Form a Corporation in North Dakota.

Articles of Incorporation

North Dakota requires that new corporations file articles of incorporation with the Corporations Division of the state Secretary of State’s office. The articles are delivered by one or more incorporators, whose primary duties are to sign the articles and deliver the original and an exact copy of the articles to the Corporations Division. The incorporator must be a natural person at least 18 years old, but does not need to be a director, officer, or shareholder of the corporation.

The articles must include the following information:

Since North Dakota allows a corporation to be formed for any lawful business activity, a general statement in the articles granting broad powers is acceptable-for example, to state that your new corporation is being formed for “general business purposes” is enough for most situations.

However, providing a specific business purpose in your articles can help the Corporations Division determine whether you are entitled to use your proposed corporate name if it is similar to that of another business entity. Even if your name is similar to the name of another corporation, the state filing office may let you use the name if the specific purpose of your corporation is significantly different from the other corporation’s purpose. If you provide a specific purpose, though, you should also include a general purpose-for example, “to sell retail repair parts and for any lawful purpose.”

North Dakota statutes do not allow a business corporation to be formed for the purpose of conducting business in the banking, farming, ranching, or insurance businesses. A business corporation may be an insurance agency that sells or services insurance products, but it cannot be the insurer that actually backs the claims.

Also, North Dakota prohibits a corporation from including provisions in its articles of incorporation that limit the right of cumulative voting as guaranteed by the state constitution, or that authorize the issuance of stocks or bonds that are in violation of the state constitution.

It’s also permissible to include other, optional provisions into the articles of incorporation for those who want to formalize additional criteria, such as:

The filing fee for your articles of incorporation is $90 minimum-$30 for the articles themselves, $10 for filing the Registered Agent Consent to Serve form, plus a minimum $50 license fee. The fee depends on the authorized capital specified in your articles. The license fee is $10 for each $10,000 of capital or portion thereof. You will have to pay at least the minimum license fee of $50, so you should authorize at least $50,000 of capital. Within that range, for shares without par value, multiply the number of no-par shares authorized in the articles by $1. For shares that do have a stated par value, multiply the par value amount of each share by the number of par value shares authorized.

Registered Agent and Office

The articles of incorporation should also include the name and address of your corporation’s initial registered agent-the person appointed to receive official legal and administrative correspondence from the state on behalf of your corporation. The registered agent must be either an individual who lives in North Dakota, or a corporation authorized to conduct business in the state. In either case, the agent’s business office must be the same as the corporation’s registered office.

Bylaws

Corporations should keep a copy of their bylaws at their principal executive office, but they are not required to file those bylaws with the state. At the new corporation’s initial meeting, the incorporators or board of directors must adopt bylaws for the corporation and then keep them updated as time goes on.

Bylaws are a critically important document describing the corporation’s basic managerial and legal operating principles regarding such issues as:

The right to adopt, amend, or repeal bylaws is vested in the board (subject to provisions in the articles of incorporation) and the stockholders. Unless the articles or bylaws provide otherwise, shareholders who hold five percent or more of the voting power of shares entitled to vote may propose a resolution for action by the shareholders to adopt, amend, or repeal bylaws which have been adopted, amended, or repealed by the board.

Directors

Corporate officers can either be listed in the bylaws or elected by the board in compliance with those bylaws. Officers must be individuals at least 18 years old. There must be at least a president, secretary, and treasurer. There may also be one or more vice presidents, as well as any other officers specified by the bylaws. Officers may appoint other officers as needed for the operation of the corporation, in accordance with the bylaws. Unless a different officer is designated by the bylaws or the board, the secretary or assistant secretary is responsible for preparing minutes of the directors’ and shareholders’ meetings and for maintaining and authenticating corporate records.

Multiple offices may be held by the same person unless the articles or bylaws state otherwise, but no individual is allowed to act in more than one officer capacity where the action of two or more officers is required.

Requirement Reports

North Dakota corporations must file an annual report with the state Secretary of State each year before August 2 (or before May 16 for foreign corporations), starting with the calendar year after the year of incorporation.

The annual report must include:

When a shareholder requests it in writing, North Dakota corporations are required to prepare an annual financial statement within 180 days of the close of the fiscal year. The corporation must furnish the report-which must include an annual income statement and a year-end balance sheet-to the shareholder within 10 business days of receiving the request.

Taxes

North Dakota’s corporate tax structure consists of five brackets. The top rate of 6.5 percent takes effect at $30,000 corporate income. Among states that levy corporate income taxes, North Dakota’s top rate ranks 30th nationally.

However, North Dakota does recognize “S corp” status. A “subchapter S” corporation-frequently referred to as an “S corp”-is treated as a pass-through entity for tax purposes. The S corp does not file a tax return on its own behalf; instead, all tax-related data for the S corp is filed as part of the owner’s individual income tax. Therefore, the tax rate for an S corp will depend on the owner’s filing status and situation, as well as the level of income received.