Starting a Corporation in North Dakota | What You Need to Know

Start a Corporation in North Dakota

In North Dakota, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in North Dakota, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in North Dakota.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in North Dakota?

A corporation in North Dakota is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in North Dakota are required to have at least Three directors. One of the main advantages of a corporation in North Dakota is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in North Dakota is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in North Dakota if you would like to provide limited liability protection to your shareholders rather than North Dakota LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in North Dakota

To start a corporation in North Dakota, you must follow the below steps that, include choosing a corporate name, hiring a Registered Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with North Dakota naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in North Dakota-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the North Dakota Secretary of State‘s business name database and Business Name Search in North Dakota. If the name is available, you may choose to reserve it for a specific period of 1 year by filing a name reservation application and paying the online name reservation fee of $10 and mail name reservation fee of $10. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, by mail and in person., which costs around $25. In addition, the DBA’s validity in North Dakota is five years, which you can file in North Dakota Secretary of State.

You can check out How to File a DBA in North Dakota for clearer understanding.

Step 2: Hire a Registered Agent

Hiring a Registered Agent is essential in starting a corporation. Registered Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are North Dakota Registered Agent Services to check in forming North Dakota Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in North Dakota are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In North Dakota, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your North Dakota corporation, the next step is to write and file a Articles of Incorporation. In writing, the North Dakota Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Registered Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your North Dakota corporation, you must prepare and file Articles of Incorporation with the North Dakota Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the North Dakota Secretary of State’s office, along with the required filing fee. Fees vary by state, but in North Dakota, the Articles of Incorporation filing fee costs around $100 for online and by mail filing. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail to Secretary of State, State of North Dakota, 600 E Boulevard Avenue Dept 108, Bismarck ND 58505-0500

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in North Dakota, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing North Dakota corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your North Dakota corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in North Dakota are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • North Dakota Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required North Dakota licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your North Dakota corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in North Dakota for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your North Dakota corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in North Dakota can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or North Dakota Office of State Tax Commissioner for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your North Dakota corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the North Dakota Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in North Dakota

Even if you have established your corporation in North Dakota, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in North Dakota has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in North Dakota are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in North Dakota

In forming a corporation in North Dakota, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in North Dakota, it costs $100 for online and by mail filing. The corporation in North Dakota also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is a corporation in North Dakota?
A corporation is a legal entity created under state law that is separate from its owners and/or shareholders.
How do I start a corporation in North Dakota?
The process of starting a corporation in North Dakota involves filing articles of incorporation with the North Dakota Secretary of State and complying with the state’s corporate laws.
What are the benefits of forming a corporation in North Dakota?
Some benefits of forming a corporation in North Dakota include liability protection for its owners, permanence, and access to financing opportunities.
Do I need an attorney to form a corporation in North Dakota?
While hiring an attorney is not required to form a corporation in North Dakota, it is recommended to ensure compliance with state laws.
Can I form a corporation in North Dakota by myself?
Yes, North Dakota allows for single-member corporations to be formed, meaning that an individual could form a corporation by themselves.
What types of corporations can I form in North Dakota?
North Dakota allows for the formation of various types of corporations, including general corporations, professional corporations, and nonprofit corporations.
How much does it cost to form a corporation in North Dakota?
The filing fee for articles of incorporation is currently $100 in North Dakota, plus any additional fees for other required filings or professional consulting.
What is an S Corporation in North Dakota?
An S Corporation in North Dakota is a type of corporation that is taxed differently than a regular corporation, allowing for single-entity taxation.
What is a C Corporation in North Dakota?
A C Corporation is a standard corporation that is taxed separately from its owners under federal and state tax codes.
Do corporations in North Dakota need bylaws?
Yes, corporations operating in North Dakota are required to have bylaws to establish the rules and structure of the corporation.
What information is required on the articles of incorporation in North Dakota?
Articles of incorporation in North Dakota must include the corporation’s name, registered agent, number of authorized shares, and the purpose of the corporation.
How long does it take to form a corporation in North Dakota?
The process of forming a corporation in North Dakota typically takes around 2-3 weeks, pending approval from the Secretary of State’s office.
What is a registered agent in North Dakota?
A registered agent in North Dakota is an appointed representative that is responsible for receiving legal notices and other documents on behalf of the corporation.
Can a corporation in North Dakota conduct business outside of the state?
Yes, North Dakota corporations can conduct business in other states, but they will need to adhere to those states’ individual laws and regulations.
Are there any state-specific compliance requirements for North Dakota corporations?
Yes, all North Dakota corporations must file an annual report with the Secretary of State and maintain accurate corporate filings to remain in good standing.
What are the North Dakota tax implications for corporations?
North Dakota corporations may be subject to corporate income tax as well as sales and use tax, depending on their operations within the state.
What type of liability protection does a North Dakota corporation offer?
North Dakota corporations are separate legal entities from their owners, providing limited liability protection to personal assets for its shareholders.
Can I change the structure of my corporation in North Dakota after forming it?
Yes, North Dakota corporations can change their structure at any point by adopting amendments to their bylaws or other required filings.
Are North Dakota corporations subject to annual fees or taxes?
Yes, North Dakota corporations are required to file an annual report with the Secretary of State, which carries with it an associated filing fee.
How can I dissolve my corporation in North Dakota?
To dissolve a corporation in North Dakota, the corporation must follow the state’s filing and notification procedures and pay any outstanding fees or taxes.
What is a DBA in North Dakota?
A DBA (Doing Business As) is a fictitious name a corporation may choose to utilize for branding and business recognition purposes; in North Dakota, it’s referred to as an assumed business name.
Do I need to register my corporation with North Dakota’s tax department?
Yes, all corporations operating in North Dakota must register for state taxes, such as sales and use tax.
Who regulates corporations in North Dakota?
The Secretary of State and the North Dakota Corporations Bureau regulate corporations operating within the state of North Dakota.
What are the North Dakota requirements for corporate officer positions?
North Dakota corporations must have a president and secretary, but other positions are optional and subject to the corporation’s bylaws.
How often are North Dakota corporations required to hold shareholder meetings?
The frequency of shareholder meetings is specified in the corporation’s bylaws, but North Dakota law does not require a set amount of meetings.
What is the North Dakota definition of a non-profit corporation?
A nonprofit corporation in North Dakota is a corporation that operates for the betterment of the public, rather than for individual profit.
What is the process for incorporating a business in North Dakota?
To incorporate a business in North Dakota, you must file articles of incorporation with the secretary of state.
How much does it cost to incorporate in North Dakota?
The filing fee is $100, but other costs such as legal and accounting fees may also apply.
What types of businesses can incorporate in North Dakota?
All types of businesses, including corporations, partnerships, and LLCs, can incorporate in North Dakota.
What are the advantages of incorporating in North Dakota?
North Dakota offers numerous tax incentives and liability protections for incorporated businesses.
What is the minimum number of shareholders required to form a corporation in North Dakota?
North Dakota corporations only require one shareholder.
Are there any residency requirements for incorporators or directors in North Dakota?
There are no residency requirements for individuals who wish to incorporate in North Dakota.
Is an attorney required to incorporate in North Dakota?
No, an attorney is not required, but it is recommended.
What documents do I need to incorporate in North Dakota?
You will need the company’s articles of incorporation and may also need a certificate of authority to transact business in the state.
Can I reserve a corporate name before filing in North Dakota?
Yes, you can reserve a name with the secretary of state for 120 days for a fee of $10.
Is there a publication requirement for incorporating in North Dakota?
No, there is no publication requirement in North Dakota.
How long does it take to incorporate in North Dakota?
It usually takes five to seven business days after the documents are filed with the secretary of state.
Is there a franchise tax in North Dakota?
Yes, North Dakota has a franchise tax for corporations with income derived from inside the state.
How often must corporations file reports in North Dakota?
Corporations must file annual reports with the secretary of state.
What is the tax rate for corporations in North Dakota?
The corporate tax rate in North Dakota is 4.31%.
Are corporations required to have registered agents in North Dakota?
Yes, corporations must have and maintain a registered agent in North Dakota.
Can I change the corporation’s name after incorporation?
Yes, but you must file an amendment to the articles and pay a fee.
Can I incorporate online in North Dakota?
Yes, you can file articles of incorporation online or by mail.
Is North Dakota corporation-friendly?
Yes, North Dakota is considered one of the most corporation-friendly states in the US.
Can corporations in North Dakota conduct business outside of the state?
Yes, North Dakota corporations can conduct business outside of the state.
Does North Dakota recognize Series LLCs?
Yes, North Dakota does allow for Series LLCs.
Can I convert an existing business into a corporation in North Dakota?
Yes, you can convert an existing business into a corporation in North Dakota.
What is the North Dakota Securities Act?
The North Dakota Securities Act regulates the sale of securities in the state.
Will incorporating in North Dakota impact my federal income taxes?
No, federal income taxes are not affected by the state in which you incorporate.
Where can I find more information on incorporating in North Dakota?
You can find more information on incorporating in North Dakota on the secretary of state’s website.
What happens if I don’t file annual reports in North Dakota?
Your corporation may be administratively dissolved or revoked by the secretary of state.
What type of management structure is required for a corporation in North Dakota?
North Dakota corporations must have a board of directors.
Can I incorporate a non-profit organization in North Dakota?
Yes, you can incorporate a non-profit organization in North Dakota.
Can foreigners own corporations in North Dakota?
Yes, foreigners can own and incorporate corporations in North Dakota.
Do I need to obtain a business license in North Dakota?
Depending on the type of business, you may need to obtain a business license in North Dakota.
Can I act as my own registered agent in North Dakota?
Yes, you can act as your own registered agent in North Dakota, but it is not recommended.

Also Read

How to Save Money While Forming Your North Dakota Corporation

One of the best ways to save money when forming your corporation is to avoid unnecessary expenses. Before diving headfirst into the process, take the time to thoroughly research and understand what is necessary for your specific business needs. This can help you avoid overspending on services or products that may not be essential to your corporation’s success.

Another cost-saving method is to take advantage of DIY options where possible. While there are certain legal and financial aspects of forming a corporation that may require professional assistance, there are also many tasks that can be handled on your own with the right resources and knowledge. By taking the time to educate yourself and handle tasks like business name registration, filing paperwork, and obtaining necessary licenses or permits by yourself, you can avoid unnecessary expenses associated with hiring professionals to do the work for you.

When it comes to legal and financial matters that require professional assistance, it is important to shop around and compare prices. While it may be tempting to go with the first service provider you come across, taking the time to obtain quotes from multiple providers can help you find the best value for your money. Look for service providers that offer competitive rates while maintaining a high level of quality and expertise to ensure that you are getting the best deal possible.

In addition to shopping around for professional services, consider exploring alternative funding options to help cover the costs of forming your corporation. While taking out a business loan may be a common solution, there are also other options available, such as crowdfunding, grants, or assistance programs that can help reduce the financial burden associated with starting a corporation. By exploring all of your options, you can find the most cost-effective solution for your specific situation.

It is also important to keep a close eye on your budget throughout the process of forming your corporation. Creating a detailed budget and tracking your expenses can help you identify areas where you may be overspending or where you can cut costs. By regularly reviewing your financials and making adjustments as needed, you can ensure that you are staying within your financial means while still successfully building your corporation.

In conclusion, forming a corporation in North Dakota does not have to break the bank. By avoiding unnecessary expenses, taking advantage of DIY options, shopping around for professional services, exploring alternative funding options, and closely monitoring your budget, you can save money while still setting up a successful and legally compliant corporation. With a little research, planning, and dedication to financial management, you can start your North Dakota corporation on a solid financial footing.

Conclusion

Starting a corporation in North Dakota involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your North Dakota corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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