Sole proprietorship vs C corp in North Dakota: which costs less (2026)

At $100,000 profit in North Dakota, a sole proprietorship costs $22,897 a year in tax and fees and a C corporation costs $26,547. On these figures a C corporation does not cost less at any profit up to $500,000.

+$3,650 a year

more for a C corporation than a sole proprietorship in North Dakota, at these numbers.

With these settings the switch does not pay at any profit from $10,000 to $500,000. Setting up costs $100 once in state filing fees.

North Dakota, 2026: $100,000 profit, single filer

Item	Sole prop	C corp	Change
Self-employment taxirs.gov, 2026 rates	$14,130	$0	−$14,130
Federal income taxirs.gov, 2026 rates	$8,235	$5,073	−$3,162
State income taxtax.nd.gov, checked Oct 20, 2026	$532	$316	−$216
Annual Reportsos.nd.gov, checked Oct 20, 2026	$0	$25	+$25
Payroll tax on your salaryirs.gov, 2026 rates	$0	$6,562	+$6,562
Payroll service and tax return (estimate)	$0	$2,000	+$2,000
State corporate income taxtax.nd.gov, checked Oct 20, 2026	$0	$1,433	+$1,433
Federal corporate income tax (21%)irs.gov, 2026 rates	$0	$11,138	+$11,138
Yearly cost	$22,897	$26,547	+$3,650

What these figures count

State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
The 20% qualified business income deduction with its income limits and the professional-service rule.
Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

Yearly cost at each profit level

Profit	Sole prop	C corp	Difference
$30,000	$5,181	$7,179	+$1,998
$50,000	$9,732	$11,769	+$2,037
$75,000	$15,574	$17,557	+$1,983
$100,000	$22,897	$26,547	+$3,650
$150,000	$39,045	$46,035	+$6,990
$200,000	$55,774	$64,663	+$8,889
$300,000	$96,492	$103,377	+$6,885

Federal and North Dakota tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is C corporation minus Sole proprietorship.

What the switch takes in North Dakota

File the Articles of Incorporation (registration via FirstStop) with the state: $100 (fee).
Get an EIN from the IRS (free, online) and open a business bank account in the new name.
Incorporate with the state, then issue shares to yourself.
Register with North Dakota as an employer and run payroll for your own salary: federal Forms 941 each quarter, Form 940 and a W-2 each year. New employers pay North Dakota unemployment tax at 1% on the first $46,600 of wages. jobsnd.com See what payroll costs.
Federal return each year: Form 1120, due April 15 for a calendar year.
State upkeep each year: Annual Report, $25 a year, due August 1.

What changes between the two

A C corporation pays 21% federal tax and North Dakota corporate tax on its profit, and the owner pays tax again on dividends (the double tax). A sole proprietorship pays no federal income tax itself: profit lands on the owner's return, where the 20% qualified business income deduction can apply.

The figures assume all C corp profit after tax is paid out as dividends. Profit kept in the company to grow it is taxed only at the corporate rate until it is paid out, which is where a C corp can come out ahead.

Questions

How much does it save at $100,000 in North Dakota?

Nothing. C corporation costs $3,650 a year more ($26,547 against $22,897).

When does a C corp make sense in North Dakota?

Mostly when profit stays in the company, when outside investors need one, or for the qualified small business stock exclusion. For an owner who takes the profit out, the second tax on dividends usually costs more. On these figures it never costs less up to $500,000.

More for North Dakota

Common cases in North Dakota

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