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How To Start A Business In North Dakota

How To Start A Business In North Dakota

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How To Start A Business In North Dakota

How To Start A Business In North Dakota

Ready to start your own business in North Dakota but not sure where to do? No need to worry about where to begin; we’ll guide you from the start with our easy-to-follow guide that outlines the key steps to take your business from an idea to a reality.

Steps To Start A Business In North Dakota

Step 1: Choose a Business Idea

The first thing you need to do when starting a business in North Dakota is figure out what your business will be. You might already have an idea, or maybe you’re still thinking it over. Either way, we have a collection of business ideas you can look through. This will give you all the details you need about different industries, how much it might cost to get started, advice, and plenty more to help you make a decision.

Step 2: Write a Business Plan

Once the business idea is nailed down, it’s time to start putting the wheels in motion and start working on the business plan. A business plan is a document that outlines your goals and objectives, as well as how you plan to achieve them. It should include detailed information about the market, marketing strategies, cost to start, financial projections, and more.

Many people typically only consider writing a business plan because the bank asks for one to get funding. While that’s a valid reason, writing a business plan is useful because it gets the ideas out of the entrepreneur’s head and helps create a roadmap for where they want the business to go. Like most builders wouldn’t build a house without blueprints, an entrepreneur shouldn’t build a business without a business plan.

Related: How to write a business plan

Step 3: Find the Money

After calculating the startup costs in the business plan and taking a look at your personal finances, you will have an idea of how much money is still needed to start your business. It’s better to tackle this step early because obtaining the funds to start a small business can be a complex and challenging exercise.

Not only are there unfamiliar terms like collateral, equity, assets, liabilities, and others, but there are several sources of funding with different rules, processes, and costs.

From conventional bank loans, Small Business Administration (SBA) loan guarantees, investors, small business grants, and many others, there are a number of different funding options.

Related: Understanding the different types of business funding

Step 4: Select a Business Structure

The next step to starting a business in North Dakota is selecting a business structure. A business structure (also called a business entity) is how a business is organized to conduct business. It’s important to choose the right type of business entity for your new business, as it will determine how you are taxed and the legal liabilities of the owners.

In North Dakota, the most common forms of business entities are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

sole proprietorship is a type of unincorporated business owned by one individual. This type of entity offers simplicity and flexibility in terms of management and taxation. However, the owner has unlimited personal liability for all debts and obligations incurred by the business.

Related: How to start a North Dakota sole proprietorship

general partnership is similar to a sole proprietorship but involves two or more individuals who share ownership and management responsibilities. All partners have unlimited personal liability for all debts and obligations incurred by the business.

corporation is a separate legal entity from its owners, meaning it can make a profit, be taxed, and be held legally liable for its own actions, which are legally separate from its owners. The owners have limited personal liability for any legal action or debts incurred by the corporation.

Related: How to form a North Dakota corporation

Finally, a Limited Liability Company (LLC) combines features from both a sole proprietorship/partnership and corporation by providing limited personal liability for its owners while allowing them to manage their own businesses without having to adhere to corporate formalities such as holding annual meetings or keeping minutes.

Related: How to form a North Dakota LLC 

Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular formation services include:

IncFile - Great service and free registered agent the first year.

Northwest - Privacy-Focused: Free registered agent and private business address for 1 year!

ZenBusiness - Easy to use and free registered agent for 1 year!

Step 5: Register the Business

With the business structure finalized, the next step is to register the business. If you are planning to start a business in North Dakota, there are certain licenses and permits that a business needs before opening their doors. These registrations will vary depending on the type of business and its location.

Business licenses: The state of North Dakota doesn’t have a general business license; however, a city license may be needed to operate a business.

Employer Identification Number (EIN): An EIN is a unique identification number the Internal Revenue Service (IRS) assigns for tax purposes. You can apply for an EIN online through the IRS. Most businesses, including corporations, multi-member LLCs, and partnerships, will need an EIN. Sole proprietorships with no employees are not required to get one, but they may consider doing so as they will use the owner’s social security number.

Sales & use tax permit: If you plan to sell goods or services subject to sales tax, you’ll need to apply for a sales & use tax permit with the North Dakota Office of State Tax Commissioner.

Professional licensing: Some services, such as auctioneers, electricians, door-to-door home repair sellers, cosmetologists, and others, require state licensing in North Dakota.

Business name registration: If a sole proprietorship or general partnership wants to operate under a name that is different from the owner(s) full name, a Trade Name Registration, sometimes known as a DBA or Doing Business As, will need to be filed with the North Dakota Secretary of State.  

Zoning: Before starting to operate a business (even if it’s home-based), be sure to check local zoning ordinances before starting to operate out of a location.

Related: What business licenses and permits are needed in North Dakota?

Step 6: Open a Business Bank Account

Separating business and personal funds is an important step when starting a small business. This step helps keep your business finances organized and separate from your personal money, making it easier to manage your cash flow and simplify tax preparation. While most banks provide business checking accounts, comparing the features and fees is important to find the best fit for your business needs.

Step 7: Hire Employees

Hiring employees is our next step, and if you plan to hire, it’s important to be aware of the regulations and requirements for hiring your first employee. There are federal and state laws and regulations to understand, such as minimum wage, overtime pay, workers’ compensation insurance, unemployment insurance taxes, and labor laws, among other things.

Employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., withholding state and federal income tax, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Related: Steps to hiring your first employee in North Dakota

Step 8: Obtain Business Insurance

Many small business owners overlook the importance of having adequate insurance coverage and without the right insurance policies, businesses can be exposed to financial risks that can put their future success (and owners) in jeopardy.

Business insurance is designed to protect businesses from potential losses due to accidents, property damage, and other unforeseen events. It can also provide protection against legal liabilities that may arise from injuries or damages caused by employees or customers on the premises.

Every business will have unique needs, but before opening the doors to your business, there will likely be several types of insurance policies that should be considered.

Related: Types of insurance your business may need

Step 9: Track Income and Expenses

Bookkeeping is the process of recording, organizing, and maintaining the financial transactions of a business. It’s easy to underestimate the role that bookkeeping plays in the success of a small business. It not only keeps the business compliant with state and IRS tax requirements but can also be used to monitor the financial health of your business and maximize profits.

Related: Setting up accounting for a business

This material is property of StartingYourBusiness.com

Common questions when starting a business in North Dakota

What are the steps to starting an LLC in North Dakota?

There are three main steps to completing a North Dakota LLC formation. These include:

1. Making sure the LLC name is available
2. Appointing a North Dakota Registered Agent
3. Filing the Articles of Organization

To learn the steps, see our guide on how to start an LLC in North Dakota.

How much does it cost to start an LLC in North Dakota?

The North Dakota Secretary of State filing fee to start an LLC in North Dakota is $135.

Does a sole proprietor need a business license in North Dakota?

In North Dakota, whether a sole proprietor needs a business license depends on the type of business they’re running and where it’s located, not the business structure.

The state doesn’t require a general business license for all businesses, but specific industries and professions may need licenses or permits to operate legally. Additionally, local regulations vary by city and county, so a sole proprietor might need a local business license or permit depending on their business activities.

North Dakota Small Business Resources

There are 73,822 small businesses in North Dakota, which is 98.7% of all businesses in the state,1 and 56% of North Dakota employees work for a small business.2 Because of the economic impact of small businesses, there are a number of small business resources to help North Dakota businesses start and grow. Some of these include:

  • North Dakota Small Business Development Center: The SBDC offers a range of services to support small businesses in their growth and development, providing advice, training, and resources tailored to the unique needs of North Dakota entrepreneurs.
  • North Dakota Women’s Business Center: Dedicated to empowering women entrepreneurs by providing them with the tools, resources, and support necessary to start and grow successful businesses in North Dakota.
  • Veterans Business Outreach Center: The VBOC offers guidance and resources to veteran entrepreneurs, helping them leverage their skills to build prosperous businesses, with a focus on the specific challenges faced by veterans in the business world.


  1. Small Business Administration ↩︎
  2. Census Bureau ↩︎


  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

How To Start A Business In North Dakota

How To Start A Business In North Dakota

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