A limited liability company (LLC) is a type of business structure that protects the company’s owners from liability for the company. This is done in part by separating the company’s assets from the owner’s assets.
If there is ever a lawsuit against the company or debts related to the company that have to be paid, the money can only be taken out from the company’s funds instead of the owner’s personal accounts or property.
In the state of North Dakota, you must register your LLC through the North Dakota Secretary of State’s office. It must be noted that in North Dakota, insurance and banking companies providing insurer backing claims are not allowed to be set up as LLCs. Insurance companies that only sell insurance products can be LLCs, though.
In order to set up an LLC in North Dakota, you must first determine which kind of LLC best fits your business. North Dakota allows for three different kinds of LLCs: a regular limited liability company, a farm limited liability company for family-run farming operations, and a professional limited liability company option for businesses that offer the services of licensed professionals.
Besides a few minor differences, the three different types of LLCs have many of the same requirements. For instance, the name for an LLC must contain “LLC” or “L.L.C”, though professional LLCs can choose to use “PLLC”, “P.L.L.C.”, “P.L.C.”, or “PLC” instead. Also, LLCs need a registered agent that has an address in North Dakota and can be served papers on behalf of the company. North Dakota requires only one organizer, so an LLC can only have one person in the company.
In order to register your company as an LLC in North Dakota, you will need to fill out the proper paperwork and mail or fax it to the North Dakota Secretary of State. If your business is a domestic company (meaning that it is based in North Dakota), then you will need to file Articles of Organization.
With this paperwork, you need to include:
- The name and address of the company;
- The name and address of the registered agent;
- When you desire the LLC to be created, which is either when the paperwork is sent in or; another date in the future that has been indicated on the form;
- How long you want the company to last, which can be forever; and
- The names and addresses of the organizer(s).
You also need to make a purpose statement that lists the reason why you are creating this business. The purpose statement is also where you can include any other statements or any other operating rules you have for your LLC.
Foreign LLCs (businesses that were established in another state or country) must file an application for a Certificate of Authority from the North Dakota Secretary of State. The application form will ask you to provide information such as where the LLC was initially formed, when you want it to end if you already have a set date, and the name and address of the registered agent.
Also, you are required to state what kind of business you plan on doing in North Dakota, and you must provide a list of the members or managers. With the Application for a Certification of Authority, you must also include a certificate of good standing or certificate of existence from your original state. Furthermore, if the foreign LLC uses another name other than its official name while transacting business, then it has to file a Trade Name Registration with the state, as well.
North Dakota provides various tax credits to LLCs in different industries. For instance, if your LLC invests in an agricultural commodity processing facility certified by the Department of Commerce Division of Economic Development and Finance, it will receive a tax incentive for doing so. The tax credit is calculated at 30% of the amount you put in for the investment.
Additionally, if your LLC invests in an angel fund that is also certified by the state, then you can receive a tax credit of 45% of the investment. Also, if your LLC buys equipment in order to automate a manufacturing process, the company can get 20% of the cost of the equipment as a tax credit.
North Dakota law requires that you file an annual report for $50 to maintain your LLC. If you are operating a foreign LLC, and do not register the LLC before doing business in the state of North Dakota, you risk being fined. LLCs can be fined up to $5,000, and the LLC members may also be fined $1,000 each.
Also, LLC members will generally have less control over the company than with other business forms like a partnership. They may also face more restrictions when it comes to making financial contributions to the business entity; contributions may be processed in a different way than with other business structures. In order to avoid a violation, it may be necessary to work with a legal professional when dealing with specific issues like business contributions.
It is in your best interests to consult with a North Dakota business lawyer while forming an LLC because you want to be certain you are following all of the rules set by the state. Your attorney can provide you with the guidance needed to ensure that all items are completed properly and filed in a timely manner. In the event of a lawsuit or legal dispute, your attorney can provide representation in court.