Starting a business in North Dakota begins with an idea, but transforming that idea into a legal business requires taking care of specific steps. It’s not uncommon for many new business owners to find themselves unsure about the process, but this guide simplifies North Dakota’s business registration requirements.
In this guide, we will break down the procedures into clear, actionable steps and explain everything from choosing your business structure to obtaining the necessary licenses, helping you navigate the official procedures with confidence.
Related: Starting A Business In North Dakota Checklist
Step 1: Business Structure
The first step to registering 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. Choosing the right type of business entity for your new business is important, as it will determine how you are taxed and the legal liabilities of the owners.
In North Dakota, the most common business structures are sole proprietorships, general partnerships, corporations, and Limited Liability Companies (LLCs).
Related: Comparison of Business Structures
A sole proprietorship is a type of unincorporated business owned by one individual. This type of business structure 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 Sole Proprietorship in North Dakota
A 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.
A 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
Step 2: Business Name
After choosing a business structure, selecting and registering the business name is the next step for many businesses. Here’s an overview of the process in North Dakota:
Sole proprietorships and general partnerships often need to register a North Dakota Trade Name, also known as a “doing business as” (DBA) name. By default, these businesses operate under the owner’s legal name. For instance, if Shelia Smith starts a knife sharpening business without using a specific business name, she doesn’t need to register. However, if she decides to call her business “Shelia’s Sharpening Services,” she would need to register this trade name with the North Dakota Secretary of State.
Corporations and Limited Liability Companies (LLCs) typically don’t register Trade Names, as they select a unique name during formation. However, they may choose to register additional names if they want to operate under multiple brand names while maintaining the liability protection of a single entity.
Before registering any business name, North Dakota doesn’t allow the registration of names that are the same or are very similar to existing registered businesses unless you have permission from the current name holder. You can search for a North Dakota business name on the Secretary of State’s website.
Step 3: Federal Employer Identification Number
The Federal Employer Identification Number (FEIN), also known as a Tax ID, is a unique nine-digit code assigned by the Internal Revenue Service (IRS) to identify businesses. Many companies require an FEIN for tax and financial purposes.
You need an EIN if:
- Your business has employees
- Your business operates as a corporation, partnership, or multi-member LLC
Sole proprietorships and single-member LLCs without employees can use the owner’s Social Security number for tax purposes. However, these businesses may still opt for an EIN to avoid using personal identification on business documents.
Obtaining an EIN is a straightforward process. The IRS provides a free online application that typically takes just a few minutes to complete. Alternatively, you can submit your application by mail or fax using Form SS-4.
Step 4: Professional Licensing
Several professions in North Dakota require specific licenses before practitioners can offer their services. The North Dakota State Board of Professional License and Certification oversees licensing for numerous occupations. Some professions that require licensing include:
- Accountants
- Architects
- Engineers
- Nurses
- Real Estate Agents
- Veterinarians
This list is just an overview of licensed professions in North Dakota. Unfortunately, the state has no central place to look at professional licensing requirements, and searches are done with the relevant licensing board.
Step 5: Sales Tax Permit
Businesses selling tangible goods or certain services in North Dakota must obtain a Sales & Use Tax Permit from the North Dakota Office of State Tax Commissioner. This permit allows businesses to collect sales tax from customers and remit it to the state.
Who needs to register:
- Retailers selling physical products in North Dakota
- Businesses providing taxable services
- Out-of-state sellers meeting certain economic thresholds for sales into North Dakota
Registration is done through the North Dakota Office of State Tax Commissioner. The process can typically be completed online through their website.
Step 6: Sales Tax Certificate of Resale
A North Dakota Sales Tax Certificate of Resale (also called a Resale Certificate) allows businesses to purchase inventory for resale without paying sales tax at the time of purchase.
Who needs a resale certificate:
- Retailers purchasing inventory to resell
- Wholesalers buying goods to sell to retailers
- Manufacturers acquiring components for products they will sell
This certificate is obtained from the North Dakota Office of State Tax Commissioner as part of the Sales & Use Tax Permit registration process.
Step 7: Local Business Licenses
While North Dakota doesn’t have a general state business license requirement, many cities and counties require specific local business licenses. Here are some common types of local licenses:
- Food Service Licenses: Restaurants, food trucks, and other food-related businesses often need licenses from local health departments. These ensure compliance with food safety regulations. For example, the City of Fargo requires food establishments to obtain a license from its Environmental Health Division.
- Liquor Licenses: Businesses selling alcoholic beverages typically need a license from the local city or county government. In Bismarck, the City Administration Department issues liquor licenses to qualifying establishments.
- Contractor Licenses: Many municipalities require contractors to obtain local licenses before performing work. These licenses often verify insurance and bonding. The City of Grand Forks, for instance, requires contractors to register with its Inspections Department.
- Taxi and Transportation Licenses: Companies offering taxi or ride-sharing services often need local licenses. These regulate vehicle safety and driver qualifications. In West Fargo, the City Commission oversees the licensing of taxi services.
Remember to check with your specific city or county government, as licensing requirements can vary significantly between locations.
Step 8: Local Building & Zoning Permits
Before finalizing a location for your business, it’s important to understand and comply with local building and zoning requirements. These regulations ensure that businesses operate in appropriate areas and that buildings meet safety standards. Here are some common requirements you may encounter:
Zoning Permits: Zoning regulations (which define residential, commercial, and industrial zones) determine where specific types of businesses can operate within a municipality. Before leasing or purchasing a property, check with your local planning or zoning department to confirm that your intended business use is allowed in that location.
Building Permits: If you plan to construct a new building or make significant modifications to an existing one, you’ll likely need a building permit. This ensures that any construction or alterations meet local building codes and safety standards. Building permits are typically obtained from the local building department or inspections office.
Certificate of Occupancy: Many municipalities require a certificate of occupancy before a business can begin operations in a building. This document certifies that the building is safe for occupancy and complies with all building codes and zoning laws. You’ll usually obtain this from the same office that issues building permits.
Sign Permits: If you plan to install exterior signage for your business, you may need a separate permit. Sign regulations often control size, placement, and lighting. Check with your local planning or zoning department for specific requirements.
Home Occupation Permits: Some areas require special permits for home-based businesses. These permits ensure that your business activities don’t disrupt the residential nature of your neighborhood and may include limits on signage, customer visits, or the use of certain equipment. As an example, the City of Minot requires home-based businesses to obtain a Home Occupation Permit from its Planning Division.
Each municipality may have its own specific requirements and processes for these permits. It’s advisable to consult with your local government offices early in your planning process to ensure compliance with all necessary regulations.
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