How to Start a Business in North Dakota in 11 Easy Steps

North Dakota is an entrepreneur’s dream come true. This business-friendly state invites trailblazers from all industries to carve their own path through the wonders of entrepreneurism.

Highlighted on multiple occasions as the best state to start a business, North Dakota brings many perks to aspiring entrepreneurs: low formation fees, generous grant programs, and a low cost of living. It’s easy to see why so many people are eager to launch businesses in the Peace Garden State.

North Dakota’s small business scene is certainly thriving; 98.7 percent of the state’s businesses qualify as small — and these employ 56 percent of the state’s workers. Real estate and construction are booming, but there are also opportunities to be had in manufacturing, warehousing, agriculture, and recreation.

It’s not all smooth sailing, of course. Explosive growth means that finding the right job candidates can be tricky. There’s also the usual challenges to launching a business: choosing the right structure, getting licensed, securing capital, and so on. These steps don’t need to feel difficult to navigate, however, as there are plenty of resources in your corner — not to mention, wonderfully welcoming communities.

Ready to launch a business in North Dakota? Get ready for an exciting journey. Follow these steps to get started:

1. Fine-Tune Your Business Idea
2. Create a Business Plan
3. Choose a Business Name
4. Choose a Business Structure
5. Set up Banking, Credit Cards, & Accounting
6. Get Funding for Your North Dakota Business
7. Get Insured
8. Obtain Permits & Licenses
9. Find Your Team
10. Market & Grow Your Business
11. Open the Doors!

1. Fine-tune your business idea

Every business success story begins with a great idea. For some driven entrepreneurs, this is the easy part — some are fortunate enough to receive a burst of inspiration. For others, this takes a lot more work, including hours of brainstorming.

There’s no simple secret to landing the perfect idea, but, in most cases, it comes down to a few main priorities: personal qualities and market need. The former involves the unique skills, interests, or resources that you, the business owner, can bring to the table. The latter is all about the practical concerns that could either help or hinder your business: industry demand and competitor volume, for example, should be top of mind.

The goal? To strike the perfect balance between these areas. You want to find something that ignites your passion but also feels viable in your unique market. Better yet, this idea will help actual people solve actual problems.

Best businesses to start in North Dakota:

Many types of businesses can thrive in North Dakota, but often, the most successful draw on local industry trends and large-scale resources. Consider starting a business that fully harnesses North Dakota’s unique strengths.

• Restaurants serving locally sourced foods
• Renewable energy businesses involving wind or solar production
• Outdoor recreation products and services such as tour guides or equipment rentals
• Logistics and transportation services involving agricultural distribution or last-mile delivery
• Construction management and real estate development firms

How to validate your North Dakota business idea:

You have the beginnings of an idea but want to feel confident that this will actually lead to business success. Through validation, you can test your concept and get a sense for how it might play out in your industry or community of choice.

• Confirm demand. Is there actually a need for your products or services? Consider local interest and use keyword tools to see if target customers or clients are actually searching for the various solutions you plan to offer. Tools like Google’s Keyword Planner can be especially helpful.
• Define and validate your market. Use demographic details or purchasing behavior to help you clarify who, exactly, makes up your target market. Again, keyword research can be helpful, although social media also allows you to gauge interest.
• Identify your competitors. Who else is currently serving your market? By learning about your competitors, you can get a sense for demand in your niche while also learning how you might differentiate your products or services.
• Consider the cost. Do you know what it will cost to launch your business? How will you access funding? Take a close look at equipment, inventory, and staffing needs, plus expected revenues. Identify your break-even point so you get a sense for when your business might become profitable.
• Check out local regulations. Confirm that your proposed business can run smoothly in North Dakota by getting a sense for local rules and regulations. This includes everything from licensing and permits to zoning requirements and, of course, details about taxes. Keep in mind that, even when these essentials can seem promising at the state level, they can vary quite a bit between counties or cities.

2. Create a business plan

You’ve found the perfect idea for a North Dakota business, but now, it’s time to take practical steps so you can bring your vision to life. This begins with creating a detailed business plan. Think of this as your personal roadmap, clarifying every step you’ll take as you prepare for your business journey. This offers not only personal guidance, but also, the chance to appeal to investors or lenders.

No two North Dakota business plans will look exactly alike, but most include these details:

Market research

Market research introduces you to the customers and competitors in your area. This is also the best way to learn about industry trends. You’ll get the most targeted information from surveys, focus groups, and interviews, but you can also look at industry reports.

This information should lead to a unique value proposition, which helps set your business apart from the competition. This value proposition will form the foundation for all branding and marketing efforts to follow.

Marketing plan

You’ve identified your go-to clients or customers, but how will you attract their attention? This is where your marketing plan comes into play. Drawing on insights from your previous market research, this plan should outline a few simple strategies that fit your industry or niche. This may involve digital marketing (such as search-optimized content, social media outreach, or email marketing campaigns), but there’s also room for traditional strategies like direct mail or newspaper ads.

Financial plan

Do you feel confident that your business will be a financial success? If so, this should be clearly evident in your financial plan. Provide a basic overview of your financial situation, describing both expected costs and revenues. Add clear projections to show how your business will turn a profit over time.

Choose a location for your North Dakota business

Where will you run your North Dakota business? This state is vast, with each city, county, and region promising unique strengths and obstacles.

Keep in mind that, while Fargo, Bismarck, and Grand Forks might seem like go-to settings based on population alone, some businesses may actually benefit more from remote locations. Be mindful of differences in operating expenses, plus niche industries better served by access to open land or natural resources.

Location-based decisions aren’t limited to cities or counties. If you plan to run a brick-and-mortar store, you also need to consider practical concerns like parking or foot traffic. How easy will it be for community members to access your storefront? Visibility can be a huge advantage, but this must be balanced with affordability.

Explore North Dakota zoning laws and regulations

The North Dakota Century Code provides a framework for zoning, allowing cities to set strict standards for lot use, building size, and land development. Local zoning ordinances aim to protect public health and safety, but these can be complicated for businesses to navigate.

Major zoning categories include residential, commercial, industrial, and agricultural. Some proposed zoning amendments could bring mixed-use developments to North Dakota communities. When in doubt, check with local governing bodies like the Bismarck Planning & Zoning Commission or the Grand Forks County Planning & Zoning Department.

Decide if you’re an online-only business

Promising a low cost of living and entrepreneur-friendly communities, North Dakota can be a great place to launch an online-only business. All you need is an idea and a strong internet connection. Without a physical storefront to attract locals’ attention, however, you’ll need to be extra mindful of your online presence. Essentials include:

• An easy-to-navigate website. Your website is the online hub of your business, helping customers learn about your products or services — or even make purchases online.
• Social media platforms. From Instagram to LinkedIn, there’s a platform to suit every type of business. Choose carefully based on who you want to connect with and why.
• Supply and distribution plan. Clarify logistics with detailed plans that show how you’ll access necessary materials or components — and how finished products will reach customers.

Be mindful of tax requirements. North Dakota has a 5 percent sales tax, and, according to rules clarifying economic nexus (or presence within the state), any remote sellers that exceed $100,000 in sales will need to collect — and remit — sales taxes. North Dakota also maintains strict rules for marketplace facilitators that contract with sellers; these must collect sales taxes for all North Dakota sales that occur on the marketplace in question.

3. Choose a business name

Your business name sets the stage for all other branding efforts. This should be memorable but should also feel authentic to your business. What’s more, it should be distinguishable from other North Dakota business names. This isn’t just a matter of differentiation — it’s a legal requirement. If you plan to launch a North Dakota LLC, be prepared to include “limited liability company” or a relevant abbreviation in the name.

Not sure if your name is original? Complete a quick North Dakota Secretary of State business search using the FirstStop Portal Business Search tool. Keep in mind that, even if your proposed name is not currently in use in North Dakota, it’s worth double-checking to see if there are any trademark conflicts at the national level. When in doubt, search the United States Patent and Trademark Office (USPTO) database.

Using a DBA in North Dakota

Interested in using a fictitious name for your business? Sometimes called “doing business as” or DBA, this allows you to operate your business under a name that differs from your official or legal name. This can be helpful for branding purposes, especially if you run an LLC but don’t actually want to include ‘LLC’ in the name. Your DBA North Dakota should be registered with the Secretary of State. The filing fee is just $25, and the registration should be good for five years.

4. Choose a business structure

Every business is shaped by an official structure, which reveals how it’s organized and managed — and also, how it’s legally recognized and taxed. This decision could have a huge impact on personal liability, so it’s not to be taken lightly. This could also set your business up for future growth. Some structures are far easier to establish than others, but, when liability is in question, options like LLC are worth exploring.

The common types of business structure

No one business structure is ideal in every situation. Top factors to consider include liability, taxes, and access to capital. Options to examine include:

• Sole proprietorship. Quick and easy to set up, a sole proprietorship is best defined based on what it lacks: formal registration with the state of North Dakota. This arrangement is simple by design: all that’s needed is to pay taxes. The downside? Assuming all personal liability in the event of debt or litigation. Sole proprietors may also struggle to raise capital.
• General partnership. Similar to the sole proprietorship, the general partnership bypasses formal registration. The main difference, of course, is that this involves two or more owners, who share the responsibility for running the business.
• Limited liability company. Offering the ultimate middle ground between sole proprietorships (or general partnerships) and corporations, LLCs provide liability protection and can also improve business credibility.
• Corporation. Legal entities known as corporations are driven by shareholders. Compared to the other businesses highlighted above, these tend to provide stronger growth potential. They take two main forms: S corporations that place limits on shareholders and C corporations that have unlimited growth potential but are subject to double taxation.

In North Dakota, small business owners often favor LLCs, as these offer much-needed liability protection but are also easy to form.

Tax advantages of each option

There’s no ‘right’ way to tackle small business taxes, but your selected business structure can have a huge impact. Tax concerns to consider include:

• Sole proprietorship or general partnership. Sharing similar tax benefits, sole proprietorships and general partnerships allow owners to avoid corporate-level taxation. Income is reported on personal tax returns, ultimately simplifying filing.
• LLC. Offering maximum taxation flexibility and control, LLCs provide the opportunity to bypass corporate taxes via pass-through taxation. That being said, LLCs can also opt to be taxed as corporations, and, in some cases, this actually poses financial benefits.
• Corporations. S and C corporations are taxed differently. S corporations can avoid double taxation by passing profits and losses through to shareholders. With C corporations, profits are taxed at the corporate level and then shareholders pay income taxes on the dividends, leading to the dreaded double taxation.

5. Set up banking, credit cards, & accounting

Simplify bookkeeping with business-friendly bank accounts, credit cards, and accounting software. Ideally, these solutions will help you track income and expenses while also keeping your personal and business finances completely separate.

The right solutions also help you save time, allowing you to focus more on running your business instead of worrying about record-keeping and other essentials. Common options for managing business budgeting include:

Business banking

If you start an LLC or S corporation, you will need to take extra care to separate your business finances from your personal resources. Fail to achieve this, and you risk piercing the corporate veil. This could carry huge legal consequences, so it’s best avoided with business bank accounts. A business bank account can also make bookkeeping easier and can help you avoid tax season headaches.

Business credit card

Allowing you to build a credit history for your business, the right business credit card will provide yet another tool for separating personal and professional finances. This may also offer perks such as rewards or cash back. Perhaps most importantly, this is a tool for establishing and improving your business credit history, which, in turn, can help you access financing.

Business accounting

Accounting services and solutions help you maintain a positive cash flow. Compliance can be tricky, however, and you may eventually require extra help. Professional accounting services provide the ultimate in expertise and oversight so you enjoy maximum peace of mind. If you need a more affordable alternative, consider using accounting software.

6. Get funding for your North Dakota business

Business banking, credit cards, and accounting services help you manage your money, but where will you get funds in the first place? Without a solid source of funding, you’ll struggle to purchase the equipment or cover payroll. This will make it far more difficult to get your business off the ground.

Thankfully, many funding resources are well within reach. The Small Business Administration (SBA) is a great place to start, offering 7(a) loans that improve access to working capital and also help business owners purchase furniture or machinery. The SBA also runs a micro-loan program, featuring loans of up to $50,000. Some businesses are also eligible for funding through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

State-specific grants and loans

As a business-friendly state, there are many North Dakota small business grants available, as well as low-interest loans, which give business owners a boost and also help civic-minded entrepreneurs do good in their communities. Innovate ND, for example, offers voucher-based reimbursements to support market research.

Employers that offer internships can take advantage of funding through North Dakota’s Operation Intern. The Regional Workforce Impact Program (RWIP) encourages businesses to address local workforce challenges. Additional grant programs are highlighted on the North Dakota Department of Commerce website.

Angel investors and venture capital

Depending on how much capital you need, you may need to explore other sources. Angel investors can make a world of difference, using their personal funds to cover early costs while also acting as valuable mentors and providing access to their many industry connections. The caveat is that they’ll expect some equity and may limit your control to some extent.

Another option worth pursuing? Venture capital, which looks a lot like angel investing but looks to professional investment firms for even larger capital. VC firms seek out businesses with strong growth potential. Again, this capital comes at a cost: this may mean giving up a greater ownership share or even letting investors help shape strategic decisions.

7. Get insured

Insurance safeguards your North Dakota business. This shields you against a variety of economic and legal risks, ensuring that, in the worst-case scenario, you’re able to recover without suffering devastating financial losses.

Many insurance policies, although not necessarily required, are strongly recommended. Examples include:

• General liability insurance. Meant to prepare for possible claims of bodily injury or property damage (specifically when these are related to business activities), general liability insurance offers well-rounded protection and is highly recommended for North Dakota businesses of all types.
• Commercial auto insurance. Perhaps you need vehicles to run your business. Examples could include delivery trucks or company cars. If these vehicles are involved in accidents, commercial auto insurance provides coverage. These policies also cover damage related to theft, safeguarding both your business and your vehicles.
• Commercial property insurance. Buildings and equipment can be vulnerable to theft, vandalism, or even natural disasters. After these incidents, commercial property insurance can pay for repairs or replacements. In the long run, this could reduce downtime and boost business resilience.
• Professional liability insurance. Business owners who provide professional services face unique risks: clients may claim negligence or may imply that errors and omissions compromised the quality of the work performed. This is where professional liability insurance can make all the difference. Also known as errors and omissions (E&O) insurance, this protects professionals (such as lawyers or accountants), managing risks that general liability policies might not cover.

North Dakota state-specific insurance requirements:

The insurance policies highlighted above may be recommended, but they’re not necessarily required. Other types of insurance, however, are mandated regardless of your risk tolerance.

• Workers’ compensation: In North Dakota, all employers are required to cover full-time, part-time, and seasonal employees via workers’ comp. If employees are injured on the job, workers’ comp helps them cover medical expenses or even lost wages if they need to take time away from work.
• Unemployment insurance. Meant to provide temporary income for those who lose their jobs through no fault of their own, unemployment insurance promotes economic stability. Most North Dakota employers need to cover this. The minimum threshold: paying $1,500 or more in wages to one or more workers who are employed during twenty different weeks in a calendar year.

8. Obtain permits & licenses

Good news: there’s no need to worry about getting a general North Dakota business license to start your venture.

That doesn’t mean you’re completely off the hook, though. Permits and licenses are required in many counties and cities. They’re also needed for specific fields or roles. Be prepared to do your research to find out which permits are relevant or required.

Many North Dakota businesses need to get licensed with the Office of the Secretary of State. Examples include

• Home inspectors
• Athlete agents
• Combative sports
• Contractors

Federal income tax and North Dakota local tax

You should have a basic idea of your tax strategy now that you’ve carefully selected a business structure. Next, consider how you’ll pay taxes at the federal, state, or local levels.

• Federal taxes. Most North Dakota businesses need to pay federal taxes, including payroll taxes that cover Social Security and Medicare.
• State taxes. In North Dakota, corporate taxes vary based on taxable income (revenue minus expenses). Many businesses pay corporate rates of just 1.41 percent, although some pay 4.31 percent.
• Local taxes. Many North Dakota cities assess local sales, use, or gross receipts taxes. In Fargo, for example, the sales tax is 2.25 percent, while Cass County assesses an extra 0.5 percent.

North Dakota-specific regulations

Tax differences between states go beyond corporate tax rates. Many states also assess different types of taxes, such as franchise taxes or sales taxes. North Dakota does not require business owners to pay franchise taxes, but the state does have a sales tax. This technically totals 5 percent, but, once city sales taxes are added to the mix, customers can expect to pay around 7 percent sales tax.

North Dakota has an income tax, which is graduated so that rates range between 1.95 and 2.50 percent. The state’s corporate tax rate is also graduated. While a few states bypass corporate taxes altogether, North Dakota’s corporate rates are actually quite low compared to several other states.

9. Find your team

People are the backbone of your North Dakota business. They bring unique skills and talents to the table, and, ideally, will share in the core passion that fuels your business. These employees represent your brand, so cultural fit is a must.

You may need multiple forms of support as you get your business off the ground. Employees may sell your products, guide your customers, or provide marketing help. Depending on your industry, you may need employees with specific skills or talents to provide important services: software developers if you launch a tech startup, for example, or maintenance technicians if you run a manufacturing facility.

Comply with North Dakota payroll regulations

Payroll regulations determine how you pay your employees. These address everything from benefits to withholdings and even overtime pay. Non-compliance could lead to significant fines or other repercussions; this can also harm your relationship with employees and, as a result, could make it more difficult to attract the best talent.

Pay attention to both federal and state-level regulations. The Fair Labor Standards Act (FLSA) sets the federal minimum wage and clarifies overtime rules. The IRS also maintains strict requirements, including guidance for withholding. North Dakota’s minimum wage is consistent with federal requirements. In North Dakota, wages are due at least once per month, with pay statements detailing the number of hours worked and the rate of pay.

Hire contractors

If you struggle to tackle specialized tasks or keep up with seasonal demand, contractors may fill the gap without dramatically increasing overhead costs. This is a smart solution if you’re not ready to fully commit to long-term hires. The only problem? If you treat your contractors as employees, you risk misclassification. This could carry significant penalties, so avoid problems by establishing independent contractor agreements and granting contractors substantial control over their work.

10. Market & grow your business

You’ve come up with a genius idea, and you’ve put a lot of thought and effort into planning. Now, you are finally ready to put your business plan into motion. This means finding actual clients or customers. Share your message with the community through clever marketing strategies that get future customers excited about your products or services.

Invite customers to opt into mailing lists and newsletters

Keep customers in the loop with emails or traditional newsletters that share all the exciting developments in store. This is a great way to drum up interest, especially if you have new products or services to offer. Once customers are signed up, you can send regular updates to score repeat business or to improve customer loyalty.

Consider making special offers to attract your first customers

Encourage customers to test your products with special offers, such as samples or exclusive discounts. If you run an online business, you may want to experiment with free shipping. Otherwise, free trials and referral bonuses are also worth considering.

Look for local business or brand collaborations

Get connected with your local business community and consider collaborating with other brands. While collaborations with direct competitors are generally best avoided, businesses in similar fields or niches can form mutually beneficial relationships. This may lead to cross-promotions or even bundled services.

Pay attention to online reviews and word of mouth

Word-of-mouth referrals are effective, and, best of all, free! This is simple: continue to provide stellar service plus high-quality products or services. Of course, in a world that runs on social proof, online reviews are everything. Clients or customers may share these on sites such as Yelp, TripAdvisor, or Trustpilot. While you can’t guarantee that you’ll receive positive reviews, you can encourage customers to share their thoughts.

Create unique content to showcase your activity

As we’ve mentioned, a social media presence is a must, especially if you run your business entirely online. This is a great way to share your story and to inspire connection among your customers. Don’t limit yourself to promotional content; share genuinely helpful advice that positions your brand as an authority in your niche.

11. Open the doors!

It’s time to kick off your North Dakota business. Plan a grand opening to celebrate your accomplishments. This is your chance to form a solid first impression and to get locals excited about your business.

Plan a successful launch event

A launch event brings extra momentum to your North Dakota business journey. Use this event to drum up excitement and make your business feel like an important part of the community. Giveaways and live demos clue customers in on your products and services. Add refreshments or entertainment to make the event even more exciting. Don’t forget to share information about your business launch on social media.

Land your first sale

Your very first sale might arrive during your launch event. If it doesn’t, however, don’t get discouraged. Keep following the suggestions highlighted above; as you continue to promote your business and make a positive impression in your community, you’re bound to gain loyal clients or customers.

Conclusion

Now that you know how to start a business in North Dakota, it’s time to make your entrepreneurial dreams come true. This is a great place to launch a business and, with the right resources, you can turn your original idea into a success story.

FAQ