do I Know if the Name I Chose Is Available?
The name of your North Dakota LLC must stand out from the names of other firms registered with the North Dakota Secretary of State. To make sure your preferred name is available, you can run a free name search on their website.
How Is an LLC in North Dakota Taxed?
These are the tax requirements you, as a business owner, will need to be aware of when starting a North Dakota LLC:
- You will be self-employed, and you will pay self-employment taxes. Every year, you'll file your personal taxes, showing your business's profits, losses, and costs.
- If you wish to be taxed as a corporation, you'll need to file two distinct tax returns: one for your business and one for yourself. Your business taxes will show your income, losses, staff expenses, and general expenses every year.
- On behalf of your LLC, you must pay estimated quarterly taxes. You will owe less at the end of the year if you pay them throughout the year. To avoid fines, you'll need to make both state and federal payments online. You'll also need to set up tax withholding accounts to deduct tax from their paychecks if you have employees.
- If your LLC is collecting sales tax, you'll need to open a sales tax account with the Office of State Tax Commissioner in North Dakota.
Do I Need Any North Dakota Business License?
North Dakota does not have statewide business licenses. It grants permits for specific activities like selling fireworks. There are also licensing requirements in several cities and counties. Fargo, for example, mandates local permits for haulers, excavators, and taxi services.
What Tax Structure Should I Choose for My North Dakota LLC?
Most LLC owners choose to tax their firm as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method needs partners to file personal tax returns and pay taxes on their share of the profits.
The LLC is not subject to taxation. That way, you avoid the "double taxation" that many corporate shareholders face, where gains are taxed at the corporate and individual levels.
It may make sense to be taxed as a corporation if you have a large LLC or one that earns a lot of money. We recommend working with a professional accountant or tax consultant if you need additional help.
What Is the Difference Between a Domestic LLC and a Foreign LLC?
When an LLC conducts business in the state where it was formed, it is referred to as a "domestic LLC."
Usually, when we talk about an LLC, we're talking about a domestic one. When an existing LLC wants to expand its operations to another state, it must establish a foreign LLC.
Can I Start a Professional LLC in North Dakota?
If you provide a licensed professional service and wish to form an LLC in North Dakota, you must first create a professional limited liability company (PLLC). Architects, attorneys, dentists, certified public accountants, and other professionals provide professional services.
If you provide a service that involves the acquisition of a North Dakota state business license before you may practice, you are providing a professional service. LLCs can be founded in North Dakota to offer professional services. However, the LLC may only offer one type of service, and all LLC members must be licensed or registered to provide the professional service for which the LLC was formed.
Do I Need to Get a Trade Name or a DBA for My Business?
You'll need a DBA ("Doing Business As") name if you want to market your company under a name different than your official business name.
In North Dakota, a DBA is referred to as a trading name. The FirstStop government platform allows you to file a trading name online. There is a fee associated with the filing for a DBA.
Is It Allowed to Have a Series LLC in North Dakota?
A Series LLC is a collection of LLCs managed by a single parent LLC. While many states in the U.S. prohibit Series LLCs, North Dakota is one of the few exceptions.
How Long Does It Take To Get a North Dakota LLC Approved?
LLC formation process usually takes around two to three weeks, depending on how long it takes you to gather all the paperwork. It also depends on how busy the staff of the Secretary of State is.
Can I Form a Single-Member Limited Liability Company in North Dakota?
A single-member (sole proprietorship ) LLC in North Dakota is treated the same as a multi-member LLC for most purposes. In North Dakota, the steps to establish a single-member LLC are the same as those stated above.
When it comes to submitting a tax return, single-member LLCs have more options.
Is It Worth It to Hire a Registered Agent Service?
Using a professional Registered Agent service to manage your LLC's government filings is a cost-effective option. The benefits of using a professional service far outweigh the annual costs for most businesses.
How Do I Get a Certificate of Good Standing or a Certificate of Fact in North Dakota?
Corporations and LLCs can get certificates of good standing from the Secretary of State.
Limited partnerships, limited liability partnerships, and any other facts of record are verified by certificates of the fact. The Secretary of State's website does not yet offer a certificate.
You can get one by submitting a request and paying. You can pay by check, money order, credit card (Visa, MasterCard, Discover, or American Express), or pre-authorized credit.
You can make a request in the following ways:
- Calling 701-328-4284 or 800-352-0867 (Ext. 8-4284)
- Fax at 701-328-2992 addressed to the Business Division
- Email to [email protected]
- Mail addressed to Business Division
- Secretary of State
- 600 E Boulevard Ave Dept 108
- Bismarck ND 58505-0500
How to Dissolve a North Dakota LLC?
An LLC operating agreement describes how to conduct business and should contain all the steps for dissolution.
The first step is to consult with all the members and see if they all agree. After that, you will need to file the Articles of Dissolution and Termination form via the FirstStop portal. You'll need to pay a filing fee.
Starting a new business can be overwhelming, but it doesn't have to be. The best way to form a successful business in North Dakota is by hiring the help of someone who knows what they are doing and has experience.
You will save money by not having to spend hours wading through confusing paperwork or searching for legal loopholes.
This is a job that an experienced lawyer who understands North Dakota laws well and could quickly help you with.