How to Start an LLC in North Dakota

Starting a North Dakota limited liability company (LLC) can seem intimidating to a new business owner. That’s why we put together this guide: to demystify the LLC process and make it easier to understand.

By the time you finish this article, you will know:

• The steps to take to form an LLC in North Dakota
• Additional tasks you should take care of once you register your LLC
• The cost of creating a North Dakota LLC and how long it takes

Read on to learn all the details about your North Dakota LLC formation!

Last updated: Sep 2024

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Step 1: Name your North Dakota LLC

To start a North Dakota LLC, you will first need to choose a name for your company. Keep in mind there are some rules about what you can name your LLC. For instance, some words are mandatory, while other words are prohibited.

These rules are explained in more detail below.

Words You Have to Use

North Dakota Century Code Section 10-32.1-11 says that all LLC names must include one of the following:

• “limited liability company”
• “L.L.C”
• “LLC”

Words You Can’t Use

Section 10-32.1-11 also says that your LLC’s name can’t contain any of the following:

• “corporation”
• “incorporated”
• “limited partnership”
• “limited liability partnership”
• “limited liability limited partnership”
• Any abbreviation of these words.

The words “limited” or “company” also can’t be used unless as part of the words “limited liability company.”

The statute also prohibits using a name that implies that the LLC is organized for an illegal purpose or a different purpose than is listed in its registration documents. For instance, your LLC name can’t make it seem like you offer certain services if you aren’t licensed to provide them.

Finally, the statute also says that your LLC name can’t be the same as, or “deceptively similar” to, the name of another business that has been registered with the North Dakota Secretary of State.

Research the LLC Name You Want

To determine if the name you want is available, you can search using the Secretary of State’s Business Search.

If the name you want has already been taken, or if your name is deceptively similar to another name, you can only use the name if the other business consents or you get a court order that says you have the right to use it.

If your desired name is available, North Dakota Century Code Section 10-32.1-12 lets you reserve it for renewable one-year periods. To reserve your name, you must file a Reserved Name Application on the Secretary of State’s website. There is a $10 filing fee.

North Dakota DBA: Using a Trade Name

If you prefer, as many business owners do, you can use a “doing business as” or “DBA” name to market your LLC. This means that the public will know your company by its DBA, not its official name.

The DBA name may be easier to remember and less formal than the legal name. DBAs also let you change the name your business “goes by” without legally changing its name.

North Dakota calls DBAs “trade names.” If you want to use a DBA for your LLC, North Dakota Century Code Section 47-25-02 says you must register it. You can do this by filing a Trade Name Registration on the Secretary of State’s website. There is a $25 filing fee.

Step 2: Appoint a Registered Agent for your LLC

A registered agent is an individual or business that receives official documents for a company.

North Dakota Century Code Section 10-32.1-16 says all LLCs must maintain a registered agent in the state. Your LLC’s agent must be located in North Dakota and be available to accept service of process during regular business hours.

North Dakota has two types of registered agents: commercial and non-commercial. The main difference is that commercial agents must be “in the business” of serving as registered agents.

New business owners often think they should name themselves as their LLC’s registered agent. And there are some clear advantages to this course of action:

• It’s cheap: You’re not paying someone else to do it for you.
• It’s easy: The only address and contact information you have to keep current is your own.
• It’s reliable: You will receive all important documents personally.

Sadly, many business owners learn too late that serving as their own LLC’s registered agent can cause problems.

Some of the negatives of being your LLC’s registered agent include:

• No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information.
• Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
• No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
• Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
• It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.

Hiring a professional registered agent service will allow you to avoid these issues. It only costs around $100 a year, and your agent will quickly let you know whenever papers arrive for your business.

If you plan to do business outside North Dakota, you are required by law to register as a foreign LLC in that state. You’ll also need to have a registered agent in each state. 

In these situations, we suggest that you use a national registered agent service. That way, you’ll only have to hire one business to handle all of your needs.

Step 3: File Your North Dakota LLC Articles of Organization

Articles of Organization are a document that includes basic info about your business. You will need to file them with the North Dakota Secretary of State to start your LLC.

What to include in my North Dakota Articles of Organization?

North Dakota Century Code Section 10-32.1-20 says that your articles of organization must list:

• The LLC’s name.
• The name and address of the registered agent.
• The address of the principal executive office.
• The name and address of each organizer.

If you are using a commercial registered agent, you only need to list their name in your articles. But if you go with a non-commercial registered agent, you must also include their address.

You can file your North Dakota articles of organization online using the Secretary of State’s First Stop portal.

North Dakota LLC Filing Fee

According to the Secretary of State’s LLC Fees, the filing fee for North Dakota LLC articles of organization is $135.

Read More: How Much Does It Cost to Form an LLC in North Dakota

North Dakota LLC Processing Time

Processing for your North Dakota LLC registration can take up to four weeks.

Step 4: Draft your North Dakota LLC Operating Agreement

An operating agreement is a contract between the owners of an LLC. It sets the rules for how the business should work and states each member’s rights and duties.

You aren’t required to make an operating agreement for your North Dakota LLC. Still, it can be helpful to think about how the business will operate before it starts. An operating agreement sets member expectations and can help avoid confusion in the future.

For instance, say a member of your LLC wants to sell their share in the business. The operating agreement will tell you what to do and dictate things like whether or not exiting members can sell their shares back, how you’ll divide up their responsibilities once they leave, and other points that need to be addressed.

Some other benefits of making an operating agreement for your LLC include:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
• They say what the manager has the right to do. Managers also have special duties to the company and the members. The LLC operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business entity now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

When drafting an LLC operating agreement, every member should have their say. This will help you address key issues upfront and avoid problems later on.

Check out North Dakota Century Code Section 10-32.1-13 for more info about the North Dakota operating agreements rules.

Step 5: Get an EIN (Employer Identification Number) for Your North Dakota LLC

An Employer Identification Number (EIN) is a nine-digit ID number that the IRS issues to businesses. You can use your EIN to identify your LLC in the same way you’d use your SSN to ID yourself.

Here are the most common times when you need an EIN:

• Does your LLC have more than one member?
• Does your LLC have any employees?
• Is your LLC taxed as a C corporation or S corporation?

If the answer to any of these questions is yes, your LLC must get an EIN.

Single-member LLCs don’t need to get an EIN because the owner can file taxes with their SSN. However, an EIN might be helpful for other parts of your business, such as if you want to protect your identity or open a business bank account.

You can apply for an EIN on the IRS website, or you can fill out Form SS-4. Online is the faster route since you don’t have to print and mail the form. Once you apply, you’ll have your EIN in just a few minutes.

An EIN is always free. This means you should never pay someone to do it for you unless it’s part of a larger service package.

Read More: How to Get an Employer Identification Number in North Dakota

First Tasks After Registering your North Dakota LLC

Starting a North Dakota LLC is a vital first step to setting up your business. However, you should do several other things after you register an LLC.

Open a Business Bank Account

The law does not require you to have a bank account for your company, but it is a good idea to do so. You will find it easier to manage your finances and protect yourself from personal liability if the company gets sued.

Some advantages of a business bank account include:

• Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
• More business opportunities: Your LLC can only receive credit card payments through a business bank account. You can also do business with people who won’t take personal payments.
• Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts.

The third point, personal asset protection, is vital.

One of the main benefits of setting up an LLC is that you’re treated as a separate legal entity from your business. This is known as the “corporate veil,” and it means that creditors can’t sue you for business-related debts out of your personal assets.

But if you mix in personal funds with those of your LLC, the corporate veil can be “pierced” during a lawsuit. If this happens, you can be held personally liable for your company’s debts. 

So, to keep you and your LLC separate, we suggest that you open a business bank account and use it exclusively for business purposes.

Get Business Insurance For Your North Dakota LLC

When you start a North Dakota LLC, it is vital to investigate insurance coverage for your business. Make sure to research the risks that are specific to your industry so you can choose the most appropriate policy.

Some common types of business insurance include:

• General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
• Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
• Workers’ compensation insurance: South Dakota law requires most employers to carry workers’ compensation insurance. Unlike most states, however, you cannot purchase private insurance. Instead, all policies must be purchased from the state fund, which is administered by North Dakota Workforce Safety & Insurance.
• Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
• Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
• Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.

Keep Your North Dakota Company Compliant

After you set up your LLC, it is essential to remain compliant with all your continuing legal obligations. An example of this is taxes, as certain LLCs may need to pay them. Depending on your industry, you may also need to get a business license or permit.

It’s crucial to stay up-to-date with the latest legal requirements for your LLC. This will make sure your business remains in good standing.

North Dakota Business Permits and Licenses

Your company may need to obtain a business license or permit to operate legally. Check out ND.gov’s Licensing Information webpage to learn more about the requirements for your LLC.

North Dakota Tax Requirements

If your LLC will sell physical goods, you will most likely be required to collect and pay sales tax. You will also need to apply for a sales and use permit with the North Dakota Taxpayer Access Point (TAP).

Federal LLC Tax Filing Requirements

LLCs are classified as “pass-through” entities, meaning all profits will be reported on Schedule C of the individual tax returns of its owners. The LLC itself will not be taxed.

You are also required to pay Social Security and Medicare taxes, even if you do not hire employees. And if you do have employees, you must take payroll taxes out of their checks.

Annual Report and other Filing Requirements

Under North Dakota Century Code Section 10-32.1-89, all LLCs must file an annual report with the Secretary of State. You can submit your annual report online by searching for your business name and clicking the “File Annual Report” button on the entry for your LLC.

There is a $50 filing fee if you submit your report by November 15 and a $100 fee if you submit it later.

North Dakota Business Formation Quick Links

• Internal Revenue Service — apply for an EIN online
• IRS information regarding the federal tax treatment of LLCs
• FirstStop (SOS)
• Business Search (SOS)
• LLC Fees (SOS)
• Business Forms (SOS)
• LLC FAQs (SOS)
• Limited Liability Company (SOS)
• Annual Report (SOS)

Statutes:

• North Dakota Uniform Limited Liability Company Act (Official)
• Name Requirements: North Dakota Century Code Section 10-32.1-11
• Name Reservation: North Dakota Century Code Section 10-32.1-12
• Trade Name: North Dakota Century Code Section 47-25-02
• Registered Agent: North Dakota Century Code Section 10-32.1-16
• Articles of Organization: North Dakota Century Code Section 10-32.1-20
• Operating Agreement: North Dakota Century Code Section 10-32.1-13
• Annual Report: North Dakota Century Code Section 10-32.1-89