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Business structures range in complexity from sole proprietorships (simplest) to corporations (most complex). Limited liability companies (LLCs) are right in the middle—they provide the personal liability protection of a corporation but have fewer formalities.
For North Dakota residents and aspiring business owners, forming an LLC is a smart way to protect your personal assets from business debts and liabilities. Establishing an LLC can be relatively straightforward, but it’s important to understand the basic requirements for forming an LLC in North Dakota before doing so.
This article explores the eight essential steps for starting an LLC in North Dakota.The 11 Best LLC Services for Starting an LLC in North Dakota
There are plenty of online LLC formation services out there, meaning you won’t have to navigate the confusing world of business law by yourself. But trust us—they aren’t created equal, so we created a list of the 11 best LLC services to cut through the noise.
- ZenBusiness — Best for entrepreneurs and startups
- IncFile — Easiest LLC setup
- Northwest Registered Agent — Best for maintaining privacy
- Rocket Lawyer — Best for affordable legal support
- LegalNature — Best for ongoing access to business documents
- LegalZoom — Most comprehensive LLC service
- BizFilings — Best for scalability
- Harbor Compliance — Best for ensuring compliance
- Inc Authority — Best for free LLC filing and bonuses
- MyCompanyWorks — Best for speedy processing
- Swyft Filings — Best for dedicated LLC support
Click here to read our full, in-depth reviews of each of these LLC services and which might be the best for your needs.Start a North Dakota LLC in 8 Easy Steps
A sole proprietorship won’t cut it if you plan to make a living or start a side hustle. The additional liability protection that LLCs provide is essential for business owners, and in North Dakota, the formation process is relatively simple.
- Choose a unique business name for your LLC
- Appoint a registered agent
- File Articles of Organization
- Draft an operating agreement
- Apply for an EIN
- Set up a business bank account
- Obtain necessary business licenses and permits
- Stay current with annual reports and franchise tax requirements
The exact process for forming a North Dakota LLC may differ depending on your situation, but this framework covers the basics. If you need help navigating the formation process, enlisting an attorney or professional service can make the process easier and ensure that your LLC is compliant with all state regulations.Step 1: Choose a Unique Business Name for Your LLC
You can’t form an LLC without naming it, but the reality is that the name doesn’t matter as much as you think—it just needs to accurately represent your brand in a way that resonates with potential customers.
You can use a few strategies to come up with a name:
- Use your own name (or a catchy combination of your first and last names).
- Try to create a memorable business name that accurately reflects the nature of your products or services (e.g., “Mountain High Travel” for a travel agency).
- Combine two relevant words or phrases (e.g., “Style and Grace Boutique” for a clothing store).
- Invent a word or use an unrelated term in a creative way (e.g., “Apple” for a computer company).
If you aren’t sure where to start, plenty of online business name generators can help you brainstorm.Use ChatGPT to come up with business name ideas.
ChatGPT is a newer tool you can use to generate business name ideas. In the example above, we asked it for ideas for a marketing agency, and it returned 15 responses (some of which were surprisingly useful). Since this software is free to use and generates outputs in seconds, you could play with it all day until you come up with the perfect name.
No matter which route you decide to take, it’s important that the LLC name abides by the following criteria:
- It must include “Limited Liability Company,” “LLC,” “L.L.C.,” or some variation thereof
- It may not contain language implying government agency affiliation
- It must be distinguishable from existing LLCs
- It may not include certain restricted words, such as “bank” or “university”
You can check the existing business names in North Dakota by searching the state’s business entity database.Step 2: Appoint a Registered Agent
Your LLC must have a registered agent to legally do business in North Dakota. A registered agent is simply an individual or organization authorized to receive service of process on behalf of your LLC.
The state’s regulations require the following:
- The agent must be a resident of North Dakota or a corporation authorized to conduct business in the state
- The agent must have a physical street address in the state
- The agent must be available during regular business hours to accept service of process and other important documents
You can appoint yourself as the registered agent for your LLC, or you can hire a registered agent service to handle everything for you. If you decide to self-appoint, make sure that you are always available to accept service of process and other documents related to your business.
Note: We advise against appointing yourself as a registered agent. There are several advantages of using a registered agent service, not least of which is that they provide invaluable legal protection at a very affordable price. Plus, registered agent services typically offer other useful services, such as mail forwarding and document filing.Step 3: File Articles of Organization The North Dakota Secretary of State website asks a series of questions and makes submitting your Articles of Organization as easy as possible.
Articles of Organization is a legal document filed with the Secretary of State that officially establishes an LLC in North Dakota. When you register your North Dakota LLC online with FirstStop, the Secretary of State’s website, it will automatically provide you with a link to set up an account and submit the form.
Every state has similar requirements for the filing of this document, but the North Dakota Articles of Organization must include the following information:
- LLC name
- Registered agent’s name and address
- Management structure (member-managed or manager-managed)
- Names and addresses of LLC members and managers (if applicable)
- Name, address, and signature of the organizer
- Purpose of the LLC
- The date the LLC will begin business (on or later than the filing date)
- The date on which the LLC will dissolve (if applicable)
- Signatures from all parties involved
This document is meant to be simple and concise—it should not be more than one or two pages long. The North Dakota Articles of Organization can be filed online or by mail, with a fee of $135. Depending on how you choose to file it (online, by mail, or by fax), the processing time can take anywhere from a few days to a few weeks.
Once you have submitted your Articles of Organization, the state will review them and notify you if any changes need to be made. Once all requirements are met, the Secretary of State will issue an order granting authority for your LLC to transact business in North Dakota.Step 4: Draft an Operating Agreement
An operating agreement is a legal document that outlines the members’ and managers’ rights, responsibilities, and duties in an LLC. It specifies several aspects of how the business will be managed, including but not limited to:
- Profit sharing
- Voting rules for decisions regarding the company
- What will happen if members or managers leave
- Dispute resolution procedures
- Capital contributions of members
The operating agreement does not have to be filed with the state—it can stay private among members and managers. However, having an operating agreement is critical because it serves as a legal document that clearly outlines everyone’s roles in the company and can serve as evidence if any disputes arise in the future.
Another risk of not having an operating agreement is that your LLC is subject to state default rules, which may not be ideal for your business. In the event of a dispute, it’s best to have a written document in place that outlines how disagreements will be addressed.A free online template is the best way to draft your operating agreement quickly.
Like Articles of Organization, an operating agreement doesn’t need to be complicated. You can use a free online template to get started or hire an attorney to help you draft a custom agreement that fits your specific needs.Step 5: Apply for an EIN
An Employer Identification Number, or EIN, is a unique nine-digit number assigned to each business by the Internal Revenue Service (IRS). It is used for tax identification and reporting purposes and for filing taxes.
An EIN is similar to an individual’s Social Security Number in that it identifies the business and allows the IRS to keep track of taxes paid by the LLC. To apply for an EIN, you must fill out Form SS-4 online or by mail and submit it to the IRS. The application is free and takes only a few minutes to complete.
There are several times when you will need to use your EIN:
- Setting up a business bank account
- Filing taxes each year
- Hiring employees
- Applying for business licenses and permits
If you work with clients on a contractual basis, you may also need to provide them with your EIN as a part of the agreement.Step 6: Open a Business Bank Account
It’s important to keep your personal and business finances separate, which is why you should open a business bank account for your LLC once it is formed. This will allow you to track your income and expenses accurately and easily.
When choosing a bank for your LLC, keep in mind that not all banks are the same. Some may offer special services or discounts for businesses, so shopping around and comparing different options is important before choosing one.
When opening a bank account for your business, you will need to provide the following information:
- Your EIN
- The Articles of Organization
- Your driver’s license or another form of photo ID
- Proof of business address
When it comes to business banking, you have a few options. You could go the traditional route and use a brick-and-mortar bank, or you could opt for an online business banking institution like Brex, Mercury, or Divvy. Choosing the latter means fewer fees, better benefits, software integrations, and a generally better user interface with built-in functionality for your business.Step 7: Obtain Necessary Business Licenses and Permits
Before you can start operating your business in North Dakota, you will need to obtain any necessary licenses and permits. This may include a general business license as well as specific permits related to your industry or profession.
Businesses that sell consumer goods must also apply for a sales tax permit, which is issued by the state’s Department of Revenue. The purpose of this permit is to collect and remit sales tax from customers.
For many basic businesses, you won’t need to worry too much about obtaining additional licenses and permits. However, permitting is a significant element of your registration process if you operate in one of the following areas:
- Construction and home services
- Tobacco and alcohol sales
- Transportation services
- Medical and health-related businesses
- Professional services (e.g., accounting, legal, engineering)
All North Dakota LLCs—both domestic and foreign—must submit an annual report to the Secretary of State by November 15th of each year. This is in addition to their initial registration with the Secretary of State.
Fortunately, it’s easy. You can file your report online at the FirstStop page on the official website for a fee of $50.
Unlike some states (e.g., California), North Dakota LLCs don’t have to pay additional franchise taxes. However, depending on the industry you are in and its income level, there may be other business taxes that you need to file.Final Thoughts About Starting an LLC in North Dakota
Forming an LLC in North Dakota doesn’t have to be difficult or time-consuming. By following the eight steps outlined above, you can successfully launch your business and get it up and running in no time.
Even if you don’t consider yourself a business expert, there are plenty of resources and guides available to help you along the way. It’s important to take your time, research thoroughly, and determine the right legal structure for your business.
Don’t forget, registering an LLC in North Dakota is just the first step of many: you must also stay up to date with filing requirements and obtain any necessary licenses or permits. If you forget this, you could face fines, penalties, and potential business closure or suspension.
* This article was originally published here