North Dakota LLC Taxes

Natural beauty and affordable housing make North Dakota an appealing place to live and start a business. Yet, as more business owners choose to launch new ventures in this state, many may find it challenging to understand the business taxes involved. 

Regardless of the size of your business, if you operate a limited liability company (LLC) in North Dakota, you’ll need to stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you must pay for your North Dakota LLC.

Recommended: Schedule a free consultation with an accountant to stay on top of your taxes. 

North Dakota LLC Taxes Owed

LLCs benefit from pass-through taxation, which means the business’s profits pass through to its members’ individual tax returns. As a result, your LLC itself doesn’t pay taxes to the federal government or the state of North Dakota. Instead, LLC owners must pay taxes on their portion of the income generated by the LLC. 

In North Dakota, LLC owners can expect to pay the following taxes:

Federal Taxes

Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.

Federal Self-Employment Taxes

It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%. 

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.

North Dakota State Taxes

Each state has its own laws that dictate how it taxes individuals and businesses. Below you’ll find an overview of the state-level taxes likely to affect you and your North Dakota LLC.

North Dakota Income Taxes

North Dakota has a state income tax rate of 2.9%. This is incredibly low when compared to other states, making it one of the lowest state income tax rates in the country.

North Dakota Sales and Use Tax

In North Dakota, the state sales tax rate is 5%. Counties and cities also may impose their own local sales taxes with an average local sales tax rate of 1.96%. That means you may have sales tax rates of around 7%, depending on where you do business in North Dakota.

Apply for a Sales Tax Permit in North Dakota

If your business sells taxable goods or services, you must apply for a sales tax permit from the North Dakota State Tax Commissioner.

Additional State Taxes

The North Dakota State Tax Commissioner oversees the collection of various state-specific taxes businesses may have to pay, depending on their location, industry, and number of employees. A few examples of these additional taxes include:

  • Coal Severance Tax
  • Motor Fuel Tax
  • Oil & Gas Severance Tax
  • Royalty Withholding Tax
  • Telecommunications Tax

Visit the North Dakota Taxpayer Access Point for more information on these and other business taxes in North Dakota.

North Dakota Local Taxes

Bismarck's local laws and ordinances likely will differ greatly from those in Fargo. Regardless of where you live in North Dakota, we recommend you check with your local jurisdiction to ensure your business obtains the proper local permits and follows any local regulations that may impact its operations.

North Dakota LLC Compliance

You must obey North Dakota’s state and local laws in order to maintain your business in good standing. While LLCs typically don’t file taxes with the state, North Dakota businesses must still file an annual report each year.

North Dakota LLC Annual Report

All North Dakota LLCs must file an annual report with the North Dakota Secretary of State. You must file your LLC’s annual report online and pay the $50 filing fee. 

Annual reports are due on November 15 each year. The only exception is the year in which the state approves your LLC’s formation when this report will be due by November 15 of the next year. If you miss the due date, the state will charge you an additional $50 as a late fee. Failure to file your annual report for six months past the deadline will lead to the North Dakota Secretary of State shutting down your LLC.

If the state shuts down your LLC, you’ll need to pay a $135 reinstatement fee in addition to all the late fees and missed annual report filing fees associated with your LLC.

For more information, check out our North Dakota LLC Annual Report guide.

LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure you handle your business taxes correctly.