North Dakota has the country’s lowest personal income tax rates at 2.1%, so starting a business in the “peace garden state” is a great choice. Starting a business can seem like a difficult task. But, whether you already have an idea or are thinking about escaping from the mundane 9-5, starting a business in North Dakota can be easier than it seems. By breaking down the process into easy and simple steps, you can have a North Dakota business running in no time.
This step-by-step guide will teach you how to start your own business from scratch—starting with choosing your business idea and writing a business plan to successfully market your business.
Step 1: Choose Your Idea
Choosing your business idea is the first step in starting your business in North Dakota. At this stage, your business idea doesn’t have to be thoroughly thought out, as this is only the planning stage of the process.
To help you come up with a good business idea, answer the following questions:
- What hobbies, skills, or interests do I have?
- Can these hobbies and skills be turned into a profitable business?
- Can I see myself enjoying the work or running the business every day?
- Is there a gap for my business in the North Dakota market?
- What problem does my business solve for consumers?
- Are there any businesses like mine already?
- How can I make my business unique from theirs?
- Will I need employees?
By answering these questions, you’ll be able to land on a good, marketable business idea. Also, don’t be afraid to ask for help from your friends and family. Their insight as fellow consumers can be eye-opening and helpful.
Step 2: Pick a Name
Picking a name can be fun, but it’s not as easy as it looks. The name that you choose should be unique from other businesses. And with the many businesses out there already, it can be difficult to find a name that’s not already taken. Thankfully, the North Dakota Secretary of State has an online business search that you can use to see if your desired name is still available.
Your chosen name should also be easy enough for people to read and pronounce. It should also be relevant to the industry your business is based in, and it should give people an idea of what products or services your business is offering.
While choosing a name can be challenging, coming up with ideas in the first place will often be your first hurdle. But with these helpful methods, you should be well on your way to picking a good name for your business:
- Brainstorm with friends and family.
- Create a word dump. This is where you quickly write down any word that springs into your head when you think of your business.
- Use an online name generator. You can find these online with a quick Google search.
Step 3: Write Your Business Plan
Every successful business has a good business plan. While not required by North Dakota, business plans are beneficial when starting a new company. Your business plan will include everything one needs to know about the business. This includes all your planning and research, information about your services and products, and any financial information you feel is important and relevant.
Your business plan should be thorough as it can be used when applying for funding, either through loans or an investor. People want to see what you will be spending their money on.
There are no set rules about what needs to go into the business plan, but you should at least aim to answer the following questions:
- Why have you started the business?
- What consumer problem does your business solve?
- What products or services are you offering?
- Who is your target audience?
- How do you plan on converting your target audience into paying customers?
- Who are your competitors, and how do you plan on standing out?
- How much do you need to break even?
- How much are your startup costs?
- Do you have the money for the startup costs?
- Will you need employees? If so, how many?
If you’re stuck, there are plenty of free or cheap business plan templates you can use online to get you started.
Step 4: Get Funding
To start a business, you will need money for the equipment, rent, supplies, and other startup costs. These costs will add up, and you will need funding unless you have the money to pay for them. You can do this through a grant, loan, or investor.
North Dakota is a pro-business state as they have over 40 different grant programs that businesses can apply to for funding. The best thing about a grant is that the money does not have to be paid back. Visit The North Dakota Department of Commerce website to see what grants your business might qualify for.
If you do not qualify for any grants, you could apply for a loan instead. The North Dakota Bank, in partnership with the government, has several different loan programs available for business owners. You can check these out on their website. Alternatively, consider getting a loan from your friends and family. Just make sure you get any agreement in writing, as the last thing you want is to ruin a relationship over financial issues.
The third option for funding is to find an investor. An investor will provide capital in exchange for some kind of financial return in the future, generally by taking a share in your business.
Step 5: Choose a Business Structure
Each business structure has its benefits, which is why you must choose the proper structure for your business and your needs.
A sole proprietorship is an informal business structure. This structure is used by businesses with only one owner, and there is no separation of the owner’s personal and business assets. This structure is commonly used by businesses that are considered low-risk, like freelancers.
Much like a sole proprietorship, a partnership is an informal business structure without separating business and personal assets. The only difference between the two structures is that in a partnership, there can be more than one owner, all with equal shares in the business.
Limited Liability Company
A limited liability company, or an LLC, is a popular choice for small businesses. This business structure offers the best of both worlds, boasting the flexibility and simplicity of a sole proprietorship or partnership and the liability protection of a corporation.
This is the most formal business structure available, and many large companies with multiple shareholders use this structure. A corporation is an entirely separate entity from its owners and has many tax benefits.
Step 6: Register Your Business
Once you have chosen a business structure, you may be required to register it with the state of North Dakota.
There is no formal setup or need to register a sole proprietorship in North Dakota. Simply set up and start trading. However, if you want to trade under a different name other than your personal one, you will need to file an assumed or trade name with the business portal, FirstStop. To do so, you will need to create an account with them first.
Like a sole proprietorship, there is no need to register this business structure with the state. But you will need to apply for an assumed name on the online business portal should you want one.
Limited Liability Company
To register your corporation, you must fill in and submit the Articles of Incorporation. This document must be submitted on the FirstStop portal along with the $100 fee.
Step 7: Set Up Your Finances & Accounting
Set up your finances by opening a business bank account, applying for a company credit card, and choosing a payment method for customers to use. You can get a credit card machine from your local bank in North Dakota and have them assist with setting it up.
If you have employees, consider installing payroll software to manage their salaries and taxes. Finances and accounting can get confusing as your business grows, so consider hiring an accountant to assist you.
Step 8: Get Business Insurance
You never know when disaster may strike; if or when it does, you want to be prepared by having a general liability insurance policy for the business. North Dakota businesses are not required to have insurance, but it is highly recommended to have a basic policy. General liability insurance is a broad policy that will cover your business against any injury or damage on the premises, as well as cover all the day-to-day aspects of running a business.
Here are some other insurance policies you might be interested in:
- Business owners insurance
- Workers compensation insurance
- Commercial property insurance
- Commercial auto insurance
- Limited liability company insurance
If you’re unsure what type of insurance best suits your and your business’s needs, consult a broker.
Step 9: Obtain Any Licenses or Permits Needed
North Dakota does not issue a state-wide general business license; however, some counties or business sectors may have different requirements. You can visit the North Dakota business licensing website to see if your business may need a license.
In addition, depending on the nature of your business, you may need to obtain specific licenses and permits before you can trade legally.
Step 10: Build a Website
As a business owner, you should have a website for the business. A website is an excellent way of expanding your business and engaging with current and new customers, and it is easy to build yourself. There are plenty of free-to-use or subscription-based web-building services that you can use to build your own business website.
When building your website, you should do the following:
- Check if your desired domain name is still available.
- Your business name should be bold and visible to viewers.
- Keep all fonts neat, easy, and big enough to read.
- Try not to overload the page with images, speech bubbles, and GIFs. This can result in slower loading times and sometimes be difficult to load on a mobile screen.
- Make sure your website is compatible with mobiles.
- Link the website to other social media accounts.
- Contact details should not be difficult to find.
- Include a call to action button.
Step 11: Hire Employees (If Any)
If you are planning on hiring employees for the business, you must first draft up a job post. Post it on job websites and read the applications from potential candidates. Interview your top choices, and finally, offer the job to your favorite candidate!
When you hire someone, keep in mind that you are legally required to report any new hires to the North Dakota New Hire Reporting Center. This needs to be done within 20 days from the hire date.
Step 12: Market Your Business
The final step in starting a business in North Dakota is to market your business. When marketing your business, make sure your content is relevant and engaging.
Here are some different ways to market your business:
- Advertise and engage with customers on your website.
- Create content and advertise on social media for free with Facebook and Instagram.
- Make use of pay-per-click advertising.
- Create a Google Business Profile and advertise on Google.
- Run competitions and giveaways on social media to build a following.
- Create and distribute flyers.
- Advertise in your local newspaper and radio station.
- Attend expos and local markets.
- Attend local networking events.
If you would prefer to focus on other aspects of the business, consider hiring a marketing expert to take care of all of this for you.