You worked hard to earn a professional license, and starting your own business is a great way to make your license work for you. Forming a professional limited liability company (PLLC) not only gives you an avenue to earn money for your services but also affords you many advantages that can give your business a boost. Although there are many documents required to start and maintain a professional entity, ZenBusiness has the tools to help you get your business off the ground and keep it running smoothly.
What is a professional limited liability company in North Dakota?
PLLCs in North Dakota share many characteristics with North Dakota limited liability companies (LLCs). Like a regular North Dakota LLC, a PLLC is a business entity made up of owners called “members,” and the entity is distinct from its individual members. This means that PLLC members are not personally liable for the business’s debts and legal liabilities, or for malpractice committed by other members.
In particular, PLLCs are business entities formed to render professional services. In North Dakota, this means that PLLC members offer their professional services to the public, and that these services require licensure, as well as an undergraduate or advanced degree in a specific field.
Who can form a PLLC in North Dakota?
A few examples of the different kinds of professionals who can form a PLLC are:
- Registered dieticians
- Social workers
Only individuals licensed to render the professional service the PLLC offers can be PLLC members. Also, an individual can’t simultaneously be a member of more than one PLLC rendering the same services.
How to Form a North Dakota PLLC
Once you determine who your professionally licensed members are, you must make a series of choices about your business and fill out paperwork to file with local, state, and federal government agencies.
Choose a name for your North Dakota PLLC
The first business choice to make is the name of your company. A North Dakota PLLC’s name must be distinguishable from other trade names and business names. Your business name must also be distinguishable from a name already reserved with the Secretary of State. Your PLLC’s name must contain the words “professional limited liability company” or “limited liability company,” but you can use the abbreviations PLLC, PLC, or LLC on official business documents.
To avoid complications with name selection, ZenBusiness offers a business name reservation service, including a name search, so you can quickly find and lock down a business name that suits your image and complies with state rules. Our domain name service also allows you to reserve the domain name you want so you will be ready to build a presence online. With ZenBusiness’s services, you can quickly establish and preserve a name for your business while you prepare to open.
Select a North Dakota registered agent
Just like any other registered North Dakota business entity, a PLLC must have a registered agent in North Dakota. A registered agent receives service of legal documents and other important business documents on behalf of the business. North Dakota requires your registered agent to be a North Dakota resident, a registered corporation, or an LLC with a physical office in North Dakota. You can’t name your PLLC as its own registered agent.
Legal documents and other notices can be time-sensitive, and you don’t want to miss important deadlines because you don’t have a registered agent continuously available during regular business hours. Also, legal documents and other business notices might cover embarrassing subject matter you don’t want to broadcast to clients. With a registered agent who isn’t one of your members, you can designate someone to be continuously available to receive your important documents while you and your members take the time and space you need to grow your business. Also, having a registered agent with a separate office helps you avoid receiving embarrassing documents that could sour your business image in front of clients.
Our registered agent service can help you locate the right registered agent for your PLLC. Our service helps you unshackle yourself from your desk and gives you the freedom to build your business outside of the office and take the time you need for breaks and vacations.
Secure certifications regarding your members’ and governors’ licensure
PLLCs can be managed by their members, by a board of governors, or by managers. You need to decide how you want your PLLC to be managed. Each member, manager, or governor of your PLLC must have a license for the professional service your PLLC provides. To start your PLLC, you must provide the Secretary of State with a certificate from the regulating board for your profession stating that each one of your members, managers, or governors has a license to practice the profession in North Dakota.
Complete and file North Dakota Articles of Organization
Once you have established your name, registered agent, and member qualifications, you’re ready to officially form your PLLC. You officially form your PLLC by filing Articles of Organization with the Secretary of State. Articles of Organization are filed and signed by an organizer who is at least 18 years of age or older.
Your Articles of Organization and accompanying documents must contain the following information:
- The name of your PLLC
- The name of your commercial registered agent or the name and address of your noncommercial registered agent
- The address of your principal executive office
- The name and address of each organizer of your PLLC
- The effective date of your PLLC
- The profession your PLLC will practice
- The name and residential address of each member who will practice the profession and each original member who is a minority owner
- A certificate from your profession’s regulating board certifying that each member is licensed to practice the profession in North Dakota
Your PLLC begins immediately after you file your Articles of Organization with the Secretary of State, unless you designate a later effective date for your business. You can state a later effective date in the Articles of Organization, but that date can’t be more than 90 days after you file the Articles.
Create a North Dakota operating agreement for the PLLC
Although not required, an operating agreement is an important feature of many successful PLLCs. An operating agreement allows you to customize the rights and obligations of members and managers of your business. It also allows you to lay out customized procedures for conducting and winding up business. Operating agreements can dictate:
- Relations among and between members
- Specific rights and duties of managers or governors
- The activities of the company
- The conduct of the company
- Reasonable elimination or restriction of a member’s duties, liabilities, and rights
Without an operating agreement, the standard provisions of North Dakota law govern the conduct of your PLLC. But the standard provisions of North Dakota law may not be the best fit for your business, so why not customize the parameters of your business if you can?
Handle North Dakota tax obligations
Once your business starts operation, it will have a number of federal, state, and local tax obligations.
Apply for a federal employer identification number
If you have employees or you want to separate your personal assets from your business assets, you need an employer identification number (EIN) from the IRS. An EIN establishes your business as a separate entity for employment, financial, and tax purposes.
The EIN application process requires you to complete your request in one sitting, and there are a number of restrictions for receiving an EIN. ZenBusiness can help you obtain an EIN quickly with our employer ID number service, so you can start hiring employees and opening bank accounts to get your business rolling.
Apply for tax permits and accounts at the state and local level
As a PLLC, you may be subject to certain state and local taxes including, sales tax and income withholding taxes for employees. You can find applications for permits and accounts on North Dakota’s website for the Office of State Tax Commissioner. You may also have county tax obligations. You can find out how to fulfill those obligations by contacting the county where your business operates.
Obtain North Dakota business licenses and permits
You must see that all your members and governors have the appropriate professional licenses to run your PLLC. Aside from professional licenses and permits and accounts for tax purposes, you may need additional business licenses to operate. There is no central place to find and acquire these licenses. You must check industry and zoning rules at the federal, state, and local levels to see if any additional business licenses apply to you.
Acquire insurance for your North Dakota PLLC
In some cases, insurance for your business is required. In other cases, insurance for your
business is a best practice.
Workers’ Compensation Insurance
North Dakota law requires most employers to have workers’ compensation insurance coverage. Employers that fail to obtain this coverage in adequate amounts could be subject to steep financial penalties.
Even though you’re not personally liable for personal injuries your business, your employees or other members cause, general business liability insurance is helpful for protecting your business assets.
Professional Malpractice Insurance
Regardless of your business structure, you’re still liable for your own professional malpractice. Malpractice insurance is designed to indemnify you against claims of professional malpractice and is an important component for any PLLC.
Open a business bank account
Once you have your EIN, you can open a bank account for your PLLC. A separate bank account for your business eliminates confusion and liabilities associated with commingling personal and business assets. Also, your financial institution might have special options or rates for business accounts. ZenBusiness can help you get started.
Maintain your North Dakota PLLC
After you start your PLLC, you must file an annual report with the Secretary of State to maintain the business. You must deliver this report to the Secretary of State on or before November 15 of each year. ZenBusiness provides an annual report service to help you keep up with reporting requirements so you avoid penalties and fees.
Contact ZenBusiness for the tools you need to set up your North Dakota professional limited liability company for success
Starting and running a business is hard and rewarding work, but not every step has to be complicated. ZenBusiness provides the tools you need to keep your business running smoothly.
North Dakota PLLC FAQs
What are the filing fees for a North Dakota PLLC?
The fees you pay depend on what documents need to be filed. The North Dakota Secretary of State maintains a list of applicable fees associated with PLLC filings. Remember that you must pay fees to maintain and certify your professional license as well as any applicable business license fees.
Do I need a lawyer to form a North Dakota PLLC?
You don’t need a lawyer to form a North Dakota PLLC.
Does North Dakota have a Professional Corporation (PC) Entity?
Yes, North Dakota has a PC entity that comes with its own set of challenges and benefits.
Can professionals from different fields form a North Dakota PLLC together?
Generally, no. North Dakota PLLCs can only render one specific type of professional service and services ancillary to that professional service. North Dakota law makes exceptions to this restriction if your business renders services from architects and landscape architects, engineers and land surveyors, or physical therapists and occupational therapists
How will I be taxed as a North Dakota PLLC?
How your North Dakota PLLC is taxed depends on the elections you make with the IRS. As a default, single-member PLLCs are taxed as sole proprietors, and multiple-member PLLCs as a partnership. Both can elect to be taxed as corporations, but may be subject to double taxation. Seek the help of a tax professional for more specific information.