Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in North Dakota, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting a North Dakota LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
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What’s the least amount I have to pay to form an LLC in North Dakota?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your North Dakota LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
ND LLC Start-up costs
There are two primary start-up costs in North Dakota. The most important one (and one of the pricier ones, really) is the Articles of Organization. The fee is $135. But regardless of whether that sounds like pocket change or something you’ll have to budget for, you can’t avoid this cost. After all, the Articles is what officially forms your business in the state. Without it, you’re not a recognized business.
A lot of North Carolina LLCs will also need to get licenses in order to run a compliant business. North Carolina doesn’t have a statewide general business license. That said, many different trades—contractors, restaurants that serve alcohol, tobacco sellers, and more—have to obtain occupational or professional licenses. You have to do your own research to learn if any of these apply to you. North Carolina’s resources are a good place to start.
Unfortunately, we can’t provide a comprehensive list of price tags for these licenses, but you can reasonably expect to pay an application fee when you get one.
Ongoing costs for an LLC in North Dakota
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Thankfully, you don’t have to worry about renewing a state general business license, but you might have to renew your professional or occupational permits. Each North Dakota licensing board has its own policies for renewals, though, so we can’t really list them here. This guide would be tedious if we did. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In North Dakota (or any state, for that matter), one of the biggest annual costs you’ll have will be taxes. And one of the biggest tax burdens is the state income tax. If you’re taxed as a corporation, your rates will fall between 1.41% and 4.31%. LLCs taxed as pass-through entities will pay rates between 1.1% and 2.9%.
If you’re involved in retail sales, you’ll also be expected to collect and pay the state sales tax. The rate currently sits at 5%. There’s also a wide variety of miscellaneous business taxes that could apply to your LLC: coal, motor fuel, and telecommunications are just a few examples. But we won’t dig into all the nitty-gritty details here. If you think a miscellaneous tax might apply to you, check out the North Dakota State Tax Commissioner.
Annual report
Most states require LLCs to file some version of an “annual report,” or a document that informs the state about the current standing of your business. This document is usually required in addition to annual tax reports, since it usually includes information about your business address, members, your registered agent, and so on.
In North Dakota, the annual report process is pretty simple: simply log into FirstStop, fill out the required information, and pay the $50 filing fee. Every LLC needs to complete this process by November 15 regardless of their formation date. If you fail to file on time, the filing fee doubles, and you run the risk of losing your good standing in the state, so it’s well worth the effort to file on time.
What are the discretionary costs to form a North Dakota LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since North Dakota doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using a Business Records Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Articles of Organization, or by filing a Reserved Name Application. You should only file this form if you’re not yet ready to file your Articles. Otherwise, you’d be wasting your hard-earned cash. North Dakota requires a $10 fee for this application, but it protects your desired name for a full year.
2. Obtaining a Trade Name
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Articles of Organization, is the legal name of your business. A trade name, sometimes called an assumed name, a DBA, or a fictitious name, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
A Trade Name acts kind of like a nickname for your business; some LLCs and corporations also use Trade Names to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use a Trade Name, if it differs from your legal name, you need to register it before you can use it.
Quick note: Trade Names in North Dakota are protected. Long story short, if you are the first to use and register a Trade Name, then no one else can use that name. But that works both ways: you can’t use a name that’s already in use, either. So you’ll need to ensure that your desired name is available. You can do so by running a Business Search.
Once you’ve ensured that your name is available, you can file your Trade Name Registration form. There’s a $25 fee for this registration, and once complete, your name is set to go for five years. In the 90 days prior to that five-year mark, you’ll need to renew it. But other than that, you’re good to go with your Trade Name.
For more information on this registration process, check out our guide to Trade Names in North Dakota.
3. LLC formation services
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Paperwork is a massive hassle. And unless you’re starting an LLC to help other North Dakotans with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting a North Dakota LLC: the Articles of Organization, the annual reports, license applications—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of options, with ZenBusiness offering packages starting at $0 + state fee. You can also take a look at other well known services like LegalZoom, Northwest, and Incfile that have other types of pros.
These services are completely optional; you can North Dakota LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying.
4. ND Registered agent services
North Dakota law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; North Dakota allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 North Dakota registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Expedited filing fees
In North Dakota, the processing speed for your documents largely depends on how you file. Online filings are usually processed immediately. But if you file by mail, you can reasonably expect to wait 3-5 business days for your paperwork to be accepted or rejected.
If that sounds like too long to wait, North Dakota does allow you to expedite your form for $50. That will speed up your processing times. Since the fee isn’t unreasonable, it may be worth the extra expense to expedite your filings, but patience works, too. You can let your budget and your timetable be the deciding factors.
6. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search North Dakota business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting a North Dakota LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (even the $135 Articles of Organization is relatively manageable). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your North Dakota LLC off on the right foot. We wish you and your new business the best!