When you’re starting a limited liability company (LLC) in North Dakota, it’s important to understand what your expenses could be. But this can be tricky when what you need to do and how much it will cost is not always clear.
This article identifies and explains the potential expenditures you might need to make when starting a North Dakota limited liability company.
In this article, you will learn:
- The mandatory costs to start a North Dakota LLC
- Extra investments that you should consider
- How to select the most appropriate LLC formation strategy
Read on to discover what you need to know about North Dakota LLC formation expenses.
Total North Dakota LLC Cost – Starting at $135
According to the North Dakota Secretary of State's LLC Fees, the lowest possible cost to start a North Dakota LLC is $135.
This only includes one item:
- North Dakota Articles of Organization filing fee: $135
Your LLC might also need to get a sales tax permit from the North Dakota State Tax Commissioner, but doing so is free. Additionally, you might need a professional or local business license for your LLC, the costs of which vary.
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North Dakota LLCs – the Basic Costs
While the total cost of forming an LLC in North Dakota varies, the absolute minimum is $135. We’ve explained what your mandatory costs could include in the section below.
Articles of Organization Filing Fee — $135
Articles of Organization are the legal papers that officially start LLCs. To form a North Dakota LLC, you must file these articles with the Secretary of State. Although the name sounds intimidating, you just need to include basic information about your company.
The filing fee for North Dakota LLC Articles of Organization is $135. You must submit this document online.
Sales Tax Permit — Free
If your LLC will sell taxable tangible personal property, recreational activities admissions, or lodging rentals, you must obtain a sales tax permit from the State Tax Commissioner. It is recommended that you apply at least 30 days before you open for business.
You can apply for your sales tax permit online using the North Dakota Taxpayer Access Point. There is no filing fee.
Professional Licenses and Business Permits — Variable
North Dakota requires businesses in certain industries to obtain licenses or permits to operate legally. You can learn more on ND.gov’s Licensing Information website.
Your company might also need a local permit or business license. For instance, the city of Fargo requires certain types of LLCs to get business licenses.
North Dakota LLCs – Optional Costs to Consider
In addition to the mandatory costs of starting an LLC, you should consider some optional purchases. While you aren’t legally required to make these expenditures, spending a little extra cash can help your North Dakota limited liability company thrive.
Expedited LLC Filing Fees — N/A
North Dakota does not offer expedited filing. Be prepared for the processing of your LLC filings to take up to four weeks.
Registered Agent Fee — about $100 per year
North Dakota law requires every LLC to name a registered agent who will receive legal papers for the business. You will list your registered agent’s information in your North Dakota LLC Articles of Organization at no added cost. But there is a $10 fee if you even want to change your agent.
Many new business owners appoint themselves as their LLCs' registered agents. Although this seems like the cheapest and easiest option, being your own agent can create issues.
First, registered agents are required to always be ready to accept documents during routine business hours. You are not allowed to take breaks or go on vacation. Additionally, registered agents must agree to make their addresses publicly available. For this reason, you might receive excessive amounts of junk mail and have your privacy compromised in other ways.
That’s why we suggest that all LLCs use a professional registered agent service. They only charge around $100 per year, and the service will manage all of your LLC’s registered agent duties for you.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
North Dakota operating agreements are contracts that LLC members use to set the rules for the company. An operating agreement will list vital terms like each member’s rights and duties and how to join or leave the LLC.
North Dakota law doesn’t mandate that LLCs make operating agreements. However, we strongly suggest that you have one. While you are allowed to write your own LLC operating agreement, working with an expert is more advisable.
Some entrepreneurs hire lawyers to write their LLCs’ operating agreements. If you choose this route, you will know that your contract is accurate and thorough. Just keep in mind that working with an attorney can be expensive. If you want to spend less, an LLC formation service will prepare an operating agreement for your LLC for as little as $39.
DBA Fee — $25
Many LLCs operate under “doing business as” or “DBA” names. A DBA is a name that a company uses that isn’t its legal name. For instance, dropping the “LLC” from a company’s official name for its daily business is common.
In North Dakota, DBAs are called “trade names.” If you want to use a DBA for your LLC, you must file a Trade Name Registration with the Secretary of State.
You must register your DBA online. There is a $25 filing fee.
Name Reservation Fee — $10
Once you have chosen the business name you want for your North Dakota LLC, you can reserve it for renewable one-year periods. You don’t have to reserve your business name if you are ready to register your LLC. But if you still need some time, a reservation will prevent others from taking the name you want while you prepare your documents.
To reserve a name for your LLC, you must file a Reserved Name Application with the Secretary of State. There is a $10 filing fee, and you must submit your application online.
Domain Name — about $20 per year
An LLC website is often an integral component of a modern marketing strategy. To start a website for your business, you must buy a domain name for it. Luckily, domains are inexpensive and readily obtainable.
Still, it’s best to purchase your domain name ASAP. If you don’t move quickly, someone else might take it first. For instance, “domain squatters” like to buy up new LLCs’ potential domain names and resell them for much higher prices.
You can get a domain from GoDaddy.com or a similar service for around $20 to $50 per year. And these websites often offer discounted rates, so you can probably get one even cheaper.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit identification number assigned to a company by the Internal Revenue Service. It may help to think of an EIN as a business’s social security number. While some LLCs must get EINs, others are not legally required to have one.
Either way, we suggest that every LLC owner get an EIN. Doing so will be helpful for several reasons. For one thing, most banks need an EIN before they will open a business bank account for your LLC. An EIN can also deter identity thieves, as you won’t need to use your SSN as often.
You can apply for an EIN for your LLC online or by mailing Form SS-4 to the IRS. Just remember that you never need to pay for an EIN. If someone is selling EINs as a stand-alone service, it is probably a scam.
Read More: How to Get an Employer Identification Number in North Dakota
Foreign LLC Qualification Fees — about $100 per extra state
If you want to expand your business beyond North Dakota’s borders, make sure to plan for extra costs. You don’t have to need to start a new LLC in every state where you operate. But, you will need to register as a foreign limited liability company.
Foreign LLC filing fees vary among states. Many are about $100.
Writing Formation Costs Off
Generally, you can deduct your LLC formation costs as business startup expenses on your federal income taxes. The IRS offers an array of guidance on this subject. So check out the IRS website to learn more about tax deductions.
Because LLCs are classified as “pass-through” entities, LLC owners can deduct up to $5,000 in startup expenses from their federal income taxes. This is only allowed for the year they start the company.
Yvonne decides to start a single-member LLC and open a house moving business in Fargo, North Dakota. Her formation expenses are as follows:
- North Dakota LLC Articles of Organization: $135
- Fargo House Mover License: $125
- Operating Agreement: $35
- North Dakota Registered Agent Service Fees: $90
- DBA (trade name) Fee: $25
- Name Reservation Fee: $10
- Web Domain Costs: $25
Because the LLC is a pass-through tax entity, it won’t be subject to income taxes. Instead, Yvonne will report the proceeds she receives from the LLC and any deductions on her personal state and federal income taxes.
Yvonne's total formation costs were $445. Before deducting her expenses, Yvonne’s total taxable income was $46,000. However, these deductions will lower her taxable income to $45,555. This will drop her 2023 federal income taxes from $5,869 to $5,771.
Although this reduction might not seem significant, LLC owners who commit to deducting expenses will see significant savings accrue over time.
Cheapest Way to Start an LLC in North Dakota
Selecting an LLC formation approach can be challenging. To help you decide which method best fits your needs, we’ve outlined the pros and cons of three popular alternatives below.
Formation Service – $39 + state fees
LLC formation services are a popular choice, particularly for first-time business owners. While these businesses are not law firms, they specialize in creating business entities such as LLCs.
LLC formation services are an excellent fit for many businesses. The benefits of this method include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
Still, a formation service isn't the best option for everyone. The disadvantages to this strategy include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
If you need a complicated LLC structure or have other unique needs, hiring an attorney might be the way to go. Just know that lawyers are not cheap. They frequently charge hourly for their services, often several hundred dollars per hour.
Despite the expense, hiring an attorney provides distinct benefits:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
However, the weaknesses of this method often outweigh the advantages:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Another option is to handle your LLC formation on your own. However, many business owners are already overworked. If this is your situation, a DIY approach might not be the best solution.
Start by assessing the advantages of doing it yourself:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
And be sure to also consider the drawbacks:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual North Dakota LLC Fees: How Much Will it Cost to Maintain your LLC?
North Dakota requires LLCs to submit an annual report to the Secretary of State. You must file your annual report online by searching for your company’s name. Once you locate the entry for your LLC, click the “File Annual Report” button.
There is a $50 filing fee for annual reports submitted by November 15. If you file after that date, the filing fee is $100.
You may also need to periodically or annually renew your LLC's business licenses or permits. Some of your optional costs may also be due each year. For example, you might need to pay the following expenses annually:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in North Dakota
North Dakota LLCs don’t have to pay income taxes because they are “pass-through” entities. Instead, you will report your LLC’s profits on your personal income taxes.
However, if you choose to have your LLC taxed like a corporation, it will have to pay North Dakota’s Corporate Income Tax.
North Dakota LLC Formation Costs Quick Links
- North Dakota Online Filing
- North Dakota Taxpayer Access Point
- North Dakota LLC Fees
- North Dakota Secretary of State
- North Dakota State Tax Commissioner
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
North Dakota LLC Formation Costs FAQs
How much does it cost to start an LLC in North Dakota?
The bare minimum cost is $135. But, it could cost you more based on your location and industry.
What is the cheapest way to start an LLC in North Dakota?
A do-it-yourself formation technique is the cheapest as far as how much money you will spend. But when you account for the value of your time, an affordable LLC formation service is often the most cost-effective approach.
Do I need to hire an attorney to form an LLC in North Dakota?
No. Most LLCs can be formed without a lawyer’s involvement. A DIY strategy or a formation service will be just fine for the average LLC.
Can I pay to form an LLC more quickly in North Dakota?
No. North Dakota does not offer expedited filing. Processing your North Dakota LLC documents can take up to four weeks.