How to Qualify a Foreign LLC in North Dakota

Explore our guide for crucial insights on getting a foreign LLC qualification in North Dakota, ensuring a smooth entry into the Peace Garden State's thriving business landscape.

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Your business is growing, and you’re planning an expansion to other states. It’s a good problem to have!

But it’s not quite as simple as choosing another location. Because each state has different rules and requirements for business operations, you may need a “foreign qualification” in each state where you plan to do business.

It’s a common misconception that foreign qualification is only for businesses operating outside the U.S. But in this case, “foreign” refers to any business operating in a state that isn’t the state where the LLC was originally formed.

For example, if your LLC is registered in Minnesota and you are looking to open a second location in North Dakota, you may need to complete a foreign qualification in North Dakota before you can expand there.

Important Note: If you’d like to save time and have the foreign qualification paperwork taken care of for you, many of the best LLC services can handle this task for you.

What happens if I fail to foreign qualify before doing business in North Dakota?

Foreign qualifying is essentially asking permission to do business in the state of North Dakota. And the notion that “it’s easier to ask forgiveness than permission” doesn’t apply here. Failing to foreign qualify before starting a business in North Dakota yields consequences that are far costlier than registering in the first place. If you fail to foreign qualify, your business:

  • Will not be able to commence or maintain a lawsuit in North Dakota courts
  • Can be stopped by the Attorney General from doing business in the state
  • Will owe the state a civil penalty of up to $5,000
  • Managers or members who participated in the transaction of business will each be subject to a civil penalty of up to $1,000

So, not only will your LLC owe a hefty fine and lose its revenue stream, but you and your associates will be individually liable as well.

Despite the serious penalties, transacting business without authority will not invalidate your current contracts or stop you from defending a lawsuit in a North Dakota court.

North Dakota Century Code outlines these penalties in more detail in Section 10-32.1-84.

What is considered “doing business” in North Dakota?

We’ve established why you shouldn’t do business without a foreign qualification. But what exactly does it mean to “do business” in North Dakota? If you go looking for specifics in the state code, you won’t find any; it’s fairly vague on the subject. The Secretary of State’s LLC FAQ page provides a little insight, but more definitively, other state and tax laws tell us that you are considered to be “doing business” in most cases and required to foreign qualify if:

  • Your LLC has offices, stores, warehouses, or other physical presences in the state
  • There are salespeople, agents, or representatives operating on behalf of your LLC in the state

If you’re unsure whether or not you need to file for a foreign qualification in North Dakota, we suggest seeking legal counsel.

Could I be exempt from foreign qualifying in North Dakota?

The foreign qualification, however, isn’t a hard and fast rule for all LLCs performing any kind of action in North Dakota. Certain actions do not qualify as “doing business” and therefore don’t require a foreign qualification. Some examples are:

  • Maintaining, defending, settling, etc. a lawsuit in North Dakota court
  • Carrying on activities solely concerning internal affairs, like meetings of LLC members and/or managers
  • Having bank accounts in the state
  • Having offices for the maintenance, transfer, exchange, etc. of the LLC’s own securities
  • Holding title to and managing properties in North Dakota
  • Creating or acquiring indebtedness
  • Collecting debts
  • Conducting a single transaction within 30 days that is not part of a series of similar transactions

Find more detail on these exemptions in Section 10-32.1-82 of the North Dakota Century Code. If your only in-state business activities appear here, you’re likely off the hook with foreign qualification. Even so, if you have questions or hesitations, it’s best to get legal advice.

How to Foreign Qualify Your LLC in North Dakota

Foreign qualification in North Dakota is simple if you know where to find and send your forms. If you or your legal counsel has decided to foreign qualify your LLC in North Dakota, you can take care of the entire process online. Head over to FirstStop, the Secretary of State’s online filing system. On the left side of the page, click “Forms.” Then, select the “Foreign Business Limited Liability Company Certificate of Authority Application” and follow the on-screen instructions.

To streamline the filing process, have your personal and LLC information ready when you begin the form. Here’s what you’ll need:

  • Your LLC name, exactly as it appears on record with the state where it was formed
  • Your LLC’s trade name, if you have one
  • The street address and phone number of your LLC’s principal office
  • The state where your LLC was formed
  • The duration of your LLC
  • The name of your North Dakota registered agent (and address, if a noncommercial agent)
  • Names and addresses of your LLC’s managers or managing members
  • An authorized signature

Additionally, North Dakota requires a Certificate of Good Standing from your home state, certified not more than 90 days before your filing. Contact the state government to request one.

Find step-by-step video tutorials for FirstStop here.

Foreign qualification isn’t free, though. It comes with a $135 fee, which you can pay online with a credit or debit card. Or, if you choose to print and mail the form, write a check addressed to the “Secretary of State” and send it, with your form to:

Secretary of State

State of North Dakota

600 E Boulevard Avenue, Dept. 108

P.O. Box 5513

Bismarck, ND 58506-5513

After your form is in and your fee is paid, sit back, take a deep breath, and pat yourself on the back. Your LLC is on its way to foreign qualification, and you’re embarking on another chapter in the life of your business.

Name Requirements to Remember

As you gather your information and complete your form, don’t forget the little details, like making sure that your LLC name complies with North Dakota’s business name requirements. Check that your name:

  • Contains the words “limited liability company” or the abbreviations “L.L.C.” or “LLC”
  • Is expressed in letters or characters used in the English language
  • Does not use words implying unlawful activity or any other activity other than what is specified in its Articles of Organization. For example, if you run a landscaping business, your name shouldn’t be ABC Frozen Yogurt
  • Is distinguishable and not deceptively similar to other business names registered or reserved with the Secretary of State (perform a North Dakota LLC name search to make sure the name you want is available)

You can also reserve your North Dakota business name if you’re not quite ready to foreign qualify your LLC.

Frequently Asked Questions

  • We think you should foreign qualify your LLC before you begin conducting business in a new state. If you don’t, your business could be subject to a broad range of fines and penalties for operating an LLC in a jurisdiction where you don’t have permission to do so.

  • You’ll typically need to wait up to four weeks for North Dakota to process your application.

  • Chances are, you’ll require at least one license or permit to operate your LLC in compliance with North Dakota state law. For more information about business licenses and more in this state, check out North Dakota’s convenient Licensing Information webpage.

  • Yes. Whether you operate a domestic or foreign LLC in this state, you are required to file a North Dakota LLC Annual Report.

  • The overall costs of operating a North Dakota LLC can vary considerably based on the specifics of your business. However, we created a helpful guide to help you identify and plan for every expense your LLC will face in this state.

  • The answer to this question lies in your personal preferences, but we can give some general pointers. An attorney will cost the most by a mile, but also provides expertise you won’t find with the other options. The DIY route is free of charge but can require quite a bit of legwork and provides no peace of mind that the process is being completed correctly.

    Using an LLC service means your business will be foreign qualified by professionals who know what they’re doing, while also costing significantly less than a lawyer. This “best of both worlds” attribute is what makes LLC services our preferred option.

  • Using an online LLC service removes much of the hassle from the foreign qualification process. With these services, all you need to do is provide them with the name, location, and industry your business operates in, along with some info about yourself and your North Dakota registered agent.

    The service then registers your Certificate of Authority with the state to qualify your LLC to do business in North Dakota.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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