Start an LLC in North Dakota (and Best LLC Services in ND)

Step 1: Name Your LLC

What’s in a name? Quite a bit, actually. Your business name is your North Dakota LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.

Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.

While you can (and should) be creative with your business name, there are certain state requirements that it must follow.

Don’t include a name on your Articles of Organization, business cards, or anywhere else until you confirm that it meets all the state’s requirements. Your name must include the words “Limited Liability Company,” or the abbreviations “LLC” or “L.L.C.” Additionally, your name cannot imply any unlawful activity or a business purpose other than the one outlined in the Articles of Organization.

You can follow all of these guidelines, but if your name is identical to one that’s already in use, it won’t be valid. If you find out that your name is already in use, you’ll need to find some way to make it unique. However, changes to the following components are NOT typically enough:

• Punctuation
• Capitalization
• Special characters and spacing
• Articles and conjunctions
• Spacing
• Business type designators like LLC, Inc., LP, or Ltd.

You must make a significant change to one or more of the name’s keywords, or rearrange the words, to distinguish a name.

For Example

Consider this: your friend Fanny wants to open a flower shop in Fargo, North Dakota. The name she is considering, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of State’s records.

Determine the Name Is Available

Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Articles of Organization without first confirming it’s available. Use the Secretary of State’s Business Search to see if there’s an existing business using your desired name.

Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.

Optional: Name Reservation

You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in North Dakota for a total of one year.

Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold by.

If you’re ready to start your business right away, you’re better off skipping the name reservation and simply using the name on your Articles of Organization, which will automatically register it.

Step 2: Choose a Registered Agent

Fanny’s LLC is quickly taking shape, and if it’s going to operate in North Dakota, she’ll need a go-between for state and legal communications. This is called the registered agent.

A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. But maintaining an agent isn’t just a convenience, it’s required.

Just take it from the Secretary of State website, which says: “a limited liability company must continuously maintain a registered agent to receive all legal documents for the limited liability company, including service of process if a lawsuit is filed against a limited liability company. The registered agent is expected to forward these documents to the limited liability company.”

LLC taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate.

Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside North Dakota and you foreign qualified your LLC here.

Now for the practical application, the “how-to.” The only step in designating your official registered agent is including their name and address on your Articles of Organization. This will put the agent’s information on your LLC’s public record. Make sure to get the agent’s consent before filing. Failure to do so can result in administrative dissolution.

You have two options for who can serve as a registered agent: an individual or a company.

Individual as Registered Agent

You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are a North Dakota resident with a physical address in the state.

You can even serve as your own LLC’s agent, provided you meet these requirements and are ready to take on the added responsibilities.

Registered Agent Service

It can be a lot easier, though, to use an LLC formation service as your registered agent, so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your North Dakota LLC on your own, you can use a national registered agent service to cover your agent duties.

During the life of your LLC you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.

Step 3: File the Formation Documents with the State

This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.

She’s reserved her unique business name and designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the North Dakota Secretary of State, giving it the authorization to commence business in the state.

Do your business online? Prefer to leave a paper trail? Either way, North Dakota has a filing option for you. No matter how you file your Articles of Organization, the filing fee is $135.

Online Filing

Take care of the entire process through North Dakota’s First Stop online services. You’ll need to create an account if you haven’t already. Then, under “Forms,” choose the Articles of Organization and follow the onscreen instructions. You’ll be finished in no time.

Hard Copy Filing

Print the form from First Stop and complete it. Then mail or hand-deliver it (with your payment) to:

Secretary of State

State of North Dakota

600 E Boulevard Avenue Dept 108

Bismarck, ND 58505-0500

For either option, processing can take up to four weeks depending on the volume of documents in the Secretary of State’s office queue.

Step 4: Create an Operating Agreement

The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.

North Dakota LLCs aren’t technically required to maintain operating agreements. Even so, it’s in your best interest to create one. This agreement essentially serves as your company’s bylaws, providing crucial structure, rules, procedures, and legal protection. Without one, your LLC will lose legitimacy in front of courts, banks, government agencies, other businesses, and more.

Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to the tax structure.

If you’ve decided to draft an agreement, there are two ways to go about it:

• Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but our favorite free template is from TRUiC.
• Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it includes all necessary information.

What are default laws?

Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.

Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.

Step 5: Get an EIN

There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.

Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.

The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:

Online

Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.

Fax

You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.

Mail

Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

Okay, so you’ve filed the Articles of Organization, designated a registered agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!

Step 6: Taxes, Licensing, & Income Reporting

For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a North Dakota LLC running smoothly and in good standing with the state.

Before you start doing business, create a plan for the following potential LLC requirements:

Federal Taxes

As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.

State Taxes

North Dakota’s income taxes act like federal ones do: they “pass through” to an LLC’s owners’ personal returns. You won’t have to worry about paying a “franchise” or “privilege” tax either, because North Dakota doesn’t have one. But before you celebrate, there are a few other business-related taxes you should check on.

Additional Taxes

Depending on certain circumstances, your LLC may be responsible for paying specific taxes. Do you sell merchandise? If so, your LLC will owe a Sales Tax and Use Tax. Do you have employees? Then it will need to pay a Withholding Tax. Register for all three through the North Dakota Taxpayer Access Point, or visit ND.gov for alternative payment options.

If you’re an employer, you’ll also need to pay an Unemployment Insurance Tax. Register for it and make payments through the Unemployment Insurance Employer Account System (UI EASY).

Plus, depending on your LLC’s location, it may owe a local tax to its city, municipality, or county. Consult your local government’s website to find out.

Licensing

The Articles of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.

Our friend Fanny, for example, may need to apply for a Nursery License through the Department of Agriculture before she can begin doing business. If she wanted to bake and sell her famous chocolate chip scones in her flower shop, she would need to get a Bakery License from the Department of Health. To find out if your LLC needs licensure, visit North Dakota’s licensing page.

Certain cities and counties require their own specific licenses on top of any state ones, so you should also check with your local government.

Reporting

Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when you’re rolling along and things are moving 100 miles per hour, don’t forget that North Dakota requires all of its businesses to submit one important recurring filing: the Annual Report.

Your LLC’s Annual Report will be due by November 15 each year, so mark that date on your calendar. The report costs $50, or $100 if you file after November 15. And if you don’t file within six months, your LLC will be administratively dissolved.

File your Annual Report through the First Stop filing service or by printing your digital form and mailing it to:

Annual Report Processing Center

Secretary of State

State of North Dakota

P.O. Box 5513

Bismarck, ND 58506-5513

And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your North Dakota LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.