North Dakota is one of the simpler states in which to do payroll as it is a pro-employer state. It does not have a lot of state-specific payroll laws and typically follows federal guidelines. North Dakota does have a state income tax, however, it’s one of the lowest rates in the country. Employers are also required to pay state unemployment insurance tax and workers’ compensation insurance, common among most states.
Even though other states may have a more complex process, doing payroll in North Dakota can still be time-consuming if you’re handling it manually. To save time and remain compliant with federal and state laws, consider using a payroll software such as Gusto. It will calculate and file your payroll taxes, so you avoid late fees or penalties for inaccuracy. Try it free for 30 days.
Running Payroll in North Dakota—Step-by-Step Instructions
Step 1: Set up your business as an employer. To register with the federal government, you will need your Employer Identification Number (EIN) and an account in the Electronic Federal Tax Payment System (EFTPS).
Step 2: Register with the state of North Dakota. For withholding taxes in North Dakota, you will need to apply online with the North Dakota Taxpayer Access Point (NDTAP).
Step 3. Set up your payroll process. You will need to set up payroll, implement a pay schedule, determine a method to pay employees, and figure out how you will process taxes and deductions, etc. You can choose to do payroll yourself, use an Excel payroll template, or choose a payroll service.
Step 4: Collect employee payroll forms. The best time to collect payroll forms is during onboarding. Payroll forms include W-4, I-9, and direct deposit information. North Dakota utilizes the federal W-4 form for its own state withholding.
Step 5: Collect, review, and approve time sheets. If you have hourly or nonexempt employees, you’ll need to track your employee time before calculating their pay. You have three options:
- Use a paper time sheet
- Use free or low-cost time and attendance software
- Use a payroll service that also has a time and attendance system
Step 6: Calculate payroll and pay employees plus taxes. You can choose to pay employees in a number of different ways (i.e., cash, check, direct deposit, pay cards). Federal taxes should be paid through EFTPS.
Step 7: File payroll taxes with the federal and state governments. The IRS has forms and instructions on filing federal taxes. If needed, you can also order official tax forms from the IRS.
Almost all North Dakota employers must file withholding tax quarterly (dates listed below). These returns can be filed on the NDTAP website or via a paper application that can be mailed to the North Dakota Office of the State Tax Commissioner (P.O. Box 5624, Bismarck, ND 58506-5624).
All employers in North Dakota are required to file a Transmittal of Wage and Tax Statement at the end of each calendar year that includes federal W-2 copies that have the withholding amount of North Dakota’s state income tax.
North Dakota Quarterly Return Due Dates
There are some employees who are eligible for annual filing only. These employers must meet the following requirements in the previous year.
- A withholding amount of $500 or less
- Paid the full amount of state income tax by the due date
- Required to do quarterly filings for all four quarters in the previous calendar year
Step 8. Document and store your payroll records. It is important to retain records for all employees for several years, including those who are no longer with your company. Federal law requires you maintain payroll records for three years and payroll tax records for four. For more information on which records to keep, please see our article on retaining payroll records.
North Dakota only requires that you have written documentation that each employee receives at least the minimum wage and detailed results on each vote regarding tip pooling. The results will include the vote totals as well as the names of the employees who voted.
Step 9. Do year-end payroll tax reports. The federal forms that are required are W-2s (for employees) and 1099s (for contractors). These forms should be provided to employees and contractors by Jan. 31 of the following year. State W-2s are required for North Dakota and these forms are also due by Jan. 31.
If you want to learn more general information on how to do payroll that’s applicable to businesses in all states, please visit our guide on how to do payroll.
North Dakota Payroll Laws, Taxes & Regulations
Federal law requires that you pay income taxes, Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) taxes. Federal taxes are remitted based on a tiered progressive tax system where higher income employees pay more. Called FICA taxes, Social Security and Medicare are withheld from each employee’s paycheck at 6.2% and 1.45% respectively. You, as the employer, also pay a matching amount. The FUTA rate is 6% on the first $7,000 that is paid to each employee in that year.
North Dakota Taxes
North Dakota only has a few items that differ from federal regulations. It has state income taxes, with reciprocal agreements with Montana or Minnesota, as well as state unemployment insurance.
State Income Taxes
North Dakota is a progressive income state tax with five income tax brackets. Four tables (single, married filing jointly, married filing jointly, and head of household) are listed below. To determine what you specifically need to withhold, use the North Dakota withholding tables.
Employees who live in Montana or Minnesota can provide you with form NDW-R, which means you do not need to withhold North Dakota taxes. This form needs to be provided within 30 days of receipt for eligible employees and must be provided every year the employee is eligible for an exemption.
If you need assistance with income tax withholdings, the state provides a guide to help.
Married Filing Jointly
Married Filing Separately
Head of Household
State Unemployment Tax
North Dakota requires you to pay state unemployment taxes (SUTA). This provides funds to support employees who lose their jobs. The rate you have to pay depends on whether the North Dakota unemployment reserve fund has a positive or negative balance. The reserve fund is the account where money is pooled to be paid to eligible individuals who were recently unemployed.
If the reserve fund is positive: The unemployment tax rate is 1.02% for new employers not in the construction industry and 6.09% for new employers in the construction industry. New employers are defined as organizations being in business for no more than six quarters. Established employers will have a rate between 0.08% and 1.13%.
If the reserve fund is negative: The unemployment tax rate is 6.09% for new employers not in the construction industry and 9.69% for new employers in the construction industry. Established employers will also have a rate between 0.08% to 1.13%.
Note: When you pay SUTA, you may qualify for a deduction on your FUTA taxes.
Workers’ compensation insurance ensures you’re covered if any of your employees become hurt or ill as a result of work performed on the job. You are required to provide workers’ compensation if you have any employees in North Dakota and/or if you have a business location in North Dakota. It is solely provided by the North Dakota Workforce Safety & Insurance Office (WSI). As a result, you must report all wages to the WSI. Premiums are calculated using employment classes and the taxable payroll amount, which is capped at 70% of the state’s annual wage.
The cost of workers’ compensation insurance is around $1.25 for each $100 payroll you processed. For example, a company that processes $500,000 of payroll can expect to pay around $6,250 in insurance.
Minimum Wage & Tips
Almost all jobs will require you to pay at least minimum wage. If you need any assistance on the federal guidelines on exemptions, please use the following: Federal Exemptions for Minimum Wage.
North Dakota’s current minimum wage is $7.25 per hour for non-tipped employees. There’s also a $2.13 cash wage per hour for tipped employees, provided that their tips allow them to receive a minimum wage of $7.25 per hour. This is the same minimum wage requirement as the federal government.
There are a few exceptions where employees can be paid less than the minimum wage. Full-time students may be paid 85% of the minimum wage. Also, employees under 20 can be paid a minimum “training” wage of $4.25 for the first 90 days of employment.
North Dakota adheres to the federal guidelines regarding overtime. You’ll need to pay one and a half times the regular hourly rate of pay for any hours over 40 that your employees work in a workweek. For more information, please see our guide on calculating overtime.
Different Ways to Pay Employees
In North Dakota, you are able to pay employees via standard payment options, including cash, paper check, direct deposit, and payroll card. If you decide to pay employees via pay card, you must make sure that all fees are covered without it affecting the employee’s pay.
Please see our guide on how to pay employees for more in-depth information.
Minimum Pay Frequency
North Dakota requires that you pay employees at least once a month on a regular scheduled pay date. For a list of pay schedule options and a free payroll calendar, check out our guide on pay periods.
Pay Stub Laws
You must provide a written or digital statement of your employee’s earnings and withholdings in North Dakota every time an employee is paid.
If you’d like a template for making your own pay statements, then download one of our free pay stub templates. They’re already formatted, so you can print and use them when needed.
Paycheck Deduction Rules
North Dakota does not have any laws mentioning what can or cannot be deducted from an employee’s paycheck. Common deductions may include:
Final Paycheck Laws
North Dakota requires you to pay employees their final pay by the next regularly scheduled payday. If an employee is not paid by this date, they can charge wages for each day the employer is in default for up to 30 days.
If you find yourself needing to print a check for a terminated employee quickly to avoid any penalties, please use one of our recommended free ways to print payroll checks online.
North Dakota HR Laws That Affect Payroll
North Dakota HR laws mostly follow federal guidelines, with the exception of required meal breaks and child labor laws for 14- and 15-year-olds.
North Dakota New Hire Reporting
North Dakota requires you to report new hires within 20 days of the hire date. You can report using the North Dakota New Hire Reporting Form.
Breaks, Lunches & Time Off Requirements
North Dakota follows federal law for time off requirements with the exception of a required meal break for eligible employees.
- Breaks and Lunches: North Dakota requires you to provide a 30-minute meal break for shifts that are longer than five hours if there are at least two people on duty at the time. The break can be unpaid if the employee is free from any work responsibilities. Rest breaks are not required by law.
- Vacation and Sick Leave: North Dakota does not have any vacation or sick leave requirements. However, if you do provide leave benefits you must abide by your company’s policy.
- Family Leave: North Dakota does not have a separate state law regarding family leave. In fact, there is a law in place that no localities in North Dakota can put in a leave law that supersedes federal or state laws. Since there is no state law, employers must abide by the federal law in the Family and Medical Leave Act (FMLA).This law is for companies that have 50 or more employees for 20 or more weeks in the current or previous year. Employees can take FMLA leave if they have worked at the company for at least a year, with 1,250 hours worked in the previous year, and if their physical work location has 50 or more employees in a 75-mile radius.
State Disability Insurance
North Dakota does not have a state disability program and does not require companies to obtain disability insurance. However, it is a prudent idea to have disability insurance for your employees and yourself.
Child Labor Laws
North Dakota follows federal guidelines regarding youth work for 16- and 17-year-olds. Federal law prohibits some job occupations for this age group, including roofing and using power-driven tools.
North Dakota does have additional work restrictions for 14- and 15-year-old employees. They include the following:
- Cannot work more than three hours on a school day
- Cannot work more than eight hours on a non-school day
- Cannot work more than 18 hours in a school week
- Cannot work more than 40 hours in a non-school week
- Cannot work between the hours of 9:01 p.m.- 6:59 a.m. from June 1 through Labor Day; after Labor Day, minors under the age of 16 cannot work between the hours of 7:01 p.m.- 6:59 a.m.
- Cannot work in a field that requires power machinery, construction, chemicals, door-to-door sales, or cooking.
In addition, minors ages 14 and 15 must submit an employment and age certificate to the North Dakota Department of Labor and Human Rights. Information from the teen, employer, and parent is needed for the form to be considered valid by the Department of Labor.
For more information on child labor laws, check out our guide on hiring minors.
Listed below are some of the state and federal forms needed to produce accurate pay for employees as well as compliant payroll reporting and tax remittance for businesses.
North Dakota Payroll Forms
- Reciprocity Exemption Form: This is used for claiming North Dakota income tax exemption status for Montana and Minnesota residents who work in North Dakota.
Federal Payroll Forms
- W-4 Form: Helps employers calculate withholding tax for employees
- W-2 Form: Reports total yearly wages earned (one per employee)
- W-3 Form: Reports total yearly wages and taxes for all employees
- Form 940: Calculates and reports unemployment taxes due to the IRS
- Form 941: Files quarterly income and FICA tax withholding
- Form 944: Reports annual income and FICA tax withholding
- 1099 Forms: Provides contractors with pay information and amounts that assist them in tax calculation
North Dakota Payroll Tax Resources & Sources
- North Dakota Taxpayer Access Point: File tax returns, make payments, and access tax account information.
- ND UI Easy: File quarterly wage reports, make payments, and access unemployment insurance tax accounts.
- North Dakota Workforce Safety and Insurance: Apply for workers’ compensation coverage, submit payroll reports, make payments and view frequently asked questions.
- North Dakota New Hire Reporting Center: Complete new hire reporting and view common questions relating to new hire compliance.
For more information on payroll laws, please see our payroll compliance guide.
North Dakota payroll only has a few state-specific items to be aware of. A couple of these items include its progressive state income tax structure and its workers’ compensation requirements. Be sure to follow deadlines and mandates by federal and state governments. If you are looking to make your payroll process easier, try Gusto. It files payroll taxes, pays your employees via direct deposit, and automates onboarding so it’s handled entirely online. Sign up for a 30-day free trial.