Start a North Dakota Corporation

Business ownership is a big leap, and it’s a process that can take a lot of time and money. You’ll need to do things like research your market, figure out which business model is best for you, and do the paperwork to make the business legitimate. A corporation is one type of business structure that many entrepreneurs adopt. Are you planning to form a corporation in North Dakota? If so, then read on!

What is a corporation?

A corporation is a business structure separate from its owners, who are called shareholders. It can enter into contracts, apply for loans, own properties, hire employees, and pay taxes. 

You can form a corporation as a C corporation, an S corporation, a nonprofit corporation, or a professional corporation:

• A C corporation, like all corporations, is a separate legal entity. A C corporation is also taxed separately, meaning it files taxes for the business; the individual shareholders also pay taxes on their share of the company’s profits on their individual tax returns, which is known as “double taxation.”
• An S corporation is a tax status that can be adopted by a C corporation or limited liability company (LLC). It allows the profits to “pass through” to the shareholders, meaning those profits are only taxed once (at the individual shareholder level). 
• Nonprofits are considered charitable and can apply for tax-exempt status with the IRS; income for a nonprofit goes to benefit its cause.
• Professional corporations (PCs) are specialized corporations formed by licensed professionals, such as doctors, attorneys, engineers, and others.

How to start a corporation in North Dakota

To start a corporation in North Dakota, you must file the Articles of Incorporation with the office of the North Dakota Secretary of State. To simplify the process of forming a corporation in the state of North Dakota, we’ve put together the following steps to form your business. We’ll also cover some of the primary nuances of forming a professional corporation.

Step 1: Name your corporation in North Dakota

Naming your corporation is a huge consideration, as it has far-reaching implications for your business. Some of these implications include marketing considerations. The state requires that you choose a name that is different from any other registered business in North Dakota.

Corporation Abbreviations

Corporations in North Dakota are required to have one of the following words or abbreviations: 

• Incorporated
• Corporation
• Company
• Limited
• Inc.
• Corp.
• Co. 
• Ltd.

On the other hand, it cannot contain words or abbreviations that reference other business types, such as “Limited Liability Company” or “LLC.”

Naming a Professional Corporation in North Dakota

North Dakota has a few distinct requirements for naming a professional corporation. For starters, you’ll use a different designator: “chartered,” “limited,” “professional corporation,” or “professional association” are all acceptable choices. The abbreviations “Ltd.” or “PC” or “PA” (with or without punctuation) are also allowed.

You’ll also need to ensure that your name complies with industry standards, as different professions may have specific rules for business names. Please consult with your industry’s regulatory board to get guidance about these requirements.

Conduct a business entity search

To check if the name you want is available, you can perform a business entity search on the ND Secretary of State website. If there are no other businesses registered with the same name, you can reserve it by filing a Reserved Name Application online for a small fee. This is not a requirement, though.

Federal and State Trademarks

Check to make sure your desired business name isn’t already trademarked. Trademarks can be reserved at the state and federal levels, with the federal level offering more protection. Visit the United States Patent and Trademark Office (USPTO) website to see whether your business name or logo is federally trademarked. You can search the Secretary of State’s trademark search engine to see if your name is trademarked in North Dakota.

Getting a “trade name” for your corporation

If you want to use a “trade name,” also known as a “doing business as” (DBA) name, you will need to file a Trade Name Registration form for $25. You can also file this form online. Businesses use these names to attract customers with catchy and easy monikers, and they’re required if you plan to do business under a name other than your corporation’s legal name. We have a page that goes into further detail about North Dakota trade names.

Step 2: Appoint directors

Only one initial director is needed to form a corporation in North Dakota. The incorporator, the person who started the business, can take the position until new directors are voted in or until the number of directors is specified in the corporate bylaws. Directors don’t necessarily have to be shareholders, but shareholders can be directors.

For professional corporations, all of the directors need to be licensed in the company’s stated profession.

Step 3: Choose a North Dakota registered agent

A corporation is required to appoint a registered agent as a designated contact to receive important legal documents and official state correspondence for the business. These may include such things as tax filing correspondence or service of process (notice of a lawsuit). 

Who can be a registered agent?

A registered agent can be a person, corporation, LLC, or a commercial registered agent service that:

• Is at least 18 years of age if it’s an individual
• Has a physical street address in the state
• Can be available (in person) during normal business hours

Step 4: File the North Dakota Articles of Incorporation

The Articles of Incorporation is a document filed to create a corporation. Upon filing and paying $100, the Secretary of State issues a Certificate of Incorporation as proof that all requirements have been performed.

What should the Articles of Incorporation include?

The Articles of Incorporation must include the:

• Name and address of the business
• Name and address of the registered agent
• Names, signatures, and addresses of the incorporators
• Names and addresses of the initial board of directors and corporate officers
• Purpose of the business
• Number of authorized shares and their par value

Authorized shares refer to the maximum number of shares that a company is allowed to issue as agreed upon in the Articles of Incorporation. If you plan to issue more than one class of shares, it should also be listed in the Articles with the par value of each class. 

Partner with us to make sure you file accurately and launch your business correctly.

Filing the Articles as a Professional Corporation

Professional corporations file a separate version of the Articles of Incorporation dedicated to professional corporations. This online form asks for a lot of the same information that we’ve covered above, but it also requests information about the company’s professional service. Please make sure that you use the proper version of the form to help streamline the filing process.

But even before you submit your form, you’ll need to get a certificate from your regulatory board that verifies that your directors and shareholders are all appropriately licensed. You’ll need to contact your licensing agency for more guidelines about getting this certificate within your industry. But once you have this certificate, you’ll need to attach this certificate when you file your Articles of Incorporation.

Step 5: Create corporate bylaws

Corporate bylaws contain the rules for managing the business and regulating its internal affairs. As an official document, it must also be signed and filed with the corporate record. For professional corporations, these bylaws need to comply with the ethical and professional standards of your industry.

What to Include in Your Corporate Bylaws

Bylaws typically include:

• How shareholders will conduct votes 
• The rights, duties, and qualifications of directors
• How often the board of directors will meet
• Procedures for replacing directors
• How shares are distributed, sold, or transferred
• Rights, duties, and qualifications of officers
• The procedures for solving internal disputes
• Procedures for amending the bylaws

Bylaws do not need to be filed and are not legally required in the state of North Dakota. However, you are encouraged to have them since it is often required by financial institutions for opening business bank accounts or applying for loans.

Step 6: Draft a shareholder agreement

A shareholder agreement is a contract among the stockholders that outlines their rights and responsibilities. 

A shareholder agreement may include:

• Names and contact information of all the shareholders
• The pricing of shares and the number issued
• A stipulation for dividend distribution
• Description of shareholder responsibilities 
• Rules and regulations regarding the appointment of officers
• Shareholder voting rights and provisions on what constitutes a majority vote
• Procedures needed to allow changes on previous agreements
• A provision for the sale or transfer of shares
• A plan for the distribution of assets if the business closes

This agreement can be drafted using a template, but you may want professional assistance because it is still a legally binding document.

Step 7: Issue shares of stock

A corporation sells shares of stock to acquire capital for the business. It’s required to issue at least some of the shares authorized in the Articles of Incorporation.

Issue private or public stocks

Stocks may be issued privately or publicly. Smaller corporations may issue stocks privately to the founders, employees, or private investors.  A public corporation issues some of its shares for public purchase and needs to file quarterly statements with the U.S. Securities and Exchange Commission (SEC).

In North Dakota, stocks offered to the public must also be registered with the North Dakota Securities Department unless the shares are exempt from registration requirements. 

Issuing Shares as a Professional Corporation

Professional corporations can’t issue shares of stock to the general public. That’s because, under North Dakota state law, only professionals who are licensed in the same profession as the corporation may be shareholders of a PC. If a shareholder becomes unlicensed for some reason (retirement, non-compliance, etc.), then they’ll need to transfer their shares to a qualified shareholder promptly.

Any shares that are issued in violation of North Dakota statutes are void.

Step 8: Apply for necessary business permits or licenses

The state of North Dakota does not have a general business license. You can find some information about state licensing online, but to learn what you need to operate within and outside the city limits where your business is located, you’ll need to contact the city or county officials for information on permits and zoning ordinances that apply to your company. This step is especially important for professional corporations, which need licenses for all shareholders, directors, and employees who offer the company’s professional service.

Licensing is an important step for setting up a company, but there is no one-stop shop to do it all. You’ll need to research what federal, state, local, and industry-specific licenses and permits your corporation needs.

Step 9: File for an EIN and review tax requirements

Corporations need an Employer Identification Number (EIN) to pay taxes, hire employees, and open bank accounts. The application process for an EIN is free and can be done online via the IRS website.

Corporate Income Tax Filing

In addition to federal corporate income tax, as a business in North Dakota, you must file a corporate income tax return with the state.  You can find out more information about specific taxes related to your industry on the North Dakota Office of State Tax Commissioner website. You may also be responsible for sales taxes and local taxes imposed by local divisions and supervised by the tax commissioner.

Step 10: Submit your corporation’s first report

Businesses incorporated in North Dakota must file annual reports with the Secretary of State. Reports are due on or before Aug. 1 of every year. It can be done online through the electronic filing system, FirstStop.

An annual report must include the:

• Business name
• Name and address of the registered agent
• Business address
• Description of the business’s purpose
• Names and addresses of directors and officers
• Corporation’s stock information, including the total number of issued shares and classes and their face value
• Confirmation that all shareholders and directors are licensed (professional corporations only)
• Signature and title of the person filing the report

How much does it cost to start a corporation in North Dakota?

The cost to form a corporation in North Dakota varies depending on the size, location, and industry. But at a minimum, you’ll pay the filing fee of $100 for the Articles of Incorporation.

Other initial costs may include business licenses and permits, a name reservation fee, a trade name application fee, and other additional fees. Recurring costs may include registered agent fees and annual reporting fees.

What are the benefits of a corporation in North Dakota?

North Dakota has a robust economy that offers many incentives to new businesses, such as financial aid through grants and a growing energy sector. 

A corporation may be more complicated and costly to form, but it does offer the strongest personal liability protection. It also has immortality because it can own properties in perpetuity, undisturbed by shareholders leaving the company or selling their shares.

Corporations face double taxation and increased red tape, but they can also raise capital more easily. With the increased credibility of being a corporation, loans are also easier to secure.

How is a corporation taxed in North Dakota?

Because C corporations (the default form of corporation) are separate taxable entities from their owners, they have to file corporate returns. Shareholders also have to report their income from the corporation on their personal tax returns, which means C corporations are double-taxed. This applies to both federal and state corporate income tax in North Dakota.

Rather than being a separate legal entity, an S corporation is a tax status that a C corporation or LLC can apply for. S corporations have a pass-through tax structure, meaning all the profits gained by the corporation go directly to the owners’ personal tax returns and are not taxed at the corporate level. North Dakota recognizes the federal S corporation status, so this applies to both federal and state corporate income taxes.

Nonprofit corporations can apply to be tax-exempt from federal and certain state taxes, but they have to adhere to strict regulations. Employees for the nonprofit do pay income tax on their salaries.

We can help

Starting a North Dakota corporation will take some work, and you’ll probably need some help during the formation process. We can help you. Our business formation services can help with your corporation’s formation as well as help you run and grow it (note: we currently don’t support formations for professional corporations). Learn more by reaching out to us or get started today.