North Dakota has a graduated personal income tax ranging from 0 percent to 2.50 percent (one of the lowest in the U.S. after 2023 reductions) and a graduated corporate income tax ranging from 1.41 percent to 4.31 percent under North Dakota Century Code (NDCC) Chapter 57-38. Verify current rates on the North Dakota Office of State Tax Commissioner site before relying on them for a given tax year. The North Dakota Secretary of State handles entity filing. The IRS handles the tax classification via Form 8832 and Form 2553. A North Dakota LLC can elect to be taxed as an S corporation. North Dakota LLC basics. - Articles of Organization filed online with the North Dakota Secretary of State via the FirstStop portal. The standard filing fee is $135 (verify current fee on the SOS schedule before filing). - Annual report. Every North Dakota LLC must file an annual report with the SOS by the first day of the LLC's anniversary month. The annual report fee is modest. Missing the deadline triggers late fees and eventually administrative dissolution. - Single-member LLCs default to disregarded entity for federal tax. Multi-member LLCs default to partnership tax. Either can elect S corp treatment with IRS Form 2553. - North Dakota has no franchise tax on LLCs beyond the annual report. North Dakota S corp basics. - North Dakota recognizes the federal S election. An S corporation files ND Form 60, the North Dakota S Corporation Income Tax Return. Income generally passes through to shareholders and is reported on their individual North Dakota returns at graduated rates up to 2.50 percent. - North Dakota's graduated corporate income tax applies primarily to C corporations. An S corp is generally not subject to that corporate-level rate on pass-through income, except for items specifically subject to corporate-level tax. - Payroll. An S corp must pay its owner-employee a reasonable W-2 salary. North Dakota imposes state unemployment insurance (UI) tax through Job Service North Dakota once the business crosses the wage threshold, plus mandatory workers' compensation coverage through Workforce Safety and Insurance (WSI). Why a North Dakota trades shop might elect S corp. The main driver is federal self-employment tax savings. A disregarded-entity LLC owner pays self-employment tax on the full net profit. An S corp owner-employee pays payroll tax on wages only; the distribution portion avoids self-employment tax. North Dakota's graduated state rate (maxing at 2.50 percent) applies to the owner's pass-through income either way, so the state-tax side is roughly neutral between LLC and S corp. The federal payroll-tax math is the primary decision. Rule of thumb. Start as an ND LLC. When annual profit after a reasonable owner wage is high enough that payroll tax savings clear the payroll, retirement plan, and accounting costs, elect S corp. A CPA with North Dakota construction clients can run the breakeven for your numbers and confirm the ND filings, annual report schedule, ND Contractor License requirements, and NDSEB/State Plumbing Board license-holder posture for the entity you choose.
ND · LLC vs S-Corp
LLC vs S-Corp in North Dakota
Entity formation, tax treatment, and when to switch.
Not legal, financial, or career advice. Trades Navigator compiles state board rules, statutes, and federal data into a navigable layer linked to primary sources. We do not maintain editorial attestation on each line. Always verify the specific number, fee, deadline, or rule against the linked primary source before relying on it. Confirm any decision with the relevant state agency, a lawyer, or an accountant.
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