How to Start a Collection Agency in North Dakota: DFI License, $400 Investigation Fee plus $400 Annual and a $50,000 Surety Bond

If you plan to collect debts from people who live in North Dakota, you need a license from the North Dakota Department of Financial Institutions (DFI) before you collect a single dollar. Many first-time owners assume that forming an LLC with the Secretary of State covers them. It does not. A north dakota collection agency license is a separate DFI license under North Dakota Century Code Chapter 13-05, and it comes with a $50,000 surety bond and a minimum net worth you must keep in place while you operate.

This guide walks through the process in order, using the fees, deadlines and requirements we could verify. This is informational content, not legal or tax advice. Debt collection is regulated heavily at both the state and federal levels, so talk to a licensed attorney before you apply and ask a CPA how your entity choice affects your taxes.

Who Needs a North Dakota Collection Agency License

NDCC 13-05-02 requires a license to engage in debt collection when the debtor resides in North Dakota. The test is where the debtor lives, not where your office sits. An agency based in another state that collects from a North Dakota resident should assume the license applies and confirm that with the DFI before it starts.

The statute also lists exemptions in 13-05-02.3. Among others, the following are exempt: attorneys licensed in North Dakota, banks, credit unions, creditors collecting their own debts, and mortgage servicers. For most businesses, the key question is whether you collect your own receivables or collect on behalf of someone else. If you buy debts or collect for clients, you are generally in licensing territory. Whether a purchased debt counts as your own debt for the exemption is a question for an attorney and the DFI, not something to assume.

What You Need Before You Start

• A legal business entity, usually an LLC or corporation, formed with the North Dakota Secretary of State
• A North Dakota registered agent with a physical address in the state
• A minimum net worth of $25,000, kept in place continuously
• A $50,000 surety bond from a surety company
• Funds for the $400 non-refundable investigation fee and the $400 annual license fee
• Funds for the $50 branch fee, if you will operate branch locations
• Principal office and branch addresses, plus the owner and officer information the current DFI application asks for (confirm the current form)
• A plan for employer registrations and taxes, if you will hire staff (see Step 6)

North Dakota Collection Agency License Costs

Item	Amount	Notes
Investigation fee	$400	Non-refundable (NDCC 13-05-04)
Annual license fee	$400	License expires December 31 (NDCC 13-05-05)
Branch fee	$50 per branch	Virtual offices are not branches (NDCC 13-05-02.1)
Surety bond	$50,000	NDCC 13-05-04.1
Minimum net worth	$25,000	Maintained continuously (NDCC 13-05-04.2)
Delinquent renewal	$50 additional	NDCC 13-05-05

The table does not include the annual cost of the bond. The state sets the bond amount, but the surety company sets your premium based on your financial profile, so get quotes from a surety agent before you budget. Also confirm with the DFI whether the $400 annual fee is due with your initial application or on a later schedule.

Step-by-Step: How to Get Your Collection Agency License

Step 1: Confirm You Need the License

List every state where your debtors live, then check the exemptions in 13-05-02.3. If any of your collection work falls outside those exemptions, plan to license. If you are unsure, call the DFI before you buy a bond or form an entity. A short call now costs far less than correcting unlicensed activity later.

Step 2: Form Your Business Entity

Your license attaches to a legal business, so form that business first. The two common choices are:

• LLC: File Articles of Organization under NDCC Chapter 10-32.1 through the FirstStop portal at firststop.sos.nd.gov. The filing fee is $135.
• Corporation: File Articles of Incorporation under NDCC Chapter 10-19.1 through the same portal. The filing fee is $100.

An LLC name must include "limited liability company," "L.L.C." or "LLC" and cannot include "corporation," "incorporated" or similar terms. It must also be distinguishable in Secretary of State records from every other registered name, reserved name and registered trade name. You can reserve a name for 12 months for $10. The Secretary of State publishes no guaranteed processing time, so call Business Services at (701) 328-2900 for current timing.

Corporations and LLCs must keep a North Dakota registered agent. You cannot serve as your own agent. The agent must be an individual who lives in North Dakota or a registered business with a North Dakota office, and you must get their approval before you name them. Changing the agent on file costs $10.

If you will operate under a name other than your legal name, register a trade name with the Secretary of State for $25 through FirstStop. A trade name is a filing, not a license. Registration must be renewed every 5 years, and it gives you exclusive rights to the name within North Dakota only. Details are at the Secretary of State trade name FAQ.

Step 3: Establish and Document Your Net Worth

Under 13-05-04.2, you must keep a minimum net worth of $25,000 on a continuing basis. Continuously means the requirement applies after approval too, not just on the day you apply. Net worth is your assets minus your liabilities, so loans you take to fund the business reduce it. Capitalize the company with enough cash and assets to cover the $25,000 floor plus startup costs, and keep balance sheets and bank statements current so you can prove compliance at any time.

Step 4: Obtain the $50,000 Surety Bond

Under 13-05-04.1, you need a $50,000 surety bond. Contact a surety company or agent and ask whether the surety is authorized to write bonds in North Dakota. Expect underwriters to review your credit, capital and formation documents, so start this step early. Ask the surety to confirm the bond form meets DFI requirements before you submit it. The bond must stay active. If it lapses, you no longer meet the requirement.

Step 5: Plan Your Offices and Branches

Each branch carries a $50 fee. A virtual office is not a branch under 13-05-02.1, so an address you use only as a mailing address or virtual mailbox does not trigger the branch fee. A physical location where collection work happens is a different question. Describe your planned setup to the DFI in writing and get its answer before you sign a lease.

Step 6: Set Up Your Employer and Tax Accounts

If you will hire staff, workers' compensation in North Dakota comes only from WorkForce Safety & Insurance (WSI), because the state runs it as a monopoly. Set up coverage with WSI before your first employee starts. Sales tax works differently. A collection agency that makes no taxable sales usually does not need a sales tax permit, but confirm that with the Office of State Tax Commissioner at tax.nd.gov. If you do need a permit, apply through ND TAP about 30 days before you open, at the ND TAP application page. For your income tax and entity tax treatment, consult a CPA.

Step 7: Submit Your DFI Application and Pay the Fees

Assemble your formation documents, net worth records, bond, branch list and the current DFI application. Check the package carefully before you pay, because the $400 investigation fee is non-refundable. Confirm the payment method and timing with the DFI, then pay the $400 investigation fee. The DFI's published turnaround is not in the materials we verified, so ask the DFI for the current processing timeline and plan your lease and hiring dates around it.

Step 8: Renew Your License Every Year

The license expires December 31. The renewal application is due 30 days before expiration, which means by December 1 for the year-end expiration. Pay the $400 annual license fee with your renewal, and confirm the timing with the DFI. If you file late, the delinquent renewal fee is an additional $50. Set calendar reminders for November 1 and December 1.

Step 9: Track Your Entity Filings

The DFI license does not replace your entity's annual filing. LLCs file the Limited Liability Company Annual Report by November 15 each year for $50. Corporations file the Business Corporation Annual Report by August 1 each year for $25. Add these dates to the same calendar as your DFI renewal, because each one is separate.

If your business also offers debt settlement, money brokering or residential mortgage services, those are separate DFI licenses under other chapters. For example, debt-settlement providers under NDCC 13-11 pay $400 plus $400 annually with a $50,000 bond and may charge a settlement fee of no more than 30% of savings. Confirm the rules for each activity before you combine services.

Tips for a Smoother Application

• Start the surety conversation early, because underwriting takes time.
• Use the same legal name on your DFI application, bond, bank account and Secretary of State filing.
• Keep your books clean from day one so proving your net worth is a simple task.
• Put every fee and deadline in one shared calendar.
• Ask the DFI specific written questions rather than general phone questions.

Common Mistakes to Avoid

• Assuming an LLC is enough. A business registration is a filing, not a license. Collecting from North Dakota debtors without the DFI license is the mistake that causes the most trouble.
• Treating net worth as a one-time check. The $25,000 minimum must stay in place continuously, including during slow months.
• Forgetting the bond's annual cost. The bond premium is a real operating expense that the $50,000 bond amount does not reveal.
• Missing the December 1 renewal date. The $50 delinquent fee is small, but a lapse in licensing is far more serious.
• Mixing up deadlines. The DFI renewal, the LLC annual report due November 15 and the corporate annual report due August 1 are separate obligations.
• Assuming a virtual office solves everything. A virtual office is not a branch under 13-05-02.1, but any physical location where you do collection work needs a clear answer from the DFI before you open it.

Expected Results

A DFI license is the legal foundation for operating a collection agency in North Dakota. It may help you show clients and banks that your agency is licensed and organized, which can matter when you are building trust. It does not guarantee approval, client volume or revenue, and the DFI reviews each application on its own terms. Depending on your setup, the first months may center on capital, the bond and compliance paperwork rather than collections. Your results will depend on your capital, your clients and how you run the operation.

Next Steps

Confirm your exemptions, get bond quotes and send the DFI written questions before you commit to a lease or hiring plan. For entity filings, use the FirstStop portal at firststop.sos.nd.gov, and check the main Secretary of State site at sos.nd.gov for current forms and fees. This content is informational, not legal or tax advice. Consult a qualified attorney and a CPA about your specific situation.