How to Start a Car Dealership in North Dakota: DOT Dealer License at $100 a Year, $25,000 Bond, No Sunday Sales and the 8-Sales Renewal Minimum

If you want to know how to start a car dealership business in North Dakota, the core task is a single state license: the motor vehicle dealer license issued by the North Dakota Department of Transportation (NDDOT) Motor Vehicle Division under North Dakota Century Code Chapter 39-22. The license itself is inexpensive at $100 a year, including one dealer plate. The requirements around it are where new dealers get stuck: a $25,000 continuous surety bond, continuous garage liability insurance, an established place of business with a permanent enclosed building, and a renewal rule that requires at least 8 retail sales in the prior year.

This guide walks through the order that works in practice: form your business entity, secure your location, line up bond and insurance, apply for the DOT license, register for sales tax, and then run the business within the rules that North Dakota sets for dealers. Treat it as a roadmap, then confirm each figure with the agency that controls it.

This article is informational content, not legal or tax advice. Dealer licensing, bonding, insurance and tax treatment depend on your facts. Talk with a North Dakota attorney and a CPA before you sign leases, insurance policies, purchase agreements or tax elections.

What You Need Before You Start

Gather these items before you file anything. Missing one of them usually delays the DOT application, not the paperwork you already filed.

• A legal business entity, usually a limited liability company (LLC) or corporation, formed through the North Dakota Secretary of State's FirstStop portal
• A federal employer identification number (EIN) from the IRS for the entity and for payroll if you will have employees
• A North Dakota registered agent with a physical address in the state, if you form an LLC or corporation
• A permanent, enclosed building of at least 250 square feet that serves as your established place of business
• A $25,000 continuous surety bond from a surety company
• Continuous garage liability insurance that meets the statute
• Your dealer license application and the $100 initial inspection payment
• A sales and use tax permit from the Office of State Tax Commissioner, applied for through ND TAP
• Workers' compensation coverage through WSI (WorkForce Safety & Insurance) if you will have employees, because workers' compensation in North Dakota is a state monopoly

Step 1: Form Your Business Entity

Start with the entity. The Secretary of State handles formation through FirstStop, and the DOT license will be issued in the name of the business that actually owns the inventory and signs the bond.

For an LLC, file Articles of Organization under North Dakota Century Code Chapter 10-32.1. The filing fee is $135. For a corporation, file Articles of Incorporation under Chapter 10-19.1. The filing fee is $100. Both are filed through FirstStop at firststop.sos.nd.gov.

Name rules matter for a dealership. An LLC name must include "limited liability company," "L.L.C." or "LLC." It cannot include "corporation," "incorporated," or the other restricted terms listed in NDCC 10-32.1-11. The name must also be distinguishable in the Secretary of State's records from every other registered entity, reserved name and registered trade name. If you want to hold a name while you prepare your filing, a name reservation costs $10 and lasts 12 months.

If you plan to sell under a brand such as "Prairie Auto Sales" rather than your legal name, register a trade name. The fee is $25 to register, $25 to amend and $25 to renew every five years. The registration is filed with the Secretary of State, not with your county.

Choose a registered agent before filing. A business cannot serve as its own agent. The agent must be a North Dakota resident individual or a registered business with a North Dakota office, and you must get the agent's approval before naming them. Failing to do so can lead to involuntary dissolution.

Step 2: Secure a Qualifying Place of Business

North Dakota requires an established place of business: a permanent enclosed building of at least 250 square feet under NDCC 39-22-15. A tent, a gravel lot with a trailer, or a space shared with an unrelated business does not meet that description on its face. Confirm the requirement with NDDOT before you sign a lease, because the building has to be real, permanent and enclosed.

Check zoning before you commit. North Dakota has 53 counties, and counties do not license businesses. Cities license specific activities, but a car dealership's use of a particular parcel is usually a zoning question handled by the city where the lot sits. Call the city planning or zoning office and ask whether the site allows vehicle sales, and whether any city permit applies. Those answers can change your timeline more than the state paperwork.

If you plan to display vehicles on a separate lot, that is a different question. A display lot permit costs $50 a year and requires $300,000 in liability coverage under NDCC 39-22-22. Ask NDDOT which lot rules apply to your setup before you buy or lease a second parcel.

Step 3: Arrange the $25,000 Surety Bond and Garage Liability Insurance

North Dakota requires a $25,000 continuous surety bond under NDCC 39-22-05. "Continuous" means the bond stays in force as long as the license does, and the surety, not you, is the party that pays a valid claim up to the bond amount. You will pay the surety a premium, and that premium is not stated in the state's fee schedule. Get quotes from surety agents and ask for the annual premium in writing before you commit.

The dealer must also carry continuous garage liability insurance under NDCC 39-22-19. Get the policy written by a North Dakota-licensed agent who understands garage coverage. A standard commercial auto policy does not always satisfy a garage liability requirement, so have the agent confirm in writing that the policy meets the statute before NDDOT receives the certificate.

Step 4: Apply for the DOT Dealer License

Apply for the motor vehicle dealer license through the NDDOT Motor Vehicle Division. The license costs $100 a year and includes one dealer plate. You will also pay a $100 non-refundable initial inspection fee under NDCC 39-22-14. Plan for that $100 as a sunk cost: it is not refunded if the application is denied or if you withdraw.

Each additional dealer plate costs $20 under NDCC 39-22-02. If you will move vehicles to customers, test drive them or transport them between locations, plan your plate count before you apply rather than buying plates one at a time.

The license is issued for the calendar year and expires December 31. Because your first application will likely come partway through the year, ask NDDOT how the first license period is prorated or handled before you sign a purchase agreement for your opening date.

The application will require your entity documents, proof of your place of business, your bond, your insurance certificate and the required fees. Ask NDDOT for the current forms and checklist. Do not rely on an old form you found online.

Step 5: Register for Sales Tax

A dealership makes taxable sales, so you need a sales and use tax permit from the North Dakota Office of State Tax Commissioner. Apply through ND TAP at tap.tax.nd.gov. The state's sales tax rate is 5%, plus any city and county taxes that apply to the sale location. Apply about 30 days before you open, so the permit is in hand when your first sale happens.

Confirm with the Tax Commissioner how sales of vehicles, trade-ins and related products are treated on your return. Vehicle sales involve more tax questions than most retail businesses, and the treatment of trade-ins and reporting frequency should be settled before opening day. A CPA who works with auto dealers can save you from amended returns.

Because North Dakota has no franchise tax, the recurring state charges on the entity are the annual report and the taxes that apply to your income and sales. Income tax depends on how the entity is taxed. An LLC taxed as a partnership or disregarded entity passes income to its owners, who pay individual income tax at 0%, 1.95% or 2.50% depending on bracket. An LLC electing C corporation treatment pays corporate income tax at graduated rates of 1.41%, 3.55% and 4.31%.

Step 6: Set Up Workers' Compensation If You Have Employees

If you will hire anyone, you need workers' compensation coverage through WSI. Coverage is a state monopoly in North Dakota, so you cannot buy it from a private carrier. Register with WSI before your first payroll. Job Service North Dakota handles employer services, including hiring resources, but confirm employer registration requirements with each agency directly.

Step 7: Know the Operating Rules Before Your First Sale

The license comes with conduct rules that apply every day, not just at opening. Build them into your sales process now.

• No Sunday sales. Motor vehicle sales on Sunday are prohibited under NDCC 39-22-07.1. This is a class B misdemeanor. Do not schedule closings, signing appointments or sales on Sundays, even if a customer asks.
• No brokering. Brokering motor vehicles is prohibited under NDCC 39-22-26 and is a class A misdemeanor. Do not arrange sales for a fee on behalf of an owner who is not your inventory.
• No direct manufacturer sales or factory stores. NDCC 39-22-24 and 39-22-25 bar these arrangements. Plan your inventory sources accordingly.
• Auction operators need their own license. If you plan to run an auction, NDCC 39-22-23 requires a separate DOT license.
• Trailer and RV dealers are separate. Trailer dealers fall under NDCC Chapter 39-22.1 and RV dealers under Chapter 39-22.3. A motor vehicle dealer license does not cover those lines.

Step 8: Plan the Renewal Minimum From Day One

The license expires December 31 every year. Renewal depends on activity: under NDCC 39-22-18, you cannot renew if you made fewer than 8 retail sales of titled and registered vehicles in the prior year. A late renewal carries a $100 fee.

That 8-sale minimum is the rule most likely to end a small dealership that opens with good intentions and slow sales. Track every retail sale from the first week. Ask NDDOT how sales in your first partial year count toward the renewal minimum, because a late opening can put you in a difficult position at the first renewal.

Your LLC annual report is a separate obligation. For business LLCs, the annual report is due November 15 every year and costs $50. A late fee applies after the statutory due date. A corporation's annual report is due August 1 and costs $25.

First-Year Fees at a Glance

The table below lists only the state fees described in this guide. Bond premiums, insurance premiums, rent, zoning costs, and sales tax permit costs are not included because the state does not publish those figures here. Confirm any item marked as unlisted with the named agency.

Item	Amount	Where it comes from
LLC Articles of Organization	$135	Secretary of State, FirstStop
Corporation Articles of Incorporation	$100	Secretary of State, FirstStop
Name reservation (optional)	$10	Secretary of State
Trade name registration (if used)	$25	Secretary of State
DOT dealer license, per year	$100, including one dealer plate	NDDOT Motor Vehicle Division, NDCC 39-22
Initial inspection (non-refundable)	$100	NDCC 39-22-14
Each extra dealer plate	$20	NDCC 39-22-02
Display lot permit, per year (if used)	$50	NDCC 39-22-22
Late dealer license renewal	$100	NDCC 39-22-18
LLC annual report	$50	Secretary of State
Surety bond premium	Not listed here. Ask your surety.	Private surety company
Garage liability insurance premium	Not listed here. Ask your agent.	Private insurer
Sales and use tax permit	Not listed here. Confirm on ND TAP.	Office of State Tax Commissioner

Common Mistakes to Avoid

• Assuming a small lot skips the license. A dealer license is required to sell motor vehicles in North Dakota. Size does not create an exemption, so do not sell a single car before the license is issued.
• Scheduling a Sunday closing. Sunday sales are prohibited. A signing that slides into Sunday creates a misdemeanor exposure for the business.
• Leasing a space that does not qualify. A building that is not permanent, enclosed and at least 250 square feet fails the established place of business requirement. Check the lease terms against the statute before you sign.
• Buying a generic garage policy. Ask the agent to confirm the policy meets NDCC 39-22-19 in writing.
• Forgetting the 8-sale renewal minimum. Many dealers plan for opening costs and forget that the next year's license depends on actual retail sales.
• Using an unregistered trade name. Selling under a name that is not your legal name without registering it creates avoidable trouble with the Secretary of State and with customers.
• Brokering a sale for a friend. Taking a fee to arrange a sale of a vehicle you do not own can be brokering under NDCC 39-22-26.

Tips for a Smoother Launch

• Call NDDOT Motor Vehicle Division before you sign a lease, and ask which forms and inspections apply to your location.
• Get your bond and insurance quotes early. Both can take longer than the state paperwork.
• Ask the Secretary of State's business services line at (701) 328-2900 about current processing times. The Secretary of State publishes no guaranteed turnaround.
• Use the North Dakota Small Business Development Centers, hosted by the University of North Dakota Nistler College of Business and Public Administration, at und.edu/ndsbdc for free business planning help. The U.S. Small Business Administration's North Dakota district page is at sba.gov/district/north-dakota.
• Keep a sales log from day one. It is your renewal evidence and your bookkeeping record.

What Results to Expect

Following these steps in order gives you a clear path to a licensed dealership that is ready to operate within North Dakota's rules. Most applicants who prepare the entity, location, bond, insurance and tax permit before applying are in a better position to avoid delays. Timelines vary with the agency workload, your surety and insurer, and your city's zoning review, so treat any timeline as a planning estimate, not a promise.

Expect the first year to be heavier on fixed costs than on income. Use the fee table to build a budget, add your own bond, insurance, rent and inventory costs, and plan for the 8-sale renewal minimum before you commit money to inventory.

Next Steps

1. Choose your entity and file through FirstStop at firststop.sos.nd.gov.
2. Confirm your site qualifies as an established place of business and check zoning with the city.
3. Get bond and garage liability insurance quotes, then bind coverage.
4. Apply for the DOT dealer license through NDDOT Motor Vehicle Division and pay the $100 license fee and $100 inspection fee.
5. Apply for your sales and use tax permit through ND TAP about 30 days before you open.
6. Set up WSI coverage if you will have employees.
7. Calendar December 31 for the license, November 15 for the LLC annual report, and your renewal sales count.

For the Secretary of State, visit sos.nd.gov. For tax questions, visit the Office of State Tax Commissioner at tax.nd.gov. For dealer licensing questions, contact NDDOT Motor Vehicle Division directly, and treat their answer as controlling over any summary here.

Reminder: this article is informational content, not legal or tax advice. Consult a qualified North Dakota attorney and a CPA for your specific situation.