An LLC provides small businesses with liability protection, tax advantages, and more. Consider forming an LLC for your new North Dakota business to minimize liability for you and your partners. It’s a straightforward process requiring just a few forms. Check out our guide on how to start an LLC in North Dakota—it covers all you need to kickstart the process.
#1: Name Your LLC North Dakota
#2: Hire a Registered Agent
#3: File Your LLC North Dakota Articles of Organization
#4: Obtain a Certificate From The State
#5: Create an Operating Agreement
#6: Get a Business Identification Number
Before You Start Your North Dakota LLC
Forming a North Dakota LLC is straightforward if you carefully follow each step. The state streamlines the process for sole proprietorships, partnerships, and LLCs, supporting the growth of small businesses, which in turn fuels North Dakota’s prosperity.
Create a Business Plan
Like consulting a map before a trip, a business plan acts as a roadmap for new companies. It not only defines a company’s purpose and values but also outlines strategies for financing, marketing, and operations essential for its success.
Create a detailed and professional-looking business plan to present to others confidently. Share this document not only for internal use but also with potential investors and lenders to showcase your business’s potential for success.
Explore Business Entity Options
Before forming your company as an LLC, explore other business entity structures available. A corporation better suits your needs for larger operations with shared control. Conversely, a sole proprietorship or partnership could be more suitable for very small businesses that do not need extensive liability protection.
Forming a North Dakota LLC offers several advantages, including protection of members’ personal assets similar to a corporate structure and safeguarding against asset seizure in lawsuits or bankruptcy.
Similar to sole proprietorships or partnerships, LLCs grant owners significant authority over management and operations. They also provide tax flexibility, allowing members to either report company profits and losses on personal tax returns or opt for separate entity taxation.
1. Name Your LLC North Dakota
Once you’ve decided on proceeding with the LLC formation, selecting a business name becomes important. Yet, it’s not a simple task. You can’t just pick a clever or meaningful name and begin branding. Ensuring its availability and distinctiveness from other protected names is the initial step, followed by taking measures to protect your chosen name.
Names must meet North Dakota’s naming requirements, which include:
- Your business name must include “limited liability company,” “LLC,” or “L.L.C.”
- Ensure it’s distinct from existing businesses by checking the North Dakota Secretary of State’s website and conducting a business name search.
- Avoid using government agency names or certain restricted words like “bank” or “lawyer” without additional documentation and licensure.
Refer to North Dakota’s comprehensive naming rules for more details.
Additional considerations:
Check URL availability early on. Even if you’re unsure about needing a webpage now, securing your domain name in advance is wise. Before confirming your LLC name, verify if the URL is accessible.
Reserve your name if you are not registering your LLC immediately. To safeguard it from being claimed, North Dakota allows name reservations for up to a year for a nominal fee. Submit the necessary form and payment to the state authority.
Do You Want a Trade Name?
If a formal business name doesn’t suit your branding, North Dakota permits registering a trade name, also known as a DBA or fictitious name. It’s a less formal version often used for branding and marketing purposes.
Before finalizing a trade name, conduct availability and distinctiveness research similar to what’s done for the formal name. Ensuring this prevents potential rejection of your preferred name. Additionally, check for an available URL that aligns with your chosen name, as online marketing can significantly impact your business success.
Protecting The Name You Choose
Intellectual property rights are crucial for a successful North Dakota LLC. Consider two key aspects:
Avoid potential lawsuits by ensuring your branding doesn’t infringe on other companies’ rights.
Protect your branding from competitors who might capitalize on it or legally claim your name or logo.
Before finalizing your LLC’s name or registering a DBA, conduct a national trademark search to confirm its availability across the U.S. Once assured, trademark your chosen name to safeguard your intellectual property rights.
2. Hire a Registered Agent
In North Dakota, appointing a registered agent for your LLC is mandatory. This agent is authorized to receive legal documents and notices on behalf of your LLC, and they can be an individual (such as yourself or an employee) or an entity offering registered agent services. Criteria for the agent include having a North Dakota address and being available during regular business hours to accept documents.
3. File Your LLC North Dakota Articles of Organization
After finalizing your LLC’s formal name and registered agent, file articles of organization. Submit this document and a $135 filing fee for the state to recognize your company officially. Ensure you have the following information ready before working on this form:
- LLC name.
- Registered agent’s name and address.
- The general reason for forming the LLC.
- Date of formation (can be the filing date or later).
- Duration of the LLC (typically perpetual, but specify if it’s limited).
- Name and address of each LLC organizer.
- The person forming the LLC must sign the articles.
You can postpone your LLC’s establishment for up to 90 days by specifying an alternative effective date on your form.
After filing your articles, the secretary of state reviews them, and upon approval, your LLC becomes a legal entity. File either by mail or online.
4. Obtain a Certificate From The State
After filing and approval, the state will issue a certificate confirming your LLC’s existence. The Secretary of State will send a receipt, an acknowledgment letter, and a stamped copy of your articles of organization to your registered agent’s mailing address. This certificate enables your LLC to acquire an Employer Identification Number (EIN), business licenses, and open a business bank account.
5. Create an Operating Agreement
Creating a North Dakota LLC operating agreement is important despite being an internal document not filed with the state. Although North Dakota doesn’t mandate LLCs to have one, single-member LLC operators may skip this step. However, creating this document is crucial for multiple-member LLCs and requires careful attention.
An operating agreement acts as a contract enforceable in court during member disputes. Drafting it before launching your business aligns everyone’s expectations, preventing conflicts and safeguarding your interests if a member infringes upon them. Given its legal nature, having a lawyer review the document before signing is advisable.
An operating agreement can formalize crucial operational details such as:
- LLC name, principal address, and duration
- Registered agent’s details
- Articles of organization information
- Business purpose
- Member contributions and profit/loss division
- Protocols for adding or removing members
- LLC management
- Indemnification and liability
6. Get a Business Identification Number
Unless it’s a single-member LLC with no plans to hire employees, getting an employer identification number (EIN) is necessary. It’s a simple, free, and quick online process.
An EIN is like a Social Security number (SSN). Your LLC holds this nine-digit number exclusively until the company dissolves. This number is crucial for hiring employees, tax filing, bank account setup, and funding applications. Creditors and government agencies use the EIN to verify your LLC’s identity for credit checks and tax filings.
Single-member LLC owners can legally use their SSNs for purposes similar to those of multiple-member LLCs with EINs. However, obtaining an EIN is advisable for all LLC owners. Relying on your SSN for bank accounts or funding could blur the line between personal and business finances.
Moreover, exposing your SSN to unnecessary parties increases the risk of identity theft. To protect your privacy and separate business from personal finances, opt for an EIN instead.
Pros and Cons of Forming a North Dakota LLC
Pros of forming an LLC in North Dakota include:
- No state income tax and low filing fees
- No public disclosure of LLC members, ensuring more anonymity
- Permission for single-member LLCs without mandating formal management boards or annual meetings
Cons of North Dakota LLCs include:
- Mandatory annual report filing with associated fees
- Limited networking and support resources due to the state’s smaller population
Finance Your LLC
When planning your North Dakota LLC’s budget, ensure you have sufficient funds to sustain operations until the company turns a profit. Many entrepreneurs focus on initial financing but overlook the capital required during the startup phase.
Expect unexpected expenses and a longer path to profitability than anticipated. This contributes to the statistic that only 30% of new businesses survive a decade after launch.
Explore diverse funding options for your venture, going beyond traditional banks. Consider federal small business loans, grants, microloans, crowdfunding, and incentive programs. Investigate financing tailored to your identity or operations, such as resources for North Dakota veterans or Native American business owners. Additionally, consider offsetting startup costs with tax benefits from investing in an opportunity zone.
LLC State Guides
How To Start an LLC in North Dakota FAQs
The cost to start an LLC in North Dakota includes a $135 filing fee for the Articles of Organization. Any necessary amendments incur an additional $50 fee.
Not all businesses require a license in North Dakota. Some industries or professions may need federal or state licensing, and your city or county might also mandate a business license.
An LLC service isn’t essential, as business owners can handle all tasks themselves, paying only necessary filing fees to the state or other entities. While these fees are unavoidable, they’re generally lower than service fees. LLC services may benefit those who prefer assistance with filings or access to additional legal services. Alternatively, a local business lawyer can form an LLC, offering a personal touch and expertise, albeit at a potentially higher cost than online services.
No, establishing an LLC in North Dakota involves filing fees. The state usually charges a fee for filing the Articles of Organization, which is required to create an LLC.
If you already have an LLC in a different state and plan to operate in North Dakota, you’ll likely need to register your existing LLC as a foreign entity in North Dakota. This involves filing necessary forms and paying fees to conduct business in the state legally.
