Establishing Your Enterprise in North Dakota: A Professional’s Guide to LLCs and Corporations.
North Dakota, known for its strong agricultural base, energy industry, and growing technology sector, offers a stable and business-friendly environment for entrepreneurs. For those seeking to establish or expand their operations in the Flickertail State, a critical foundational decision involves choosing the appropriate legal structure: a Limited Liability Company (LLC) or a Corporation. This choice significantly impacts your legal liability, tax obligations, administrative responsibilities, and future growth potential.
At Sure Financial and Tax Services LLC, we specialize in guiding businesses through the intricate process of entity formation and ongoing compliance in North Dakota. This comprehensive guide provides a professional overview of the core distinctions, advantages, and formation requirements for both LLCs and Corporations, empowering you to make an informed decision for your North Dakota enterprise.
The North Dakota Limited Liability Company (LLC): Flexibility and Personal Asset Protection
The LLC is a highly favored and flexible business structure in North Dakota, offering a beneficial blend of personal asset protection (similar to a corporation) with the operational simplicity and potential for pass-through taxation typically associated with partnerships or sole proprietorships.
Key Advantages of a North Dakota LLC:
Limited Personal Liability: This crucial benefit shields your personal assets (such as your home, savings, and personal vehicles) from the LLC’s business debts, lawsuits, and other financial obligations.
Pass-Through Taxation (Federal & State Income Tax): By default, North Dakota LLCs are treated as “pass-through” entities for both federal and state income tax purposes. This means that business profits and losses are passed directly through to the owners’ personal tax returns, avoiding the “double taxation” that can occur with C-Corporations.
North Dakota Individual Income Tax: Income passed through to LLC members will be subject to North Dakota’s graduated individual income tax rates, which for 2025 range from 1.95% to 2.50% (for taxable income over certain thresholds).
LLCs also offer the flexibility to elect to be taxed as an S-Corporation or a C-Corporation if strategically advantageous. Electing S-Corp status can sometimes lead to self-employment tax savings.
Operational Flexibility: LLCs generally have fewer formal requirements and ongoing compliance obligations compared to corporations. This allows for greater freedom in structuring management, decision-making, and profit distribution, typically outlined in an internal Operating Agreement.
Owner Privacy: While the registered agent’s information is public, North Dakota LLC laws generally do not require the names of all members or managers to be listed on public state filings, unless you choose to include them in the Articles of Organization.
North Dakota Business Taxes Applicable to LLCs:
Sales and Use Tax: If your business sells tangible personal property or certain taxable services, you are required to collect and remit North Dakota sales or use tax. The statewide sales tax rate is 5%. Local jurisdictions may impose additional rates, bringing the total combined state and local rate to an average of 7.04% in some areas. Businesses are required to register with the North Dakota Office of the State Tax Commissioner.
Withholding Tax: If your LLC has employees, you will be required to register for and remit state income tax withholding and unemployment insurance with the North Dakota Office of the State Tax Commissioner and Job Service North Dakota, respectively.
No Franchise Tax: North Dakota does not levy a franchise tax on LLCs.
Forming Your North Dakota LLC: Key Steps (as of July 2025)
Name Selection: Choose a unique business name that includes “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.” The name must be distinguishable from other entities on file with the North Dakota Secretary of State (SOS). You can check for name availability using the SOS’s online Business Search tool (FirstStop portal). You can optionally reserve an available name for up to 12 months by filing a Name Reservation Application for a $10 fee.
Trade Name (DBA): If you plan to operate under a name different from your legal LLC name, you must register a Trade Name with the SOS by filing a Trade Name Registration. The fee is currently $25.
Appoint a North Dakota Registered Agent: Every North Dakota LLC must appoint a registered agent. This individual or entity must have a physical street address in North Dakota (not a P.O. Box) and be available during regular business hours to accept legal documents and official notices on behalf of your LLC. The registered agent must be an individual North Dakota resident over 18 or a business entity authorized to transact business in North Dakota.
File Articles of Organization: This is the official document that legally creates your LLC. It is filed with the North Dakota Secretary of State. The filing fee is currently $135. This can typically be filed online using the FirstStop application or by mail. The Articles of Organization must include:
The LLC’s name.
The principal office address.
The LLC’s purpose.
Whether the LLC is perpetual or will end at a set date.
The name and address of the registered agent.
The effective date of the LLC (if not immediate).
The names, addresses, and signatures of the LLC organizers.
Note: Specific requirements exist for Farming LLCs and Professional LLCs.
Prepare an Operating Agreement: While not legally mandated to be filed with the state, a comprehensive Operating Agreement is strongly recommended for all North Dakota LLCs, even single-member ones. This internal document outlines the ownership structure, member roles and responsibilities, profit and loss distribution, decision-making processes, and procedures for resolving disputes. It is a critical legal document for internal governance and for maintaining the separate legal existence of your LLC.
Obtain an Employer Identification Number (EIN): An EIN is a federal tax identification number issued by the IRS. You will need an EIN for federal tax filings, opening a business bank account, and hiring employees (even if you’re the only employee). You can apply for an EIN online for free through the IRS website.
Register for North Dakota State Taxes & Obtain Permits/Licenses:
Office of the State Tax Commissioner: Register with the North Dakota Office of the State Tax Commissioner for any applicable state taxes, such as sales and use tax and withholding tax.
Local Licenses/Permits: North Dakota does not have a general statewide business license for all LLCs. However, specific state, county, and local business licenses and permits may be required depending on your industry, profession, and location (e.g., occupational licenses for certain fields, zoning permits, specific local business permits). Check with your local city and county clerk’s offices.
File Annual Report: All North Dakota LLCs are required to file an Annual Report with the North Dakota Secretary of State. This report is due annually by November 15th each year. The filing fee is currently $50. There is a $50 late fee for missing the deadline. Failure to file can lead to the LLC being placed in “Not Good Standing” and potentially administrative dissolution after six months.
The North Dakota Corporation: Formal Structure, Defined Governance, and Investor Appeal
A Corporation (C-Corp or S-Corp) functions as a distinct legal entity separate from its owners (shareholders). This structure is frequently chosen by businesses aiming for substantial growth, planning to raise external capital, or those that benefit from a more formalized governance framework.
Key Advantages of a North Dakota Corporation:
Strongest Liability Protection: Corporations provide the most robust shield for personal assets, completely separating the personal finances of shareholders from the corporation’s debts and legal obligations.
Capital Acquisition: The ability to issue shares of stock makes corporations highly attractive for raising capital from investors, including venture capitalists and public markets.
Credibility: The corporate structure can enhance a business’s perceived professionalism and stability, which can be advantageous in securing large contracts, partnerships, or loans.
Perpetual Existence: A corporation’s existence is independent of its owners, ensuring continuity even with changes in shareholder or management composition.
Well-Defined Legal Framework: North Dakota’s corporate laws provide a clear and established legal framework for corporate governance and operations.
North Dakota Corporate Income Tax (as of 2025): North Dakota has a graduated corporate income tax, with rates ranging from 1.41% to 4.31%.
Forming Your North Dakota Corporation: Key Steps (as of July 2025)
Name Selection: Choose a unique corporate name that includes “Corporation,” “Incorporated,” “Company,” “Limited,” or an abbreviation thereof (e.g., “Corp.,” “Inc.,” “Co.,” “Ltd.”). The name must be distinguishable from other entities on file with the North Dakota SOS. You can optionally reserve an available name for 12 months for a $10 fee.
Appoint a North Dakota Registered Agent: A North Dakota corporation must appoint a registered agent with a physical street address in the state to receive legal and official documents.
Appoint Initial Directors and Officers: North Dakota requires at least one incorporator. The incorporator(s) will elect the initial directors, and the directors will then appoint officers (President, Secretary, Treasurer, etc.). The names and addresses of the directors must be listed in the Articles of Incorporation.
File Articles of Incorporation: This document is filed with the North Dakota Secretary of State. The filing fee is currently $100. This can be filed online, by fax, or by mail. The Articles of Incorporation must include:
The corporate name.
The name and address of the registered agent.
The names and addresses of each incorporator.
The names and addresses of the directors.
The effective date of incorporation (if not immediate, up to 90 days in the future).
The number of shares to issue and par value (if applicable).
The purpose of the corporation (general purpose is usually acceptable unless otherwise specified).
The duration of the corporation (perpetual unless stated otherwise).
The signature of the incorporator.
Adopt Corporate Bylaws: North Dakota law requires corporations to adopt bylaws. These internal rules govern the corporation’s operations. They define the roles of shareholders, directors, and officers; outline meeting procedures; and detail how stock will be issued and transferred. They are not filed with the state but are crucial for internal governance and for demonstrating the corporation’s separate legal existence.
Hold an Organizational Meeting: The initial directors should convene an organizational meeting to formally adopt bylaws, elect officers, authorize the issuance of shares of stock, and conduct other initial business. Minutes of this meeting should be kept.
Issue Stock: Shares of stock are issued to the initial shareholders as outlined in the Articles of Incorporation and bylaws.
Obtain an Employer Identification Number (EIN): An EIN is required for all federal tax purposes, opening business bank accounts, and hiring employees.
Register for North Dakota State Taxes & Obtain Permits/Licenses: Corporations must register with the North Dakota Office of the State Tax Commissioner for corporate income tax, sales and use tax (if applicable), withholding tax, and unemployment insurance. Secure any necessary state and local business licenses and permits specific to their industry.
File Annual Report: All North Dakota corporations are required to file an Annual Report with the North Dakota Secretary of State.
Domestic Profit Corporations are due by August 1st.
Foreign Corporations (out-of-state entities registered to do business in ND) are due by May 15th.
The filing fee is currently $25. There is a $20 late fee if filed by November 1st, and $60 late fee if filed after November 1st. Failure to file can lead to dissolution or revocation.
The Essential Modern Requirement: Beneficial Ownership Information (BOI) Reporting (Important Update!)
As of March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA).
Therefore, if you are forming a domestic (U.S.) LLC or Corporation in North Dakota, you are currently EXEMPT from the FinCEN BOI reporting requirement.
However, it’s crucial to stay informed about any potential future changes or clarifications from FinCEN. This exemption applies specifically to U.S. entities. Foreign entities registering to do business in the U.S. may still have reporting obligations.
Making the Right Choice for Your North Dakota Enterprise
The optimal business structure for your venture in North Dakota depends on your specific objectives and operational preferences:
Choose a North Dakota LLC if you prioritize strong personal liability protection, desire operational flexibility with fewer internal formalities, and prefer “pass-through” taxation for state individual income tax purposes. Be prepared for the annual report filing and its associated fee. It’s often ideal for small to medium-sized businesses and professional practices.
Opt for a North Dakota Corporation if your plans involve raising significant external capital, require a highly formalized management structure, or if a traditional corporate framework (with its defined roles for shareholders, directors, and officers) is preferred by investors or industry standards. North Dakota’s graduated corporate income tax rates are relatively low, and there is no franchise tax. Be prepared for the annual report filing.
At Sure Financial and Tax Services LLC, we provide comprehensive support for business formation and ongoing compliance in North Dakota. Our expertise ensures your business is established on a solid legal and financial foundation, allowing you to confidently pursue opportunities in North Dakota’s evolving economic landscape.
Ready to establish your business in North Dakota?
Contact Sure Financial and Tax Services LLC today for a strategic discussion on the optimal entity structure for your unique needs.
Next step… fill up the information sheet to register your corporation.
