Many self-employed North Dakota residents are eager to start their businesses. The simplest and most rational solution to this issue is to join the ranks of sole proprietors.
Organizing and managing a business in this format is the least difficult in America and has no service pitfalls. Although, future business owners will have to adhere to certain norms. Also, be prepared that you will have to face some restrictions regarding the functions of your sole proprietorship.
So, the main task of this manual is to help you answer the essential question – is the business format of an individual enterprise right for you? And, of course, we will tell you which aspects to pay attention to while opening a sole proprietorship and how to set up a business structure in this vein properly.
The Proper Way To Start Business As The North Dakota Sole Proprietor
There is no algorithm for organizing the business work of an individual entrepreneur in North Dakota as for LLC. In addition, the state does not charge additional service fees for the formation or management of this type of business or company. Are you looking to become an individual business owner and start a sole proprietorship in North Dakota? – Just start working!
Though, you still have to go through several additional legal formalities. These service stages are optional. Although many sole proprietors prefer not to neglect them, compliance with these formalities guarantees the legal protection of their interests.
Applying For DBAs
Almost every company and business owner prefers doing business as a DBA. There are many benefits to running a business under an assumed name compared with an entity or LLC. We are talking primarily about creating the business image of your company. Potential clients and consumers will find this approach more professional and give you more confidence. It turns out that a company that uses the real name of its owner is often not competitive.
Let’s clarify that a company owned by sole proprietors can use the DBA to open and manage a business bank account. Customers will appreciate it as one more advantage in favor of the business owner, so they feel more comfortable.
Once you have ascertained that the name you have selected is still available, the next step is to fill out the Trade Name Registration Form. In case the name has previously been reserved by another business and is still in the database, your enterprise may legally appropriate it by submitting the Trade Name Assignment if the name in question is no longer in use. You will find both documents by following the link here.
Clarification & Compliance with Tax Requirements
You can run your business in this format and not hire third-party employees. In this case, you do not need to obtain an EIN (Federal Tax Identification Number) because your Social Security number will replace it. Of course, it would be correct to take care of your confidentiality and still use the EIN and not the SSN.
The nature and the structure of the business activity of individual entrepreneurship determine the list of tax requirements that the state will put forward (as with LLC).
If you intend to operate an enterprise that provides services and products in North Dakota, you will, most probably, have to comply with specific registration requirements and pay the use tax and the taxes on your revenues.
You can visit North Dakota’s Tax website to discover all the information concerning the state’s taxation policy. You will also have to use North Dakota’s guide to local taxes by location to learn about additional local revenues for you to provide in agreement with the municipal taxation policy.
Business Licenses & Permits
Even though they do not prescribe exclusive proprietors in North Dakota to obtain general business licenses, there might still be some additional licenses and permits to acquire for your kind of enterprise to establish it in agreement with the local rules and regulations.
The majority of local licenses and permits in North Dakota are granted by the Attorney General or the Secretary of State, whom you might have to consult on which of those licenses they would prescribe you to acquire, depending on what kind of enterprise you intend to operate in the state.
You can follow the link here to access the North Dakota business licenses database and establish where you will have to obtain each specific license. You will also discover all the information concerning the North Dakota licensing policy in the Licensing Information section of the North Dakota website.
Besides that, you will also do well to inquire whether you have to obtain specific licenses and permits for your enterprise at your particular location in the state.
You may have to inquire with the county official at the municipality where you intend to establish your enterprise which specific licenses and permits you would have to obtain to agree with their particular local licensing policies. For instance, Fargo has its specific licensing requirements on top of the state taxation policy.
North Dakota Sole Proprietor: The Notion & Essence
A sole proprietor is not a legal entity! But any corporation and limited liability company (LLC) has this status. As a sole proprietor, you run the business alone (register and manage it on your behalf). It is worth noting that this gives the business owner advantages, though, imposes additional obligations and responsibilities on him.
Make Sure to Pay Attention to the Following Three Aspects
There are obligations to pay taxes to the state
A business owner and an individual entrepreneur are the same people. It means that filing tax returns is not a requirement, as with an entity or LLC. You need to declare your income and expenses and fill out the declaration of an individual;
Business owners who are registered as sole proprietors have the right to enter into contracts on their behalf, unlike an entity. Also, receiving profit from clients, in checks they can indicate their name in the recipient column;
Flexible terms of business management
The advantage difference between individual entrepreneurship and any entity is the ability to combine work and personal assets. Whereas corporations and LLCs must separate personal assets from company assets. It has several positive and negative aspects. For example, if you have financial difficulties, creditors can seize or confiscate your personal property (house, car, etc.). In the case of corporations and LLCs (or any entity), creditors do not have this freedom, as their powers only apply to business assets.
Of course, the structure of doing legal business as a sole proprietor is greatly simplified while in North Dakota. You don’t even have to pay any commission fees provided for the entity or LLC. At the same time, based on the nature and structure of the business activity that you conduct, you will all have to go through a series of entity stages.
The issues of taxation, obtaining licenses, and permits require more detailed consideration. Also, pay attention to the possibility of obtaining and using DBA. These aspects are vital, as their omission can result in unnecessary legal penalties for you.
We have prepared this manual so that you can think over the structure of your business to the smallest detail. Manage it correctly and get more legal profit!