Learn the steps to create an S Corp in North Dakota and how we can help make it easier.
Ready to form your S corporation in North Dakota? Check the name availability to get started.
As a small business owner, you’re probably looking to save money everywhere you can. And you know that keeping your business taxes low is no exception! However, you may not know that how you set up your business may impact how much you save come tax time. One strategy for North Dakota entrepreneurs to consider is making a North Dakota S Corp election. Savvy tax elections like this can help you save a bundle on your business’s tax return.
Our fast, easy business entity formation services can help you get your business up and running quickly. Whether you choose to form your business as a North Dakota LLC or a North Dakota corporation, we can help get you started. Regardless of which entity type is right for your venture, a S Corp election might be a great idea for your small business. And once you’re up and running, we’re here to help you with your other filing requirements and business compliance needs.
North Dakota S Corp requires a few steps — from entity formation through finalizing tax elections. It’s important to remember that a North Dakota S Corp isn’t a stand-alone business entity like an LLC or corporation. “S Corporation” is simply a way to describe how an entity should be taxed.
We’ll take a deeper dive into tax elections later in this article. But before you can make a tax election, you first need to form a business entity. We’ll walk you through how to do that.
Picking a name for your North Dakota corporation or LLC requires careful consideration. This means that you’ll need to check whether any other North Dakota companies have the name you want to use. You’ll also need to include an identifier like “Inc.” (for a corporation) or “LLC” (for a limited liability company) as part of your company name. Be sure to check the state and local rules before buying a domain name or marketing your company!
You may hear either the term statutory or registered agent used to describe this role. Your registered agent is the person who accepts legal papers on your company’s behalf. We offer a Registered Agent Service to help your corporation or LLC stay compliant in North Dakota.
With a registered agent in place, you’ll want to select directors or managers. Directors help run corporations and corporate boards, and managers help run LLCs. Typically, you’ll need to disclose their identities in your operating documents, so be sure you’ve done your due diligence on who you select to help run your company.
Once you’ve got your directors or managers in place, you can file your Articles of Incorporation or Organization with the North Dakota Secretary of State. You’ll be able to file your completed documents online. Once these are filed, congratulations! You’ll have taken the first steps in creating a legal business entity.
The next step to creating your S Corp is applying for your Employer Identification Number (EIN). Once you apply for your EIN, then you can decide whether you want to make an S Corp election.
Form 2553 is the Internal Revenue Service (IRS) form where you’ll make your tax treatment election. Whether your company is a corporation or LLC, once you’ve applied for and received an EIN, you’re ready to take the final step to make an S Corp election. That final step is completing and filing Form 2553 with the IRS. If your business entity is an LLC, you may need to take an interim step and file for C Corp status before you can take the final step of filing Form 2553. Check with your tax professional if this applies to you.
You’re now familiar with the term S Corporation. As a business owner, you’ve probably also heard the term C Corporation before. S Corps and C Corps aren’t different types of business entities; they’re ways the IRS defines and classifies your company for tax purposes.
While becoming a North Dakota S Corp can be a great, tax-efficient idea for many businesses, the IRS places some limitations on who can choose S Corp status. Before making the election, make sure your company meets North Dakota S Corporation requirements:
If you meet these requirements, then you may want to file Form 2553 and elect North Dakota S Corp status.
There are many pros and cons of electing North Dakota S Corp status. Some pros include:
This isn’t an exhaustive list. There are many more positive aspects to creating a tax-efficient North Dakota S Corp that may apply to your business.
Some cons of electing to become an S Corporation in North Dakota include:
If you have more questions about weighing the specific pros and cons of S Corp status for your business, you may want to consult an accountant or other tax professional.
S Corporations are businesses that have limited corporate shareholders but aren’t subject to corporate double taxation. As we’ve mentioned, a North Dakota S Corp is a way to classify your business for tax purposes. Most businesses are legally distinct from their owners and shareholders. An S Corp election helps the IRS distinguish which parties associated with your business should be taxed at what rate.
S Corporations are basically small business corporations that have limited corporate shareholders but aren’t subject to corporate double taxation.
There are two main differences between S Corps and C Corps:
North Dakota corporations are treated as C Corps unless and until you make an election otherwise, so be sure you don’t miss any election deadlines.
When you file Form 2553, the IRS provides instructions on how to complete the form. You’ll need to make the election within a specific time frame depending upon your business circumstances. You should note that you may not need to file the form at the same time you create your business entity.
If your entity has been up and running for months or even years, you may be able to make a new tax election at the start of a new tax year or after certain deadlines. If you want to make a new election and miss the deadline, it can seriously impact your tax obligations.
An LLC can make an S Corp election in North Dakota. LLC owners usually choose S Corp status for tax and accounting reasons. North Dakota S Corp status can help mitigate some issues related to self-employment and other taxes. We provide great tax resources for small businesses and can help guide you through some of the benefits of S Corp status for self-employed business owners.
Our S Corp formation service can help your North Dakota company get the right tax treatment for your business goals and needs. We can assist you through all stages of your business growth — from forming your entity quickly, keeping you compliant, and helping you learn about your tax obligations.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Benefits to creating a North Dakota S Corp include personal asset protection, pass-through taxation, and accounting flexibility.
Be sure to follow all state laws when choosing the name for your business entity.
The IRS needs to know that you’ve elected S Corp tax treatment. Other than that, there is no need for your S Corp status to be reflected in the name of your business.
A qualified bookkeeper or accountant will be able to tell you how to calculate taxes for your North Dakota S Corp.