How to Move an LLC to North Dakota

There are many reasons why a business owner may want to move an LLC to North Dakota. This article discusses the use of domestication, known in some states as LLC conversion, to transfer an LLC to North Dakota.

What is North Dakota LLC Domestication?

North Dakota domestication is a legal process that allows an LLC to formally move to a new state.¹ An LLC that completes a domestication changes its state of formation—also called its domicile—which is the state whose law primarily governs the company. North Dakota’s LLC domestication law authorizes out-of-state LLCs to domesticate into North Dakota and North Dakota LLCs to domesticate into another state.² In both cases, the other state must also allow LLC domestications.

North Dakota has a similar statutory procedure—called a conversion—that changes a business’s organizational form.³ A business entity that completes a North Dakota conversion becomes a different type of entity. For example, a North Dakota corporation can convert into an LLC.

Some states use one statutory conversion process that can change an LLC’s domicile state or change its organizational form. In those states, a conversion serves the same function as a North Dakota conversion or a North Dakota domestication.

Why Transfer an LLC to North Dakota?

A North Dakota domestication is a useful resource for an LLC owner who moves to North Dakota or who wants the company to be governed by North Dakota’s LLC laws. Some of the more common motivations for moving an out-of-state LLC to North Dakota include the following:

• Taxes are lower in North Dakota. Transferring to North Dakota sometimes reduces a company’s tax burden. North Dakota is usually considered a top-ten best state for taxes—with lower-than-average rates for corporate income, personal income, and property taxes. The tax savings may be especially large for businesses coming from a high-tax state—such as neighboring Minnesota. A domestication can also reduce an LLC’s taxes if it severs the connection (or taxable nexus) between the LLC and the original state—reducing the number of states that tax the LLC.
• North Dakota law has advantages for the LLC. An LLC that completes a North Dakota domestication is governed by the business laws in North Dakota—not the original state. The change can help a business prosper if North Dakota’s system is better for the company. North Dakota was a reputation as one of the best states to start a new business—due in part to its legal and regulatory environment designed to promote economic growth. North Dakota also lets LLC members customize how their operating agreement treats members’ fiduciary duties and profit-and-loss allocations.⁴
• North Dakota is move convenient for the owner. A business owner who moves to a new state often wants to change the business’s domicile state, too. Having a business governed by North Dakota law allows a North Dakota-resident owner to focus on a single state’s legal system. The uniformity helps avoid unnecessary legal issues and can allow for easier dealings with state agencies.
• Domestication reduces the LLC’s reporting obligations. A North Dakota domestication may reduce a company’s annual reporting burden—particularly if the LLC is organized in another state but does most of its business in North Dakota. The company may avoid future reporting and annual fees in the original state if it will no longer do business there.
• Domestication makes hiring professionals easier. Domesticating an LLC into North Dakota streamlines the professional hiring process for a North Dakota business owner. Lawyers, accountants, and other contractors in North Dakota are more likely to be licensed in North Dakota and have the right experience. This can make identifying the right person easier—and allow for greater selection—compared to finding a North Dakota-based professional familiar with another state’s law.

What are the Benefits of North Dakota LLC Domestication?

An LLC domestication is the simplest and most direct method of transferring an out-of-state business to North Dakota. Domestication offers several important benefits compared to alternate ways of moving a business to a new state:

• The LLC continues the same business identity. An LLC that domesticates to North Dakota is the same company after completing the domestication.⁵ Its federal Employer Identification Number (FEIN or EIN) and taxpayer history stay the same. State-to-state transfers that change a business’s legal identity often lead to confusion and difficulties with government agencies.
• The LLC can keep its bank accounts and other assets. The North Dakota LLC after a domestication still has all the same property rights that the out-of-state LLC had before domestication.⁶ Bank accounts can stay open, and there is not need to sign deeds or other documents officially transferring ownership of other assets.
• The LLC’s contracts are still valid. Domestication to North Dakota has no effect on the LLC’s existing contractual relationships. Agreements remain valid and enforceable, and the company still has all contractual rights and obligations it had before the procedure.
• The business keeps operating throughout the domestication. A domesticating LLC can continue day-to-day operations as normal during and after a domestication. There’s no need to pause work or close offices. Employment relationships between the company and its employees are not disrupted, so firing and re-hiring employees is unnecessary.
• The LLC is not dissolved in the original state. Domestication to North Dakota does not require the company to dissolve and is not considered a dissolution in the original state.⁷ Other methods of moving a business may require dissolution, winding up, and asset distribution—which are burdensome and expensive.
• The LLC need not register in the original state. An LLC that completes a North Dakota domestication does not need to register as a foreign LLC in the original state—unless the business will continue operating there. If not, the company simply exits the original state and continues its existence as a North Dakota LLC.

What LLCs Can Convert to North Dakota LLCs?

The North Dakota LLC domestication process is not possible for every out-of-state LLC. The first issue is whether the LLC’s current state allows LLC domestication. If the LLC is in a state without a statute authorizing LLC domestications, the company cannot domesticate to North Dakota.⁸ Some states use the name conversion. What matters is that the state has a legal procedure that changes an LLC’s domicile state.

The out-of-state LLC must also confirm that it can comply with all North Dakota laws that will govern the business. North Dakota LLCs are primarily governed by the North Dakota Uniform Limited Liability Company Act.⁹ Certain types of North Dakota LLCs are subject to additional rules.

Professional limited liability companies (PLLCs), for example, must comply with the Uniform Limited Liability Company Act and North Dakota’s Professional Organizations Act.¹⁰ PLLCs are companies that provide professional services that require a license. Among other things, a PLLC must be owned only by licensed professionals, and it must disclose in its articles of organization the professional service it provides and the members with the necessary license.¹¹

Before starting a domestication, an out-of-state LLC should confirm that it can meet all North Dakota legal requirements and comply with any rules governing its specific business area.

How Much Does North Dakota LLC Domestication Cost?

An out-of-state LLC’s costs for a domestication into North Dakota include service providers’ labor costs, filing to state offices, and a commercial registered agent’s fee (if needed).

• Service-provider costs. A domesticating LLC’s costs includes labor costs paid to the service provider who assists with the procedure. Service providers’ work for an LLC domestication typically includes information gathering, planning, drafting and filing domestication documents, and communicating with the LLC members and with state agencies. The actual amount varies by provider and depends in part on the extent of the work.
• Filing fees. The filing fees are charges from state agencies when the LLC submits domestication documents. The North Dakota Secretary of State’s office charges $185.00 for an LLC domesticating into North Dakota.¹² That amount includes $50.00 for the articles of domestication and $135.00 for the articles of organization. The LLC’s current state will also charge filing fees in an amount that varies between states.
• Commercial registered agent fees. Every North Dakota LLC must have on file with the Secretary of State a registered agent with a physical address in North Dakota.¹³ A registered agent’s job is to accept service of process, official notices, and other important communications for the company.¹⁴ An LLC without a North Dakota address can hire a commercial registered agent—a service that charges an annual fee to act as a business’s registered agent.¹⁵ Commercial registered agents in North Dakota ordinarily charge around $100.00–$150.00 per year and also have the benefit of keeping important communications organizes and consistent.

How Long Does North Dakota LLC Domestication Take?

North Dakota’s LLC domestication process consists of several steps. The start-to-finish time needed to complete a domestication depends on how long each step takes. The length of each step depends on the responsible party, as follows:

• The business owners’ turnaround time to plan the details of the domestication and provide information to the service provider or other document preparer;
• The document preparer’s time to prepare draft domestication documents and forward the drafts to the members or managers for review;
• Members’ or managers’ turnaround time to review the draft domestication documents and sign the final documents; and
• The North Dakota Secretary of State’s turnaround time to process the domestication documents, and the current state’s equivalent office’s turnaround time.

The North Dakota Secretary of State’s Business Division reports that processing time for business filings may be as long as four weeks.

What Laws Govern North Dakota LLC Domestication?

An out-of-state LLC that domesticates into North Dakota must follow the domestication laws of North Dakota and the company’s current state.¹⁶ North Dakota’s domestication laws—which are included within the Uniform Limited Liability Company Act—establish the procedure, requirements, and legal effects in North Dakota.¹⁷ The current state’s law controls the following issues:

• Is the LLC eligible for domestication into North Dakota? The company can domesticate into North Dakota only if the current state authorizes LLC domestications.¹⁸
• What information must the plan of domestication contain? The LLC’s plan of domestication must include all information required by North Dakota and all information required by the current state.
• What is necessary to approve the domestication? The current state’s law sets the threshold for approval of the domestication by the LLC’s members.¹⁹
• What must the LLC file in the current state? The current state determines what documents the LLC must file in the current state to complete the domestication.

Depending on the state, the current state may have additional domestication requirements not mentioned above. A domesticating LLC needs to be familiar with both states’ laws and comply with all requirements of either state—along with any additional requirements found in the LLC’s governing documents.

What is the North Dakota LLC Domestication Process?

The North Dakota LLC domestication process consists of two components: document preparation and administrative tasks.

Document Preparation

A domesticating LLC prepares several domestication documents that describe the terms of the domestication. All domestication documents must follow state law and any policies of state offices where a document will be filed.

• Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both North Dakota law and the law of the state that the LLC is moving from.
• North Dakota Articles of Domestication. The North Dakota Articles of Domestication with all information and any related documents needed for filing with the Business Division of the North Dakota Secretary of State.
• Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.²⁰
• North Dakota Articles of Organization. The North Dakota Articles of Organization for filing with the North Dakota Secretary of State’s Business Division.
• North Dakota Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a North Dakota LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Domestication. A resolution approving the transaction and adopting the North Dakota organizational documents as the LLC’s governing documents.

Administrative Tasks

The North Dakota LLC domestication process requires completion of several administrative tasks to implement the domestication. The company officially becomes a North Dakota LLC after all tasks are completed and the state offices accept and process the domestication documents.

• Conduct preliminary name search. Check the official records of the North Dakota Secretary of State’s Business Division to determine whether the LLC’s name is available in North Dakota. (If the name is unavailable, a slight name change may be required to complete the domestication.)
• Obtain signatures on the Articles of Domestication. The Articles of Domestication must be signed by the required parties. The North Dakota Secretary of State’s Business Division allows the Articles of Domestication to be e-signed.
• Obtain signatures on the Articles of Organization. The Articles of Organization must be signed by the required parties. The North Dakota Secretary of State’s Business Division allows the Articles of Organization to be e-signed.
• File the Articles of Domestication. File the Articles of Domestication with the North Dakota Secretary of State’s Business Division. The Business Division requires the Articles of Domestication to be filed by mail or in person (no e-filing).
• File the Articles of Organization. File the Articles of Organization with the North Dakota Secretary of State’s Business Division. The Business Division allows the Articles of Domestication to be e-filed. However, Articles of Organization prepared for an LLC domestication are ordinarily filed alongside the Articles of Domestication.
• File domestication documents with prior state. File the domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.

What is the Legal Effect of North Dakota LLC Conversion?

A North Dakota LLC domestication transfers an LLC formed in another state into North Dakota with no interruption in the company’s day-to-day operations. The North Dakota domestication law lists the legal effects of a completed domestication.

• North Dakota law governs the company. An LLC that domesticates into North Dakota is the same company.²¹ The LLC keeps the same tax identity and EIN, but it is a North Dakota LLC governed by North Dakota law after completing the domestication.²² The North Dakota articles of organization and operating agreement that the LLC creates during the domestication govern the LLC’s internal affairs.
• The North Dakota LLC owns the business’s property. The North Dakota LLC still owns all the same real estate, financial assets, and other property that the out-of-state LLC owned before the domestication.²³ The domestication does not count as an asset transfer, and transfer documents like deeds are unnecessary.
• The North Dakota LLC keeps the business’s debts and liabilities. The North Dakota LLC continues to owe all debts, liabilities, and other obligations that the out-of-state LLC had before the domestication.²⁴
• The plan of domestication’s terms take effect, and ownership interests convert. The terms of the LLC’s plan of domestication—including treatment of membership interests—take effect when the domestication becomes legally effective unless the plan describes a different effective date.²⁵ Most domestications call for conversion of out-of-state LLC interests into interests in the North Dakota LLC, but members can agree to convert interests into money or other consideration.²⁶
• The company’s business contracts are unchanged. A North Dakota domestication does not impair or alter the out-of-state LLC’s existing business agreements. The North Dakota LLC is a party to the contracts, and it has the same contractual rights, duties, and obligations after the domestication.²⁷
• The LLC’s legal cases are still pending. The North Dakota LLC carries on all pending legal actions or other proceedings that involved the out-of-state LLC.²⁸ Legal matters continue forward as though the domestication had not occurred—except that the company substitutes its new name if its name changes during the domestication.
• The out-of-state LLC is not dissolved. Domestication to North Dakota does not result in dissolution of the out-of-state LLC in its original state.²⁹

1. N.D. Cent. Code § 10-32.1-67(1).
2. N.D. Cent. Code § 10-32.1-67(1).
3. N.D. Cent. Code § 10-32.1-61.
4. N.D. Cent. Code §§ 10-32.1-13; 10-32.1-30.1.
5. N.D. Cent. Code § 10-32.1-70(1)(a).
6. N.D. Cent. Code § 10-32.1-70(1)(b).
7. N.D. Cent. Code § 10-32.1-70(1)(g).
8. N.D. Cent. Code § 10-32.1-67(1).
9. N.D. Cent. Code §§ 10-32.1-01, et. seq.
10. N.D. Cent. Code §§ 10-31-01, et. seq.
11. N.D. Cent. Code § 10-31-02.1.
12. See N.D. Cent. Code § 10-32.1-92.
13. N.D. Cent. Code §§ 10-32.1-16; 10-01.1-04.
14. N.D. Cent. Code § 10-01.1-14.
15. N.D. Cent. Code § 10-01.1-02(2).
16. N.D. Cent. Code § 10-32.1-67(1)(c).
17. See N.D. Cent. Code §§ 10-32.1-67 – 70.
18. N.D. Cent. Code § 10-32.1-67(1)(a).
19. N.D. Cent. Code § 10-32.1-68(1).
20. Fourteen states use the term articles of domestication to refer to the document that must be filed with the state to approve the domestication: Iowa, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, South Dakota, Utah, Vermont, Virginia, Wisconsin, Wyoming, and Indiana. The corresponding document may be called a statement of domestication (Alaska, Arizona, Connecticut, Idaho, Illinois, Mississippi, and Pennsylvania); articles of conversion (Florida, Nevada, North Carolina, Oregon, and Washington) or certificate of conversion (California, Delaware, Georgia, Michigan, Ohio, and Texas). It may also be called a statement of conversion (Colorado, Maine), certificate of domestication (Kansas), request for conversion (Louisiana), or statement/plan of domestication (District of Columbia).
21. N.D. Cent. Code § 10-32.1-70(1)(a).
22. N.D. Cent. Code § 10-32.1-67(1).
23. N.D. Cent. Code § 10-32.1-70(1)(b).
24. N.D. Cent. Code § 10-32.1-70(1)(c).
25. N.D. Cent. Code § 10-32.1-70(1)(f).
26. N.D. Cent. Code § 10-32.1-67(3)(c).
27. N.D. Cent. Code §§ 10-32.1-70(1)(b)–(e).
28. N.D. Cent. Code § 10-32.1-70(1)(d).
29. N.D. Cent. Code § 10-32.1-70(1)(g).