Start an S Corporation in North Dakota

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Swyft Filings is committed to providing accurate, reliable information to help you make informed decisions for your business. That's why our content is written and edited by professional editors, writers, and subject matter experts. Learn more about how Swyft Filings works, our editorial team and standards, what our customers think of us, and more on our trust page.

Carlos Serrano
Written by Carlos Serrano
Written byCarlos Serrano
Updated September 12, 2023
Edited by Alexis Konovodoff
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Are you interested in turning your small business into an S Corporation in North Dakota? You can achieve this with a corporate or limited liability company entity to get better tax treatment from the IRS.

However, getting S Corporation (S Corp) status requires more than filling out a form. This article examines what you need to do to create an S Corp.

S Corporation in North Dakota: Key Points

  • An S corp is not a business entity but a tax classification available for eligible corporations and LLCs.

  • S corp status allows businesses to pall all taxable income, losses, deductions, and credits to their shareholders and avoid double taxation.

  • S corp status often leads to lower self-employment taxes.

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What Is an S Corporation?

An S Corp is a business permitted to pass all taxable income, losses, deductions, and credits to its shareholders. It differs from the C Corporation (C Corp) structure.

First, an S Corp doesn’t pay corporate taxes on the income it generates, meaning it avoids the double taxation issue most North Dakota corporations face. Second, there are several restrictions an S Corp must meet to achieve its status.

As a pass-through entity, an S Corp is similar to a limited liability company (LLC). The key difference here is that the Internal Revenue Service (IRS) treats each differently. And again, S Corps face restrictions that an LLC doesn’t have.

It’s important to note that an S Corp isn’t a business entity or structure. Instead, it’s a tax classification that can apply to corporations and LLCs.

Tax Considerations for an S Corporation in North Dakota

Due to S Corp status being a tax classification, you must understand several tax treatment categories for North Dakota.

North Dakota Tax Treatment of S Corporations

Under North Dakota tax law, all income an S Corp generates is subject to apportionment, meaning the income gets passed through to its shareholders, who take a cut depending on their ownership stake.

From there, each shareholder pays income taxes on the money they receive at the federal and state levels. According to the Tax Foundation, North Dakota’s state income taxes range from 1.1% to 2.9%, depending on how much you earn.[1] You may also have to pay self-employment tax on your earnings.

Interestingly, North Dakota has an extra requirement for any Subchapter S Corporation. In addition to each shareholder declaring income on their personal tax return, the business must file Form 60 - S Corporation Income Tax Return with the Secretary of State.[2]

This form outlines who receives what share from the business, allowing the state to determine whether the company handles all tax matters correctly.

North Dakota Franchise Tax for S Corporations

North Dakota doesn’t charge a franchise tax to S corporations. Furthermore, its tax treatment differs between C Corps and S Corps.

A C Corp must pay between corporate income taxes, plus a franchise tax, of the following:

  • 1.41% when earning $25,000 or less

  • $352.50 plus 3.55% on any amount earned over $25,000 and below $50,000

  • $1,240 plus 4.31% on any amount earned over $50,000

S Corps are tax-exempt for federal income tax purposes. As a result, North Dakota also exempts them from the above franchise and corporation taxes.[3]

Pass-Through Taxation

An S Corp is a pass-through tax entity, meaning all income passes through to the S Corp shareholders. These shareholders then pay income tax on that money.

North Dakota recognizes these entities, so S Corps do not have to pay taxes on business earnings.

Requirements for Forming an S Corporation in North Dakota

North Dakota defers to the IRS when granting S Corp status. Hence, a North Dakota limited liability company or similar business must meet the following conditions to become an S Corporation.[4]

  • Operate a domestic corporation based in the United States

  • Have only 100 S Corp shareholders, who must be individuals, estates, or some types of trusts

  • Offer no more than one class of stock to its shareholders

  • Not be an ineligible company, which includes insurance companies, some financial institutions, and any Domestic International Sales Corporation (DISC)

Furthermore, S Corp shareholders can’t be other corporations or partnerships. You also can’t accept a nonresident alien as an S Corp shareholder.

With the requirements being so stringent, it’s common for a business corporation owner to misfile when applying for S Corp status. Swyft Filings S Corporation filing service ensures that doesn’t happen. We’ve worked with over 300,000 businesses and can ensure you file accurately and meet the IRS’s conditions when creating your S Corporation.

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Filing as an S Corp in North Dakota

Though filing for S Corp status in North Dakota requires you to follow the standard IRS procedures, it’s still complicated. These six steps cover forming an S Corporation in North Dakota, from business setup to an S Corp application.

Step 1: Choose a Business Name

Your business name is what customers use to identify your company. That name has to be unique from any other business name used in North Dakota.

Assuming you have an idea for a name, you need to check whether it’s in use. You can do this using our free business name search tool.

Naming requirements are fairly straightforward. Avoid using profanity or any language that could indicate that you are a governmental institution. You can also create a “Doing Business As” (DBA) name, which is an alternative name under which you operate.

Suppose you have the perfect name but need more time before filing your Articles of Organization or Incorporation. You can submit a name reservation with the Secretary of State in that case. 

Note that successfully reserving or filing a business name doesn’t mean that the name is trademarked. To get a trademark for the business name of your S Corporation in North Dakota, you must file the Trademark or Service Mark Registration form.[5]

Step 2: Appoint Directors and a Registered Agent

With your name selected, you need to create a board of directors and appoint a registered agent before applying to register your business in North Dakota.

As an S Corp is a corporation structure, you must have a board of directors. These directors are usually a small group of your S Corporation shareholders who oversee the company and enforce its bylaws.

Registered agents can be an individual who lives in North Dakota or any domestic or foreign corporation or LLC that is registered with the Secretary of State and has a business office in North Dakota.[6]

Registered agents take on several duties, including the following:

  • Accepting legal documents, such as service of process, on behalf of your company

  • Filing and transmitting those documents to your business

  • Keeping regular business hours, so they’re always reachable

  • Maintaining a street address filed with the Secretary of State (can not be a P.O. box or mailing service)

While a business owner or employee can serve as your registered agent, a business entity can’t serve as its own registered agent in North Dakota. Many entrepreneurs hire a third party to act as their agent for convenience and additional benefits.

Swyft Filings offers a registered agent service that gives you constant access to a dashboard containing your company’s documents. Our fast and knowledgeable team ensures your business always has a presence in the state.

Step 3: File Articles of Organization

With the previous two steps completed, you’re ready to file to open a business in North Dakota. This process involves completing a form and sending it to the Secretary of State, along with the appropriate filing fee.

However, the form you complete differs depending on whether you create a limited liability company or a corporation.

For LLCs, you must complete the Articles of Organization form. Corporations must file Articles of Incorporation. The forms are available via the Secretary of State’s First Stop service. Both cost $135 to file with the state.[7]

You can file your forms online or mail them to the following address:

Business Registration Unit

Secretary of State

600 E Boulevard Ave Dept 108

Bismarck, ND 58505

You don’t have to pay a franchise tax when filing to create your business. Upon acceptance of your application, the Secretary of State should send a Certificate of Formation, which signifies that you’re in good standing and can transact in North Dakota.

Once your business is official, you must file annual reports with the Secretary of State. These reports come with filing fees ranging from $25 to $100, depending on when you file. Failure to file an annual report for your business leads to it falling out of good standing, which can result in the company’s closure.

LLCs must file annual reports on or before November 15, while corporations must file on or before August 1.

Step 4: Create an S Corp Operating Agreement

When you create a corporation, your company bylaws and general operation is governed via the corporate structure. That’s not the case for LLCs, which offer more flexibility in how you lead the company.

While that flexibility is a good thing, it can also create problems. If you don’t document the company’s bylaws, as well as the roles and responsibilities of each member, you have the potential for internal disputes. Without an agreement, North Dakota will also apply its own structural rules for LLCs if it needs to get involved in its business affairs.

You can remedy this issue with an S Corp operating agreement.

An operating agreement is a document that business owners create to essentially set the rules for their company. A good operating agreement contains the following elements:

  • Company bylaws that you’ll refer to in disputes

  • Processes for dealing with members leaving, being terminated, or transferring their ownership stakes

  • Rules for how you’ll handle a company dissolution

  • Statements that detail each member’s percentage ownership and how you’ll distribute your S Corp profits

  • Information about the roles and responsibilities each member or director assumes

Note that having an operating agreement isn’t mandatory in North Dakota. However, it’s recommended for those who want to control how they run their businesses.

Step 5: Apply for an Employer Identification Number

If you have employees or intend to hire some, your S Corp needs an Employer Identification Number (EIN). This nine-digit number is akin to a social security number for your business.

The IRS uses your EIN to identify your business and oversee your employment taxes and any income tax issues related to employees.

An EIN isn’t mandatory if you have no employees, such as with a single-member LLC or sole proprietorship. However, even if you don’t need it, it’s still recommended that you get one for the following reasons:

  • Banks sometimes refuse to allow companies that don’t have EINs to open business banking accounts

  • Customers and clients might not view businesses as credible without an EIN

  • Entrepreneurs can prepare to hire people in the future by getting an EIN in advance

The IRS makes it simple to get an EIN via its online application platform. We can also handle the application and obtain an EIN on your behalf. 

Step 6: File Form 2553 for S Corporation Election

You officially have a North Dakota business. Now, it’s time to apply the S Corp status to that business. To do so, you need to file Form 2553, Election by a Small Business Corporation, with the IRS.[8]

This form asks for details about your S Corporation election, specifically regarding the company’s shareholders and what they’re entitled to from the business. You need to file this form in the tax year before the one in which you want S Corp status or no more than two months and 15 days into the current tax year.[9]

If you have an LLC, you can work around the deadline by submitting Form 8832, Entity Classification Election, alongside Form 2553. Form 8832 allows you to reclassify your business entity as a corporation after the deadline, which then allows you to apply for S Corp status alongside that application.[10]

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North Dakota S Corp vs. North Dakota LLC

You now know the S Corporation election process and why it benefits your business from a tax treatment perspective. But there’s still the question of whether it’s needed if you have a limited liability company. After all, both are pass-through tax entities, meaning you may not want to deal with the extra documentation of filing for S Corp status.

Each of these structures has pros and cons, which you must consider before making your choice.

Advantages of Starting an LLC in North Dakota

  • Gives you complete control over your leadership structure

  • Provides some liability protection, meaning you can usually guard your personal assets in business disputes

  • Has a simple application process and maintenance 

Disadvantages of Starting an LLC in North Dakota

  • Liability protection isn’t absolute because a judge can rule that it doesn’t apply in some cases

  • Self-employment taxes are higher because you can’t classify yourself as an employee of the business

  • Dissolution occurs if a member leaves

Advantages of Forming an S Corporation in North Dakota

  • Access lower self-employment taxes and avoid double taxation

  • Leave as a shareholder without affecting the business, which operates until the owners choose to dissolve it

  • Get great liability protection from the S Corp structure

Disadvantages of Forming an S Corporation in North Dakota

  • Can only have 100 shareholders, with such restrictions not being in place for LLCs

  • Must take extra steps to form an S corp, which you may deem unnecessary for your business

Ready to File for S Corp Status in North Dakota?

Small business owners have plenty of challenging decisions when creating their companies. But what if you’ve decided you want an S Corporation in North Dakota?

If you’re ready to start your S Corp but don’t want to deal with the extra paperwork, our filing service ensures your application is accurate and complies with all federal and state laws. We’ve worked with over 300,000 businesses since 2015, meaning we have the experience to accompany our expertise.

If you want to form an LLC before applying for S Corp status, we can help there, too. Our LLC filing service is built for entrepreneurs who want to focus more on running their companies and less on dealing with complicated paperwork.

S Corp Advantage Awaits: Take the Leap Today
  • Maximize Tax Benefits: Experience pass-through taxation with North Dakota S corp status and avoid double taxation.

  • Access a One-Stop Solution: Establish an LLC or C corporation easily and then transition to S corp status, all within our platform.

  • Stay Compliant: Our compliance alerts help keep you up-to-date on all the complex compliance requirements of an S corp so you can stay on the government’s good side.

Secure Your S Corp Status

Frequently Asked Questions

What is an S Corporation in North Dakota?

An S Corporation is a pass-through tax entity that allows small businesses to avoid corporate taxes.

Does North Dakota recognize S Corporations?

Yes, North Dakota recognizes S Corporations per the IRS’s definition of these entities.

What is the turnaround time for filing for S Corp status with the IRS?

The IRS can take up to 60 days to accept an S Corp application.

What is the difference between an S Corp and an LLC?

The major differences relate to how you structure the business, though more details are in the article.

What are the requirements for an S Corporation in North Dakota?

You must follow the IRS’s rules for forming an S Corp and file Form 60 - S Corporation Income Tax Return with the North Dakota Secretary of State.

Are taxes for LLCs and S Corps the same?

S Corp owners may be able to pay lower self-employment taxes than LLC owners.

What is the S Corp tax rate?

S Corp shareholders pay tax at the federal and state income tax rates. S Corps don’t pay corporate taxes in North Dakota.

How do I dissolve an S corporation in North Dakota?

Among other steps, your members or shareholders must agree upon the dissolution and draft a resolution. This resolution must be submitted to the North Dakota Secretary of State.[11]


  1. Tax Foundation. “Taxes in North Dakota.” Accessed March 13, 2023.

  2. ND Tax. “S Corp and Partnership Tax.” Accessed March 13, 2023.

  3. ND Tax. “Corporate Income Tax.” Accessed March 13, 2023.

  4. Internal Revenue Service. “S Corporations.” Accessed March 13, 2023.

  5. North Dakota Secretary of State. “Trademark/Service Mark.” Accessed March 14, 2023.

  6. North Dakota Secretary of State. “Registered Agents.” March 14, 2023.

  7. North Dakota Secretary of State. “Business Forms.” Accessed March 14, 2023.

  8. Internal Revenue Service. “About Form 2553, Election by a Small Business Corporation.” Accessed March 14, 2023.

  9. Internal Revenue Service. “Instructions for Form 2553.” Accessed March 14, 2023.

  10. Internal Revenue Service. “About Form 8832, Entity Classification Election.” Accessed March 14, 2023.

  11. North Dakota Small Business Development Centers. “Closing a Business in North Dakota.” Accessed March 14, 2023.

Originally published on May 22, 2023, and last edited on September 12, 2023.
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