Starting a small business in North Dakota often means registering with several federal, state, and local agencies. Let’s review common North Dakota business license registrations so your business starts off right.
Related: Guide to starting a business in North Dakota
Setting Up the Business
Before you can apply for business licenses, you should first establish the business structure. This decision impacts your legal responsibilities, taxes, and how much personal liability you might face. Here’s a brief explanation of each type of structure:
Sole proprietorship: This is the simplest form of business structure, where one person owns and runs everything. There’s no separation between the owner and the business, meaning the owner is personally responsible for all debts and legal actions against the business. Taxes are straightforward as the owner reports business income on their personal tax return.
General partnership: Similar to a sole proprietorship, but with two or more people running the business. Partners share profits and losses, and like sole proprietors, they are personally responsible for the business’s debts and legal issues. Partnerships also don’t pay taxes as a separate entity; instead, each partner includes their share of profits or losses in their personal tax filings.
Corporation: A corporation is a more complex entity that is separate from its owners, providing personal liability protection. Owners, known as shareholders, are not personally responsible for the corporation’s debts or legal problems. Corporations can raise money by selling stock and are taxed separately from their owners. This entity requires more requirements, like having board meetings and record-keeping.
Limited Liability Company (LLC): An LLC blends elements of sole proprietorships, partnerships, and corporations. Owners (members) have limited personal liability for business debts and actions. Like sole proprietorships and partnerships, an LLC can pass income directly to owners to avoid double taxation, a common issue with corporations. This structure offers flexibility in management and less strict requirements than a corporation.
Related: Comparison of Business Structures
What Licenses Do North Dakota Businesses Need?
With the business structure out of the way, we can begin looking at the different types of registrations businesses in North Dakota may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.
General Business License
There is no general state of North Dakota business license; however, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and the business’s activities. Below are a few cities that have licensing requirements.
- Fargo: A few types of businesses will need to apply for licensing to operate in the City of Fargo. A Business License is needed for kennels, transportation businesses, pawn brokers, second-hand dealers, and a few others. An Occupational License is needed for HVAC and plumbers. More information on business licensing in Fargo is available from the Fargo Auditor’s Office.
- Bismarck: Certain businesses, such as those in food service or selling alcohol, pawnbrokers, and others in city limits, will need a City of Bismarck Business License.
- Grand Forks: The City of Grand Forks requires several types of businesses to be licensed. A few include kennels, bakeries, bed & breakfasts, mobile food vendors, and others. Businesses such as junk yards, towing services, bowling alleys, and more will need to register with the city.
For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements.
Trade Name Registration
While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a name that is different from the full name of the owner(s) to register for a Trade Name (also known as a Doing Business As, DBA, or Fictitious Name Certificate) with the North Dakota Secretary of State.
Building & Zoning Permits
Zoning Permit: North Dakota businesses should check on zoning requirements from their local planning and zoning department. These permits, available from city or county zoning offices, confirm that business activities fit within designated zones, like commercial or industrial areas.
Building Permit: Building permits are required for new construction, additions, alterations, and repairs. Permit applications are submitted to the local building department, and the process includes plan review and inspections to ensure compliance with state and local building codes.
Signage Permit: North Dakota businesses must obtain sign permits from their local government before installing exterior signage. Sign permit applications are typically submitted to the local building department or planning department.
Sales & Use Tax Permit
Any business making retail sales of tangible personal property in North Dakota must register for a Sales & Use Tax Permit (also called a Seller’s Permit) from the North Dakota Office of State Tax Commissioner.
Resale Certificate
Businesses purchasing merchandise to resell will usually want to obtain a North Dakota Sales Tax Certificate of Resale to not pay sales tax on merchandise that will be resold to customers.
Professional License
A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in North Dakota include; auctioneers, electricians, door-to-door home repair sellers, cosmetologists, and many more.
In addition to professional licenses, businesses in various of industries, such as food establishments and daycares require licensing.
Contractor License
Any person or business in the construction or contracting business when the price per job exceeds $4,000 has to obtain a Contractor’s License from the North Dakota Secretary of State.
Employer Identification Number (EIN)
Many businesses will register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of a Social Security Number for an individual.
Next Steps
These are some of the most common business licenses a new business in North Dakota will need to register for. Be advised that while it’s a good start, there are so many different licenses that may be needed, be sure to double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.
