North Dakota LLC Taxes

An North Dakota LLC is taxed at three levels: federal income tax on the profits, North Dakota state rules, and payroll or sales taxes that depend on what the business does. North Dakota taxes personal income, so LLC owners report their share of profit on a North Dakota return in addition to the federal one. North Dakota does not charge a separate franchise or privilege tax on LLCs.

Federal tax treatment

By default the IRS treats a single-member LLC as a disregarded entity, so profit is reported on Schedule C of the owner's personal return. A multi-member LLC is taxed as a partnership and files Form 1065, with each member receiving a Schedule K-1. Either can elect to be taxed as an S corporation (Form 2553) or a C corporation (Form 8832). See the IRS page on LLCs.

Self-employment tax

Members who work in the business generally pay self-employment tax of 15.3% on net earnings: 12.4% for Social Security up to the annual wage base set by the SSA, and 2.9% for Medicare with no cap, plus an additional 0.9% Medicare tax at higher incomes. An S corporation election can reduce this for profitable businesses, but it requires running payroll and paying yourself a reasonable salary. Our LLC vs S-Corp comparison walks through the trade-off.

North Dakota state taxes

Sales tax, payroll tax, and local business taxes sit on top of these. If you sell taxable goods or services, register with the North Dakota tax agency for a sales tax permit. If you hire, you will register for state unemployment insurance and withholding.

Estimated tax payments

LLC owners usually have no employer withholding, so they pay federal estimated tax each quarter, and North Dakota estimated tax as well. Missing estimates can trigger underpayment penalties, so many owners set aside a percentage of every payment they receive.

North Dakota specific notes

North Dakota LLCs file an annual report with FirstStop online at $50, due November 15.

North Dakota LLC at a glance

Tax rules and thresholds change, and this page is general information. Confirm details with the North Dakota tax agency and a licensed CPA before you file.