Agriculture is North Dakota’s largest income earner. The Roughrider State is the largest producer of grains in the US, including canola and flaxseed (90% of US crops), barley (36%), durum wheat (58%), hard, red, and spring wheat (48%), oats (17%), and combined wheat of all types (15%). The state is also the second-largest producer of buckwheat in the country.
Energy is also very significant to the state economy, North Dakota accounts for 12.5% of US crude oil production. Oil exploration has dramatically transformed once sleepy towns in the remote corners of the state, attracting billions of dollars in investments, as well as attracting workers in search of high remuneration.
The North Dakota economy is quite small compared with most states, but two of its largest cities, Fargo and Bismarck, are developing swiftly. A growing economy, tax-friendly environment, and high quality of life are bringing in savvy millennials and driven entrepreneurs alike.
Despite its small stature, the Peace Garden State ranks number one in the country in the number of start-ups. It offers opportunities and support that combine to create a sense of initiative and innovation for small business (SMB) owners.
Here is a list of interesting statistics on North Dakota’s small businesses:
- There are 74,202 small businesses that account for 98.8% of all businesses in the state.
- The following industries have the largest number of small businesses working in them:
- Other services (except public administration) — 9,907
- Real estate, rental, and Leasing — 8,603
- Retail trade — 8,591
- Construction — 8,340
- Professional, scientific, and technical services — 6,764
- The average median income for self-employed individuals who run incorporated businesses is $62,000. That’s $20,000 more than those who run unincorporated businesses.
- According to the 2020 census, North Dakota has a population of 779,094. This small population means that competition among SMBs for reliable employees can be difficult and limited by geography.
- The recent boom in oil exploration has siphoned most of the labor force from small businesses. Understaffing has led to the closure of numerous small firms in the state.
- A total of 195,312 individuals are employed by small businesses in North Dakota. They represent 57.4% of all employees in the state.
- State law requires that every new North Dakota LLC designate a North Dakota registered agent to be available during regular business hours at a physical address within the state.
- There are 3,652 self-employed minorities in North Dakota. That is 4.92% of all SMB owners in the state.
- To form a corporation in North Dakota, you need to file your Articles of Incorporation with the Secretary of State’s office. The filing fee is $100.
- Small businesses in the mining, quarrying, and oil and gas extraction sectors employ 5,795 people cumulatively. That’s 37.7% of the total private workforce in the same sectors.
- North Dakota has a corporation income tax (CIT) but no franchise nor privilege taxes generally applicable to businesses. The CIT is imposed at minimal rates as shown below:
- Income below $25,000 is taxed at a rate of 1.4%.
- Income over $25,000 up to $50,000 has a 3.55% tax on the amount over $25,000 plus $350.
- Income over $50,000 is taxed at 4.31% on amounts over $50,000 plus an additional $1,237.50.
- In order to form a North Dakota LLC (limited liability company), you need to file your Articles of Organization with the Secretary of State’s office. The filing fee is $135.
- The utilities sector has the smallest number of SMBs, with a measly 23 currently in the sector.
- There are 1,469 SMBs in the export business that generate 48% of the state’s $7.3 billion worth of export revenue.
- According to WalletHub’s 2018 “Best Large Cities to Start a Business” report, Bismarck, ND came in 7th while Fargo ranked 37th on the list.