North Dakota Business Taxes for LLCs
Bizee explains what taxes North Dakota LLCs need to pay — state income tax, sales tax, self-employment tax, and payroll tax — with rates, forms, and filing requirements.
Bizee Editorial Staff
Editorial Team
North Dakota LLC tax facts
Filing fee: $135 (domestic LLC)
Processing time: [PROCESSING_TIME]
State agency: North Dakota Secretary of State
Annual report due: November 15 each year
State tax rate: State income tax: 1.1%–2.9% (graduated); Sales tax: 5% statewide; No franchise tax on LLCs
North Dakota LLC tax overview
North Dakota LLCs are taxed as pass-through entities by default, meaning the business itself doesn't pay income tax. Instead, profits flow to the owners' personal returns, where they're subject to North Dakota's graduated state income tax, federal income tax, and self-employment tax. If your LLC has employees or collects sales tax, additional obligations apply.
North Dakota doesn't impose a franchise tax or entity-level tax on LLCs, which keeps the tax picture simpler than in many other states. That said, the combination of federal self-employment tax and state income tax still adds up — knowing what you owe and when it's due is what keeps you in good standing.
State income tax
North Dakota taxes individual income on a graduated scale from 1.1% to 2.9%. As an LLC owner, the profits you take from the business flow through to your personal state return and are taxed at these rates, minus any applicable deductions or allowances.
North Dakota's top rate of 2.9% is among the lowest in the country, which is one of the reasons the state is considered business-friendly. You'll file your state income tax return using North Dakota Form ND-1. A tax professional can help you figure out which deductions apply to your situation.
Sales and use tax
North Dakota has a statewide sales tax of 5%, collected at the point of sale. Cities and counties can add local sales tax on top of that, so the total rate your customers pay may be higher depending on where your business operates.
If your LLC sells taxable goods or services, you need to register with the North Dakota Tax Commissioner to collect and remit sales tax. Not every business is required to collect it — whether you do depends on what you sell and where your customers are located. The Tax Commissioner's office has guidance on what's taxable and how to register.
Self-employment tax
If your North Dakota LLC is taxed as a sole proprietorship or partnership — the default for single-member and multi-member LLCs — you'll owe federal self-employment tax on your share of the business profits. The self-employment tax rate is 15.3%, covering Social Security and Medicare.
Self-employment tax is one of the bigger line items for LLC owners, and it's separate from income tax. You calculate it on Schedule SE and file it with your federal return. Some LLC owners elect S Corporation status to reduce self-employment tax exposure — a tax professional can help you figure out whether that makes sense for your income level.
Federal income tax
Federal income tax works the same way as state income tax for most LLCs: profits pass through to the owners and get reported on personal federal returns. Single-member LLCs report on Schedule C. Multi-member LLCs file a partnership return (Form 1065) and issue each member a Schedule K-1.
If your LLC elects to be taxed as a C Corporation, it files its own federal return (Form 1120) and pays corporate income tax at the flat federal rate of 21%. That changes the tax picture significantly. Most small LLCs don't elect C Corporation status, but it's worth discussing with a tax professional if your business retains a lot of earnings.
Payroll and employer taxes
If your North Dakota LLC has employees, you'll need an Employer Identification Number (EIN) from the IRS and you'll be responsible for withholding and remitting federal payroll taxes. That includes FICA — Social Security and Medicare — plus federal unemployment tax (FUTA) and any applicable state withholding.
Federal payroll tax deposits follow IRS schedules based on your payroll size — monthly or semi-weekly. Missing a deposit deadline can mean penalties, so it's worth setting up a payroll system or working with a payroll provider before you bring on your first employee.
North Dakota also requires employers to register with the Job Service North Dakota for state unemployment insurance (SUTA). You can register through the North Dakota Department of Employment Services.
Estimated taxes
Most LLC owners need to pay estimated taxes quarterly — both federal and state — because no employer is withholding taxes from their income. If you expect to owe $1,000 or more in federal taxes for the year, the IRS requires quarterly estimated payments. North Dakota has a similar threshold for state estimated payments.
Federal estimated payments are due in April, June, September, and January. State estimated payments follow a similar schedule through the North Dakota Tax Commissioner. Getting behind on estimated payments can mean an underpayment penalty at year-end, so it's worth building the habit early.
FAQ
North Dakota collects state income tax, sales and use tax, and — if your LLC has employees — state unemployment insurance (SUTA). There's no franchise tax or entity-level tax on LLCs. Profits pass through to the owners' personal returns, where they're taxed at North Dakota's graduated income tax rates of 1.1% to 2.9%.
It depends on how your LLC is taxed. For LLCs taxed as pass-through entities — the default — owners pay North Dakota's individual income tax rate, which ranges from 1.1% to 2.9% on a graduated scale. If your LLC elects to be taxed as a C Corporation, it would pay the federal corporate rate of 21%, but North Dakota doesn't impose a separate state corporate income tax on LLCs.
Yes. North Dakota has a statewide sales tax of 5%. Cities and counties can add local sales tax on top of that, so the combined rate varies by location. If your LLC sells taxable goods or services, you need to register with the North Dakota Tax Commissioner to collect and remit sales tax.
No. North Dakota does not impose a franchise tax or entity-level tax on LLCs. This is one of the ways North Dakota's tax structure is simpler than states like California or Texas, which charge LLCs an annual franchise or privilege tax regardless of income.
Yes. If your LLC is taxed as a sole proprietorship or partnership — the default for most LLCs — you'll owe federal self-employment tax at 15.3% on your share of business profits. This covers Social Security and Medicare. North Dakota doesn't add a separate self-employment tax on top of that, but you'll still owe state income tax on the same profits.
Yes. A North Dakota LLC can elect S Corporation tax treatment by filing IRS Form 2553. This changes how the IRS taxes the business — owners pay themselves a reasonable salary as a W-2 employee and take additional profits as distributions, which aren't subject to self-employment tax. It's a strategy some LLC owners use to reduce their overall tax bill, but it adds payroll complexity. A tax professional can help you figure out whether the math works for your income level.
Yes, in most cases. If you expect to owe $1,000 or more in federal taxes for the year, the IRS requires quarterly estimated payments. North Dakota has a similar requirement for state estimated payments. Federal payments are due in April, June, September, and January. Missing a payment can mean an underpayment penalty at year-end.
It depends. If your LLC has employees or is taxed as a corporation, you need an Employer Identification Number (EIN) from the IRS. Single-member LLCs without employees can use the owner's Social Security number for tax purposes, but getting an EIN keeps your personal number off business documents and is required to open a business bank account at most banks.
