A LLC can offer certain tax advantages over a corporation, including the availability of more deductions. Additionally, a LLC is not required to be a separate tax entity like a corporation; instead it can be a “pass-through entity” so that the LLC owners report business losses or profits on their personal tax returns, like a partnership.
Federal Income Tax
Unless you elect to tax the LLC as a corporation, the IRS treats single-member LLCs as sole proprietorships for tax purposes. This means the LLC itself does not pay taxes and does not have to file a tax return. Unless you elect to tax the limited liability company as a corporation, the IRS treats multi-owned LLCs as partnerships for tax purposes. This means that LLC owners each pay taxes on their lawful share of the profits on their personal income tax returns, not the LLC itself. If you desire, by filing IRS Form 8832, you may elect corporate taxation if you regularly need to keep a substantial amount of profits in your LLC.
State Income Tax
The LLC tax rate for North Dakota is listed on the following page: https://www.nd.gov/tax/user/businesses/formspublications/corporate-income-tax
Federal Tax Identification Number
Your LLC may need to obtain a federal tax identification number (also known as an employment identification number/EIN), which is similar to an individual’s social security number. Generally, you will not need a separate EIN number for your LLC as long as you are the sole owner and the LLC has no employees. However, if you are not the sole owner of the LLC or if the LLC has employees, your LLC will need a separate EIN number to open a bank account and for certain tax filing requirements. United Agent Services can prepare your Federal Tax ID Application if you have not already done so.
Filings must be made with the Secretary of State along with the appropriate filing fee. When appropriate, a check must accompany the document payable to the State of North Dakota, covering all charges for the Secretary of State.