How to Start a Business in North Dakota

North Dakota is not just famous for its vast plains and picturesque landscapes—it's also a land of opportunity for entrepreneurs. With a booming economy, business-friendly policies, and supportive state programs, there's never been a better time to start your venture here.

Whether you're launching a tech startup in Fargo or a small farm in the rural countryside, our comprehensive guide will walk you through every step to start your small business with confidence and ease.

Selecting a business structure

Choosing the right business structure is important for your new venture in North Dakota. It affects your personal liability, taxation, and the paperwork you'll handle.

Choosing between sole proprietorship, LLC, and corporation

Sole proprietorship

As a sole proprietor, you own and run your business alone. It's the simplest structure, but you're personally liable for any business debts.

Limited liability company (LLC)

An LLC offers personal asset protection like a corporation but with less paperwork. It also provides flexible tax options: profits and losses can pass through to your personal tax return. Learn more about the tax implications for LLCs.

Corporation

Forming a corporation creates a separate legal entity, which generally protects your personal assets from business liabilities. However, corporations have more formalities and can be subject to double taxation—once on profits and again when dividends are paid to shareholders.

Assess legal and tax implications

When choosing your business structure, consider:

• Liability protection
• Sole proprietorship. No personal liability protection.
• LLC. Protects your personal assets from business liabilities.
• Corporation. Offers the highest level of personal liability protection.
• Taxation
• Sole proprietorship. Income and expenses go on your personal tax return.
• LLC. Flexible taxation—can be taxed as a sole proprietorship, partnership, or corporation.
• Corporation. Subject to corporate income tax; profits taxed at the corporate level and again when dividends are paid to you.
• Understanding these tax implications is crucial. Check out these small business tax tips to help you navigate your tax obligations effectively.
• Management and compliance
• Sole proprietorship. Simple management, minimal paperwork.
• LLC. Requires filing Articles of Organization and maintaining an operating agreement.
• Corporation. More formalities—file Articles of Incorporation, adopt bylaws, hold meetings, keep records.

Choosing the best structure depends on your goals, risk tolerance, and preferences for taxes and administration. Consider consulting a legal or financial professional to make the right choice for your business.

Registering the business with the North Dakota Secretary of State

To officially register your business in North Dakota, you need to file with the Secretary of State. This establishes your business's legitimacy and provides legal protections. If you're operating under your own name, registration may not be required, but it's recommended.

Complete necessary forms and documentation

Visit the FirstStop Portal. Choose your business structure—such as an LLC or corporation—and complete the required formation documents. For an LLC, you'll file the Articles of Organization with a $135 fee. For a corporation, you'll file the Articles of Incorporation with a $100 fee.

Ensure your business name is unique and meets North Dakota's naming rules. You can check if your desired name is available on the Secretary of State's website. Need more time? You can reserve the name for up to one year for just $10!

Confirm registration and obtain certificate of formation

After submitting your forms and fees, the Secretary of State's office will review your application. Once approved, you’ll receive a Certificate of Formation, confirming your business's registration in North Dakota. Keep this document for tasks like opening a business bank account, applying for licenses, and handling other important tasks.

Obtaining necessary licenses and permits

To operate legally in North Dakota, make sure you have all the required licenses and permits. Understanding your business licensing requirements is important since it helps ensure smooth operations and compliance.

Identify required local, state, and federal permits

The licenses and permits you need depend on your business type and location. Check with the North Dakota Secretary of State's office for state-level requirements. Some professions, like contractors and home inspectors, have specific licensing obligations.

For industry-specific licenses, consult the North Dakota Boards and Commissions Search. The NDSU Extension offers a list of state-required reports, permits, and forms.

At the federal level, certain businesses may need permits from federal agencies. For example, selling alcoholic beverages or tobacco products requires federal registration.

Don't forget to check for local requirements! In addition to state-level permits and licenses, cities and counties in North Dakota may have their own specific rules. Be sure to contact your city clerk's office or explore your local government website to find out if you need additional licenses or permits. This ensures your business stays fully compliant and avoids any costly surprises down the line.

Verify compliance with zoning and health regulations

Make sure to check local zoning laws to ensure your business activities are allowed at your chosen location. Contact your local zoning department for confirmation to avoid any legal roadblocks.

If you're in the food service or healthcare industry, you’ll need to comply with health regulations. Ensure you obtain the necessary permits from the North Dakota Department of Health or your local health department. These agencies will guide you on sanitation standards and inspection requirements to protect both your customers and your business.

Securing funding for the business

Every business needs funding to get started. Securing the right financing helps cover startup costs and maintain operations in the initial stages.

Explore funding options

Determining the right amount of capital for your business is crucial to getting started on the right foot. A well-crafted business plan can help demonstrate to potential investors or lenders your goals, strategies, and financial projections. By exploring various financing strategies, you can find the best approach to fund your venture.

Here are some funding options to consider:

• Personal savings. Using your own money gives you full control and avoids debt.
• Small business loans. Banks and credit unions offer loans designed for small businesses. A strong business plan increases your chances of approval. Consider exploring startup business loans to find the right fit for your needs.
• Investors or venture capital. Attract investors who can provide significant funding in exchange for equity in your company.
• Crowdfunding. Use online platforms to raise money from a large number of people, often offering rewards or early access to products.
• Grants. Look for small business grants from government agencies or private organizations, especially those supporting specific industries or groups.

North Dakota also offers several state-specific funding programs:

• Bank of North Dakota (BND). The nation's only state-owned bank partners with local financial institutions to provide loans and credit programs to businesses.
• North Dakota Development Fund. Offers flexible financing through debt and equity investments, working with lenders to fill financing gaps.
• InnovateND. Provides resources and support for entrepreneurs, including vouchers, mentorship, and funding opportunities.

For personalized guidance, reach out to:

• North Dakota Small Business Development Center
• North Dakota Women's Business Center
• SCORE
• Veterans Business Outreach Center

These organizations can assist you in exploring funding options, refining your business plan, and connecting you with valuable resources.

Setting up business finances and bank accounts

Organizing your finances sets a strong foundation for your business. By setting up dedicated bank accounts and a clear accounting system, you'll have better control over your cash flow, tax obligations, and overall financial health.

Open a business bank account

Opening a separate business bank account keeps your personal and business finances separate. This simplifies accounting and helps maintain liability protection – especially if you've established an LLC or corporation. It’s a simple step that goes a long way in maintaining financial clarity and legal safeguards.To open a business bank account in North Dakota, you'll typically need:

• Employer Identification Number (EIN). You can quickly apply for one from the IRS website.
• Business formation documents. Provide the Articles of Organization or Articles of Incorporation filed with the North Dakota Secretary of State.
• Identification. Bring valid ID for all authorized signers on the account.

A dedicated business account makes it easier to track expenses, manage cash flow, and prepare for taxes.

Establish bookkeeping and accounting systems

Setting up an efficient bookkeeping and accounting system helps keep your business on track. With accurate financial records, you'll not only stay compliant with tax laws but also gain insights into your revenue and expenses. Here's how to get started:

• Choose accounting software. Select a reliable program that suits your needs, like QuickBooks or Xero.
• Track income and expenses. Regularly record all financial transactions.
• Understand tax obligations. Register with the North Dakota Taxpayer Access Point (NDTAP) to manage state taxes.
• Consult a professional. Hire a certified accountant or bookkeeper if needed.

Organizing your finances from the beginning helps ensure your business operates smoothly.

Registering for state and federal taxes

Complying with state and federal tax requirements keeps your business legally sound. Proper tax registration not only ensures you're following the law but also strengthens your business's reputation with customers and partners.

It shows you're contributing to public services and helps you avoid costly penalties, fines, or legal complications down the road. For assistance in mastering small business tax compliance, it's important to be thorough and stay informed.

Obtain an Employer Identification Number (EIN)

If your business plans to hire employees or open a business bank account, make sure to apply for an Employer Identification Number (EIN). This unique tax ID number is required for most businesses and simplifies tax reporting. Fortunately, applying for an EIN is free and easy – just visit the IRS website to apply online in minutes.

File necessary tax registration forms

Register for state taxes with the North Dakota Office of State Tax Commissioner. Depending on your activities, this may include:

• Sales tax permit. If you sell taxable products or services, apply through the ND TAP system.
• Income tax withholding. If you have employees, register for a North Dakota Withholding Tax account to handle state income tax withholding.

Familiarize yourself with other tax obligations that may affect your business, such as:

• Local taxes. Some cities impose local taxes on lodging, prepared food, and beverages.
• Industry-specific taxes. Certain industries, like alcohol or motor fuel, may have additional tax requirements.

Staying compliant with tax laws helps you avoid penalties and ensures your business operates smoothly.

Hiring employees and understanding employer requirements

Hiring your first employees is an exciting milestone that can take your business to the next level, bringing in new skills, increasing productivity, and fueling growth. To set yourself up for success, make sure to understand the legal requirements and responsibilities involved. For guidance on hiring your first employee, consider following these key steps to ensure a smooth process.

Register with Job Service North Dakota

Register with Job Service North Dakota to set up unemployment insurance. Create an account to report wages and pay unemployment taxes.

Set up workers' compensation insurance

North Dakota requires employers to carry workers' compensation insurance through Workforce Safety and Insurance. This insurance provides benefits to employees injured on the job and helps protect your business from lawsuits related to workplace injuries.

Register for income tax withholding

If you have employees, register with the Office of State Tax Commissioner to set up a withholding tax account through the ND TAP system. This allows you to withhold state income taxes from your employees' wages.

Comply with labor laws and regulations

Get acquainted with North Dakota labor laws, which are enforced by the North Dakota Department of Labor and Human Rights. Key areas to be aware of include:

• Minimum wage and overtime. Ensure you're paying at least the state minimum wage and overtime when applicable.
• Fair employment practices. Understand anti-discrimination laws and promote a fair workplace.
• Record keeping. Maintain proper employment records as required by law.

Utilize labor law compliance tools to help you stay up-to-date with regulations and maintain a fair workplace.

Federal employer obligations

At the federal level, you'll need to:

• Obtain an EIN. If you haven't already.
• Comply with federal tax requirements. Withhold federal income and FICA taxes from employee wages.
• Complete Form I-9. Verify each new employee's eligibility to work in the U.S.
• Report new hires. Register new employees with the North Dakota New Hire Reporting Center.

By understanding and fulfilling these requirements, you can build a compliant team that supports your business's growth.

Developing a marketing strategy and online presence

In 2023, it’s reported that North Dakota had 74,202 small businesses. So, establishing a strong brand can distinguish your business in a crowded marketplace. After all, a well-crafted brand identity helps establish trust, attract customers, and create lasting relationships.

Create a brand identity and messaging

Define your brand values and mission. Identify what sets your business apart in North Dakota's market and how you want customers to perceive you. Develop a memorable logo that reflects your brand's personality and appeals to your target audience.

Once your brand identity is established, focus on building your online presence:

• Register a domain name. Choose a domain that reflects your business name.
• Build a professional website. Provide information about your products or services, contact details, and your story.
• Set up social media profiles. Engage with customers on platforms like Facebook, Instagram, or LinkedIn.
• Claim your Google Business Profile. Enhance visibility in local searches and make it easy for customers to find you.

Implement marketing strategies that align with your goals:

• Conduct market research. Understand your target audience and competitors.
• Utilize various advertising channels. Consider online ads, local print media, or radio spots.
• Engage in public relations efforts. Participate in community events or share newsworthy updates.
• Develop customer retention strategies. Offer loyalty programs or personalized communications to keep customers returning.

Effectively promoting your business helps build lasting relationships with customers while fueling sustainable growth. So make every marketing effort count by aligning your approach with your business goals, utilizing the right channels, and staying connected with your target audience.

Launching your North Dakota business

Launching your North Dakota business is an exciting venture filled with opportunities. While the journey may seem complex, having the right tools and support can make all the difference. Efficiently managing your team, keeping track of schedules, and ensuring compliance with labor laws are important components of your business's success.

This is where Homebase comes in. Homebase provides all the tools you need to manage your employees effectively—from scheduling and time tracking to hiring and onboarding. With Homebase HR Pro, you can simplify your HR tasks so you can focus on growing your business.

Don't let administrative tasks slow you down. Let Homebase help you streamline your operations, stay compliant, and create a great workplace for your team. Sign up today and take the first step towards a more efficient and successful business!