Starting LLC in North Dakota: Peculiarities & Detailed Manual
Want to start an LLC in North Dakota? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in North Dakota, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An North Dakota LLC: The Notion & Essence
Many North Dakota business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of North Dakota puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet North Dakota’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of North Dakota obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with North Dakota’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in North Dakota and will help you to start an LLC. The agent can be an North Dakota resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of North Dakota notifies:
The only duty of a registered agent under this chapter who has complied with this chapter is to forward to the represented person, at the last address given to the agent, any process, notice, or request that the agent serves. To provide notices to the legal entity at the address that was last provided to the agent by the legal entity.
A registered agent guarantees an excellent reputation for your North Dakota LLC. Also, if your business gets worse, North Dakota can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in North Dakota, you must file the Articles of Association with the North Dakota State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
You may fill out this form online at FirstStop in North Dakota.
How much it costs to create an LLC: They need a $ 135 LLC set-up fee.
Processing period. In this state, it can take 2 to 4 weeks to process the North Dakota LLC incorporation documents you mailed and send you your final documents. If you apply online it will slightly reduce the waiting time, but there are currently too many applications being sent to North Dakota. Mind that the calculation of working days begins after ALL the necessary documents are in order and correctly submitted.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in North Dakota, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
When it comes to LLC taxes that the state levies, in North Dakota you have to pay taxes that depend on the type of business you have. For cross-cutting organizations, an individual enterprise, or a partnership, you pay income tax on your tax returns. But some LLCs want to pay taxes like a corporation, in which case they will pay state corporate income tax.
The corporate tax rate ranges from 1.41% to 4.31% and a fixed amount is added here, calculated from your annual income. Find out all about corporate taxes here.
Retail LLCs in North Dakota must also pay state sales tax. The current rate in the state mostly does not exceed 5%. You can read more about sales tax rates and demands here.
The owners of the LLC, in which the employees work, should also pay some taxes. First of all, employers must pay withholding taxes on the wages of their employees. You withhold a portion of the employee’s salary and give that tax to the state.
Learn more about taxes paid in North Dakota here. Likewise, North Dakota employers must also pay into government unemployment insurance. Strictly speaking, this is not a tax, but you must pay it regularly, which is why we write about it in this section. You can find out more information at Job Service North Dakota.
In addition to general taxes, industry-specific taxes are also levied here. North Dakota has taxes on alcohol, fuel, and certain other foods. You can view a list of state taxes for new businesses here.
Taxes can be huge, but in North Dakota, it is easy to register and apply to pay most taxes on your business at the Taxpayer Access Point.
Local Tax Business Demands
You may need to pay some of the local taxes, but it all depends on where your business is located in North Dakota. Occasionally, individual counties in a given state may require additional sales tax on top of the state tax. You can find a list of current sales tax rates by postal code here.
Stage №6: Getting Business Licenses & Permits
The state does not have a statewide business license that each LLC must acquire to operate in North Dakota.
But the state demands licenses that are supported by the federal government for certain professional activities, this list usually includes agricultural activities, aviation, and some other professions. For more information, see the Small Business Association Lists for Federally- Regulated Industries needing licensing.
The state has tax requirements for each industry and has licenses and permits required to operate businesses in specific industries. There are some special licenses among the documents for working in North Dakota, so there is a great possibility that one of them may be needed for your LLC.
Before starting a business, every LLC owner needs to search the state license database for doing business here. Also, don’t forget that local authorities can demand a license or permission too.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
Business Insurance
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the North Dakota Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting
Income reporting is precisely the report on the income that you received from your business. It is important to always remember that you need to fill out this reporting form regardless of whether you are receiving income during the year or, on the contrary, losing your money.
In the state of North Dakota, there is a very useful resource for accurately understanding and filling out income statements correctly, which you can find here.
Referring to the services of a qualified accountant
To work here, all LLCs must complete a report every year. You can submit it online here. Completion date – until November 15 of each year; a commission of $ 50 will be charged. This report helps you update any information that is relevant to your business and has changed in some way over the past year.