How to Start an S-Corp in North Dakota


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start an S-corporation in North Dakota

North Dakota, popularly known as The Peace Garden State, offers a bunch of benefits for business owners, especially the state capital Bismarck has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in North Dakota, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in North Dakota. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In North Dakota, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in North Dakota. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in North Dakota.

What is an S-Corp in North Dakota?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in North Dakota. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in North Dakota

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in North Dakota.

How to Start an S-Corporation in North Dakota?

To create S-Corp in North Dakota, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement in North Dakota, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in North Dakota

After you have decided on the idea to start an S-Corp in North Dakota, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on North Dakota LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in North Dakota.
  • Limit of restricted words that need a license in North Dakota, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the North Dakota Registered Agent

The next step in starting an S-corp in North Dakota is hiring a North Dakota Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in North Dakota. Forming an LLC and an S-corp will be easier if you have Registered Agent in North Dakota.

Step 3: File Your North Dakota Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). North Dakota Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In North Dakota, the filing fee is $135.

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in North Dakota

After you have filed your Articles of Organization in North Dakota, the next step is to create an LLC operating agreement in North Dakota. The North Dakota LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in North Dakota

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. 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- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 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.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in North Dakota

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In North Dakota, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

Advantages of Starting an S-Corporation in North Dakota

Filing an S-Corp in North Dakota has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in North Dakota apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What is an S-Corp?
An S-Corp is a type of corporation that is recognized by the Internal Revenue Service (IRS) and offers its owners the ability to be taxed like a partnership.
What are the advantages of forming an S-Corp in North Dakota?
Starting an S-Corp in North Dakota can provide a number of advantages, including limited liability for owners, tax savings, and the ability to raise capital more easily.
What are the requirements for forming an S-Corp in North Dakota?
The requirements for forming an S-Corp in North Dakota include filing articles of incorporation with the North Dakota Secretary of State, obtaining a North Dakota Employer Identification Number (EIN), establishing an organizational meeting, and preparing and filing the necessary tax forms.
Is it easy to form an S-Corp in North Dakota?
Yes, it is relatively easy to form an S-Corp in North Dakota. The process can typically be completed in just a few steps.
How much does it cost to form an S-Corp in North Dakota?
The cost of forming an S-Corp in North Dakota varies depending on the type of services used and the complexity of the formation. Generally, the cost can range from a few hundred dollars to several thousand dollars.
Does North Dakota require an annual report for S-Corps?
Yes, North Dakota requires S-Corps to file an annual report each year.
Is there a fee for filing an annual report for an S-Corp in North Dakota?
Yes, there is a filing fee for filing an annual report for an S-Corp in North Dakota. The fee is usually $30.
Does North Dakota require corporate taxes for S-Corps?
No, North Dakota does not require S-Corps to pay corporate taxes.
Does North Dakota impose any special taxes for S-Corps?
Yes, North Dakota does impose a special tax for S-Corps on net income over $250,000.
What other taxes may I be subject to when forming an S-Corp in North Dakota?
When forming an S-Corp in North Dakota, you may be subject to personal income tax, sales tax, and payroll taxes.
Can I form an S-Corp in North Dakota without hiring a professional?
Yes, it is possible to form an S-Corp in North Dakota without hiring a professional. However, it is recommended that you consult a qualified professional to ensure that all of the necessary steps are taken and that all required documents are properly filed.
Is there a minimum capital requirement for forming an S-Corp in North Dakota?
No, there is no minimum capital requirement for forming an S-Corp in North Dakota.
Is there a time limit for forming an S-Corp in North Dakota?
No, there is no time limit for forming an S-Corp in North Dakota.
Is an S-Corp the same as a Limited Liability Company (LLC)?
No, an S-Corp is not the same as an LLC. An S-Corp is a type of corporation, whereas an LLC is a type of partnership.
What documents do I need to form an S-Corp in North Dakota?
The documents required to form an S-Corp in North Dakota include articles of incorporation, a North Dakota Employer Identification Number (EIN), and the necessary tax forms.
Does North Dakota require S-Corps to have a board of directors?
Yes, North Dakota requires S-Corps to have a board of directors.
Does North Dakota require S-Corps to have officers?
Yes, North Dakota requires S-Corps to have officers.
Does North Dakota require S-Corps to hold annual meetings?
Yes, North Dakota requires S-Corps to hold annual meetings.
Does North Dakota require S-Corps to keep certain records?
Yes, North Dakota requires S-Corps to keep certain records, including minutes of meetings and records of all corporate transactions.
Are there any restrictions on who can be a shareholder of an S-Corp in North Dakota?
Yes, there are restrictions on who can be a shareholder of an S-Corp in North Dakota. Generally, a shareholder must be a US citizen or resident alien, as well as a resident of North Dakota.
Are there any restrictions on who can be an officer of an S-Corp in North Dakota?
Yes, there are restrictions on who can be an officer of an S-Corp in North Dakota. Generally, an officer must be a US citizen or resident alien, as well as a resident of North Dakota.
Does North Dakota have any special rules for S-Corps?
Yes, North Dakota has special rules for S-Corps, including regulations regarding corporate governance, record keeping, and taxation.
Is there a limit on the number of shareholders an S-Corp in North Dakota can have?
Yes, North Dakota limits the number of shareholders an S-Corp can have to 75.
What is the tax rate for an S-Corp in North Dakota?
The tax rate for an S-Corp in North Dakota depends on the net income of the corporation. For net incomes of $250,000 or less, the rate is 1.86% and for net incomes over $250,000, the rate is 2.86%.
Is there a filing fee for forming an S-Corp in North Dakota?
Yes, there is a filing fee for forming an S-Corp in North Dakota. The filing fee is usually $100.
Are there any other fees associated with forming an S-Corp in North Dakota?
Yes, there may be other fees associated with forming an S-Corp in North Dakota, such as professional fees and state fees.
Is there a deadline for filing an annual report for an S-Corp in North Dakota?
Yes, the deadline for filing an annual report for an S-Corp in North Dakota is April 15th.
How long does it take to form an S-Corp in North Dakota?
The amount of time it takes to form an S-Corp in North Dakota varies depending on the type of services used and the complexity of the formation. Generally, the process can be completed in just a few weeks.
What are the filing fees for forming an S-Corp in North Dakota?
The filing fee for the Certificate of Incorporation is $135. If you wish to expedite the filing, you must pay an additional $100.
Does North Dakota require S-Corps to register with the Department of Revenue?
Yes, all S-Corporations in North Dakota must register with the North Dakota Department of Revenue.
Are there any annual reports required for S-Corps in North Dakota?
Yes, all S-Corporations in North Dakota must file an annual report by April 15th of each year.
Are there any special taxes for S-Corps in North Dakota?
Yes, S-Corporations in North Dakota must pay an additional $20 annual tax to the Secretary of State.

Also Read

Why North Dakota S Corporation is So Important

One of the key reasons why North Dakota S Corporations are so important is the tax benefits they offer. S Corporations are unique in that they are not subject to double taxation like traditional C Corporations. This means that the profits of the business are passed directly to the owners and taxed only once at the individual level, potentially leading to significant tax savings for shareholders.

Additionally, S Corporations allow business owners to avoid self-employment taxes on their share of the company’s profits. This can add up to substantial savings, especially for businesses with high revenues or multiple owners. By restructuring as an S Corporation, business owners can maximize their earnings and make the most of their hard work.

Furthermore, forming an S Corporation in North Dakota provides business owners with limited liability protection. This means that the owners’ personal assets are shielded from the company’s debts and liabilities, offering a sense of security and peace of mind to entrepreneurs. In the event that the company encounters financial difficulties, the owners’ personal assets are not at risk of being seized to cover the company’s debts.

Another important benefit of North Dakota S Corporations is the flexibility they offer in terms of ownership and management structure. Unlike traditional corporations, S Corporations are not limited to a certain number of shareholders, making them a suitable choice for businesses with multiple owners. Additionally, S Corporations can issue different classes of stock, allowing owners to structure the ownership of the company in a way that best suits their needs.

S Corporations in North Dakota also benefit from a favorable tax environment and business-friendly regulations. The state offers a competitive corporate tax rate and does not impose a personal income tax, making it an attractive location for business owners looking to minimize their tax burden. Additionally, North Dakota has a reputation for being supportive of small businesses, with a variety of resources and programs available to help entrepreneurs succeed.

In conclusion, North Dakota S Corporations offer a variety of advantages that make them a smart choice for small business owners in the state. From tax benefits and limited liability protection to flexibility in ownership and management structure, S Corporations provide entrepreneurs with the tools they need to thrive and grow their businesses. By taking advantage of the benefits of forming an S Corporation, business owners in North Dakota can set themselves up for success and build a strong foundation for their companies.

Conclusion

In conclusion, starting an S-corp in North Dakota is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in North Dakota.

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