Starting a Business in North Dakota

Also known as the “Peace Garden State”, North Dakota may not be the first state to pop into people’s minds when it comes to business, but in actuality its economy is growing at an alarming rate. It has one of the highest per capita GDP rates in the nation, boasts a tax-friendly atmosphere, and is one of the best states to launch a start-up company. North Dakota businesses can capitalize on various incentive programs in order to promote growth. The most common are incentives that are given through grant/loan programs, tax credits, Sales Tax Exemptions, and to companies who reside inside designated Renaissance Zones. The North Dakota Office of State Tax Commissioner regulates procedures relating to the collection of sales tax as well as other types of statewide taxes. Sales taxes can be remitted on a monthly, quarterly, or yearly basis depending on sales levels. The North Dakota Secretary of State deals with company formations and declarations.

STARTING A BUSINESS IN NORTH DAKOTA

After starting a business by registering with their office, you would need to perform some compliance related activities in order to operate. You can register online for a North Dakota Sales Tax Permit so you will be able to manage sales tax requirements for your company. The regulatory process in North Dakota is generally fair, but you still need to get the correct Business Licenses in place to conduct operations.  Some other important things you can do for your business after filing an Application for a Sales and Use Permit are looking up your local North Dakota sales tax rate and filing a sales tax return. Many states have changed their laws regarding how they govern collection of sales tax and North Dakota is one of them. Registering for SST streamlined sales tax may be necessary if you have customers outside of North Dakota who you sell to. Once your company has met its compliance obligations, you will see there are a variety of incentive programs to choose from which include the following:

• North Dakota Sales Tax Exemptions are given to any manufacturing company for equipment or machinery that is used in operations. This is applicable to the current sales tax rate. To qualify, companies must increase the production of manufactured products or expand employment.

• North Dakota offers an incentive program for data centers. Sales Tax Exemptions are given to any data center for support equipment and computer software that is used in daily operations. Additionally, the exemptions are given against electricity used within the data centers. You must also obtain a seller’s permit to be considered for the exemptions.

• The North Dakota Renaissance Zone Programs provide various benefits to incentivize businesses to relocate to economically distressed areas. The objective is to stimulate investment and bring growth to these distressed areas. The programs are approved by the Department of Commerce. Incentives are made up of various tax credits and exemptions.

• The North Dakota Pace Fund is a workforce creation program that keeps North Dakota competitive throughout the state. It is a fund program that is available to certain service industries. They are offered a lower interest rate on a loan from a local qualified lender that is supported by the community.

• A Research Credit is offered that is given to businesses that are related to their qualified R & D expenditures. The R & D tax credit which is 25% of qualified R & D expenses that exceed the North Dakota base amount up to $100,000. For amounts exceeding $100,000 the rate moves to 8%. Credits are taken against corporate income tax obligations. Any unused credits that exceed total state income tax can be carried forward and applied to future income tax obligations with certain statutory limitations for up to 15 years.