An North Dakota LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership or a Subchapter S Corporation, are generally prime candidates for a business juststarting. The state of North Dakota gives public support to an North Dakota LLC.
Should I form a North Dakota LLC?
An North Dakota LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in North Dakota to your LLC. Your North Dakota LLC establishes a legal presence within the state, which you can use either
as a platform for in-state operations or by registering your North Dakota LLC via your agent's physical address in order to
meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages of a North Dakota LLC
Advantages of LLC
Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of LLC
Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By North Dakota and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial North Dakota LLC members, the name and address of your North Dakota registered agent, the details of which will be introduced into the body of your LLC operating agreement and related North Dakota LLC formation documents assembled for application to the state of North Dakota.
North Dakota's 2008 Business Tax Climate Ranks 30th
North Dakota ranks 30th in the nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Montana (6th), South Dakota (2nd) and Minnesota (42nd).
North Dakota's Individual Income Tax System
North Dakota's personal income tax system consists of five brackets and a top rate of 5.54% kicking in at an income level of $349,700. Among states levying personal income taxes, North Dakota's top rate of 5.54% is 31st highest nationally. North Dakota's 2005 individual income tax collections were $381 per person, which ranked 41st highest nationally.
North Dakota's Corporate Income Tax System
North Dakota's corporate tax structure consists of five brackets with a top rate of 6.5% kicking in at $30,000. Among states that levy corporate income taxes, North Dakota's top rate ranks 30th nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $188.90 per capita, which ranked 12th highest nationally.