The process of an LLC formation in North Dakota is accomplished by filling out forms (Articles of Organization), which are then sent to the Secretary of State online or by mail.
Let’s take a look at how to create an LLC in North Dakota in 2022 and what features await local and foreign organizations here. We'll also consider how much it would cost to maintain the business.
North Dakota LLC Registration: Step by Step
Note! The documents should be filled out strictly according to the law in order to get approved. Otherwise, the application will be rejected, and the applicant will have to go through the process from the beginning up to re-paying the state fee.
So, the procedure consists of 5 steps, and we suggest you read carefully about all the requirements of the state.
Step 1: Choose Your North Dacota Brand Name
The process of choosing a name for an LLC is somewhat complicated because it is not enough to just decide on the word or phrase you like. The legal name is chosen according to the established laws of the country and state.
In North Dakota, there are no specific rules peculiar only to this state. So, you will have to meet only general requirements:
- Uniqueness. You cannot use names that are already registered in the state. And in order not to duplicate, we recommend using the business name search on the Secretary of State's website;
- Originality. Your name should be 100% original. So, if your chosen name is already taken, and you make minor corrections to it (changing suffixes or characters), the Secretary of State will not approve your Articles of Organization;
- Use of specific words. Indicate your business structure in the name. For example, you may choose "Land Farmer L.L.C." or "Land Farmer Limited Liability Company.";
- Prohibitions. Certain words that might hint that the business is a state or federal agency (e.g., "Police," "Treasury") are not allowed. Names that are inconsistent with the business's purpose are also not forbidden.
Also, the legal name can be reserved in case an individual is not planning to launch the project right away. A 365-day reservation is available to you. You can do that here.
Trademark and DBA
Often, business owners choose not to publicly use the legal name but register a DBA. In North Dakota, it is called a trade name. But a DBA is not a trademark. The trademark implies more protection and guarantees the legal right to use elements such as the name and logo.
In turn, DBA carries less value with respect to legal protection but will be very useful as a marketing and brand development tool. Its main differences from a trademark are:
- It's easier to set up;
- Its capabilities apply at the state rather than the country level.
What Else You Can't Miss
When asked how to start an LLC in North Dakota, we advise taking care of a domain name reservation, which is the firm's web address. Customers will use it to find your site on the web.
The domain does not necessarily have to match the legal name of the firm. But it should be identical so that customers can identify your brand from the competition.
Step 2: Appoint a Registered Agent for your ND LLC
A resident agent (or RA for short) is required by all for-profit and nonprofit organizations in the state. All of the rules and requirements for this step are detailed in the NDCC Act, Chapter 10-01.1.
It states that every company (domestic or foreign) should appoint a RA to serve procedural documents. This is another important point without which an LLC registration North Dakota and its further activities are impossible.
Please, read more about it here. You can file information on the agent on the Secretary of State's online platform.
What Is RA's Job and Who Can Perform These Tasks?
RA's duties include:
- Receiving state documents and notifying the business owner of their contents;
- Monitoring tax and business correspondence;
- Reminding business owners of important events, such as filing an annual report (statement of information) or renewing a license.
Other requirements regarding the appointment of a registered agent:
- This person needs to be at least 18 years old;
- The agent is required to have a mailing address in order to receive the documents in person. This can be a home, business, or office address;
- The agent should be a resident of ND.
Thus, the business owner can choose a friend/family member, a commercial agent as the RA, or perform these tasks on his/her own.
The Owner Being a Registered Agent
This may seem like a lucrative option from a financial standpoint. But it's not so perfect when it comes to compliance and confidentiality. Let's take a look at why you should seek help from specialized services rather than performing the agent's tasks yourself.
- Reputation. When the owner or member of an LLC accepts government documents, the notice of claim may be delivered at the most inconvenient time, e.g., in the presence of clients or potential partners/investors;
- Free time. We have already indicated that the RA should be available during business hours to accept mail. This means that vacation, business travel, or sick leave will not be a valid excuse to be temporarily off duty as an agent;
- Non-Compliance. The business owner has a lot of tasks, which makes it difficult to keep track of important dates when mandatory paperwork needs to be filed with the state. Appointing a third-party agent will help ensure that no document is missed;
- Privacy. If you run your business from home, you'll need to designate it in your Articles of Organization, thus, the data will be available online. By appointing an RA, you will be able to use his/her address and protect your personal information.
The market offers many solutions, and LLC owners have a lot of options to choose from. Usually, the platforms that offer RA services can also help you form an LLC in North Dakota and take responsibility for the process.
If you are planning to free yourself from the routine of filing Articles of Organization and searching for a RA, we strongly recommend checking all the offers on the web. Some of the providers offer packages with free agent services for the first year of cooperation.
Step 3: Your North Dakota LLC’s Articles of Organization
The Articles of Organization form contains all the important information about the future company. If this document is filed in writing by mail, other rules of how to get an LLC in North Dakota inherent in this format should also be considered.
For example, the forms are filled out exclusively in black ink and can be downloaded in pdf from the Secretary's website.
Note! It is much faster and easier to complete the registration process through the Secretary of State's online platform. To begin filling out forms online, you have to create your account first.
Now, let's move on to a more detailed explanation of how to fill out the Articles of Organization:
- The name of the entity and address of the registered agent. This is the first piece of information you have to provide, and it is basic. So, there is no way to skip these two sections;
- LLC effective date and duration. If you plan to start doing business as soon as the Secretary of State approves your application, skip this step. Also, the firm will have an indefinite status if the section does not include a liquidation date;
- Purpose. The organizer specifies a general purpose if the firm is not engaged in an activity that requires a professional license. A professional business requires a different purpose statement, which can be obtained from the IRS;
- Organizers. In this section, the organizer will provide personal information (name and phone number). But you can entrust the process of filling out the document to another person or a professional company that will be ready to act as an organizer;
- Confirmation and signature. Be sure to check that there are no errors or typos in the document. Next, you need to sign the Articles of Organization and pay the state fee.
Once the Secretary of State approves the documents, the business owner receives a confirmation letter stating that the firm is eligible to do business in the state.
Sometimes, after North Dakota LLC registration, there are reasons to make changes to the Articles of Organization. For this purpose, you should file an application for an amendment to the Secretary of State. But sometimes, it is sufficient to file an amended annual report.
The procedure can be completed through the Secretary of State's online system, or the amendments can be submitted by fax. The processing time is up to 10 days, and there is no expedited processing in the state.
Step 4: Operating Agreement
It's going to be very difficult to properly manage a limited liability company without a specific document. So, let's focus on the Operating Agreement. This document is an important part of setting up an LLC in North Dakota.
Note! An Operating Agreement does not need to be filed with the state, nor does it have to be witnessed by attorneys. But it is still worth creating one in North Dakota because the state recommends doing so.
When Is an Operating Agreement Needed?
- First, a Certificate of Formation does not show who actually owns the LLC, which could become a problem in the future. And in the OA, it is stated who the participants are and what shares each of them owns;
- Second, to separate their assets from the firm's budget, the owners will need to get a commercial bank account and a credit card. In most cases, this cannot be done without an OA since banks require a copy of such an agreement;
- Third, the OA is the guarantor of resolving disputes and conflicts within the company quickly and painlessly. In the agreement, as a rule, the rights and responsibilities of each party are described in detail;
- Finally, an LLC is a tool that gives you an advantage over the state's laws. When you are just learning how to register an LLC in North Dakota and do not plan to draft an OS, note that your company will automatically be governed by all state laws.
Note! According to North Dakota Century Code Ch. 10-32.1-02, an Operating Agreement may be made orally. But we recommend a written document to avoid potential conflicts and misunderstandings in the future.
Contents of the Operating Agreement
The Operating Agreement is made individually based on the needs of the LLC and the niche of the business. Even if you download a template online, consider whether each point fits your requirements or if you need to add your own sections.
Let's take a look at the elements that should definitely be in your agreement:
- Organization. All detailed information about the firm and its members is described in this section, as well as how the latter distribute property;
- Management and voting. You can choose the form of management: by managers or participants. Also, specify how the voting will be conducted and what rights the participants have in this regard;
- Investments. Define how much each member has invested to open an LLC in North Dakota and expand it;
- Distribution of profits. You need to specify how each member earns profits. The easiest way is to state equal shares. If the distribution will be done in a different way, it's worth writing about it in detail in the Operating Agreement;
- Changes. This probably isn't relevant to the business right now, but you should look ahead and describe under what conditions you can transfer rights and shares of the company;
- Dissolution. Provide details on how the process of business dissolution will occur in case all participants decide to take this step.
Step 5: Create an EIN for Your LLC in North Dakota
Another important aspect of the LLC formation North Dakota has to do with obtaining a tax identification number. You can get it through the online platform of the IRS.
It's needed not just for those who hire employees but for every LLC owner to protect the business and get a number of benefits.
How to Form an LLC in North Dakota: Why Do You Need an EIN?
- Banking. When you set up an LLC, you probably expect to get personal asset protection. And to make that a reality, you need to create a separate bank account for the firm. For this, getting an EIN is essential;
- Hiring employees. You can hire employees for a firm only if you have an EIN. Therefore, whether you plan to do it now or later, take care of this document when you start an LLC in North Dakota;
- Security. You can use a social security number instead of an EIN, but then there is a high risk that your accounts will be hacked. But with an EIN, those risks are greatly reduced;
- Business loan. Planning on getting a business development loan? Then you'll need your tax number to get better offers;
- Suppliers. Did you know that many suppliers prefer to cooperate with those firms that have an EIN? Moreover, they tend to avoid LLCs that don't have one.
Think about getting an EIN even if it seems that there is no need for it right now. In addition, the process of obtaining a tax number is fairly simple and will take no more than 10 minutes.
LLC North Dakota Cost: How Much Is an LLC in ND
How much does an LLC cost in North Dakota during the formation period and after it?
- Legal name. You can reserve it on the Secretary of State's website by submitting an application. Reserve the name for 12 months at a cost of $10. Along with the business name, you may want to get a DBA ($25);
- Articles of Organization. The document is filed with the Secretary of State along with a check for payment of the state fee ($135);
- Registered agent. If you hire one of the third-party services, the prices can range from $49 to $200 a year;
- Certified Copies. If there is a need for additional copies of approved documents, you can request them from the Secretary of State. Then, a copy will cost $20+$0.5 per document;
- Certificate of Good Standing. This document is also obtained through a request to the Secretary of State, and the cost is $20.
Before registering a company, it's worth considering not only how much an LLC formation costs in North Dakota but also future expenses:
- You may need to amend your Articles of Organization. The price for this service for foreign and local firms is $50;
- Also, to set up some types of firms, you need to get special permits and licenses. Their cost can reach several thousand dollars;
- Depending on the type of business, North Dakota's tax requirements may also differ. For example, you may have to pay property tax, sales tax, workers' compensation insurance, and unemployment insurance;
- Annual reporting also has to be paid annually. And in this case, you need to add another $50 annually to the costs.
Also, you can't avoid paying state fees if you want to legally conduct business in the state. Otherwise, the firm will be charged additional fees (fines) or denied the right to operate in the state.
First Tasks After Creating an LLC in North Dakota
Once you've got your state's approvals, let's go over what you should do next. We've listed five steps that may be relevant to you:
- Licenses. We recommend obtaining a license in advance not only to save money but also to keep commercial activities legal. You can find out what permits your firm needs from your local state office;
- Income tax structure. An LLC gives you the flexibility of taxation. You can choose from several structures. Depending on your choice, the firm will be taxed in a specific way;
- Open a bank account. This will help you maintain the corporate veil. Moreover, it will be easier for your accountant to keep track of business profits and losses;
- Professionals. Hire employees who can help not only make money in the long run but also reduce financial risk. For example, it could be an accountant;
- Insurance. LLC as a business structure is attractive, but it does not protect the agency from losses. Therefore, business owners prefer to insure their property, business, and employees. Find out which insurance package will work best for you.
Keep Your Company Compliant
Corporate compliance is something that all business owners should take care of if they want to maintain a positive reputation for the entire period of the firm's existence.
Note: Use the minute book. This way, you can store all of the firm's documentation (Articles of Organization, Operating Agreement, accounting book, meeting minutes, and more).
Recommendations for compliance:
- Be organized. Reduce the likelihood of possible errors by classifying documents;
- Use reliable software. Choose the software based on business needs in order to optimize and automate work operations;
- Control. It is important to keep track of all expenses (even those that seem insignificant);
- Audit. The lack of regular accounting audits often causes problems with profit sharing;
- Make an insurance plan. Insurance plays an important role in the business, its customers, and employees;
- Consult. Even experienced entrepreneurs prefer to seek help from experts to reduce the risks of non-compliance.
The North Dakota LLC registration process does not seem too complicated and can be accomplished by someone new to starting a business. Of course, there are some requirements, but if you follow the manual clearly, everything will work out perfectly.
North Dakota has no unique rules for choosing a business name or filling out Articles of Organization. Every step is governed by the general laws of the country. Although you might see some differences in licensing/permitting requirements. So, we recommend checking with your local authorities beforehand to find out more accurate information.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.
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