How to Do Payroll in North Dakota

In North Dakota, the definition of payroll is not as simple as it may seem. When you think about filing your taxes with a salary and wages, this typically refers to an employee’s gross earnings before deductions are made for federal income tax withholding (FIT), social security contributions (SSC) and Medicare insurance premiums. However in North Dakota, many companies pay employees through “payroll checks” which do not include FIT or SSC withheld from their paycheck – so how can you file your taxes?

The “north dakota w-4 form 2021” is a form that must be filled out to determine the number of personal exemptions and allowances an employee has. The form is required by employers in North Dakota, and it can also be used as a guide for other states.

As a pro-employer jurisdiction, North Dakota is one of the easiest states to process payroll in. It follows federal norms and does not have many state-specific payroll rules. Although North Dakota has a state income tax, it is one of the lowest in the nation. Employers must additionally pay a state unemployment insurance levy as well as workers’ compensation insurance, which is required in most states.

Even while other states may have a more complicated procedure, manually processing payroll in North Dakota may be time-consuming. Consider adopting payroll software like Gusto to save time and stay compliance with federal and state standards. It will calculate and submit your payroll taxes for you, so you don’t have to worry about late fines or penalties for mistakes. For 30 days, you may try it for free.

Gusto is a great place to visit.

Step-by-Step Instructions for Payroll in North Dakota

Step 1: Register your company as an employer. You’ll need your Employer Identification Number (EIN) and an account with the Electronic Federal Tax Payment System to register with the federal government (EFTPS).

Step 2: Apply for a North Dakota driver’s license. You must apply for withholding taxes in North Dakota online via the North Dakota Taxpayer Access Point (NDTAP).

Step 3: Create a payroll system. You’ll need to set up payroll, create a pay schedule, decide how to pay personnel, and figure out how to handle taxes and deductions, among other things. You have the option of doing your own payroll, using an Excel payroll template, or using a payroll service.

Collect employee payroll paperwork in step four. Onboarding is the optimum time to gather payroll paperwork. W-4, I-9, and direct deposit information are all included on Forms for Payroll. For its own state withholding, North Dakota uses the federal W-4 form.

Collect, evaluate, and approve time sheets in step 5. If your workers are hourly or nonexempt, you’ll need to keep track of their time before determining their compensation. You may choose from three options:

Step 6: Work out your payroll and pay your staff, including taxes. You have a variety of options for paying your staff (i.e., cash, check, direct deposit, pay cards). EFTPS should be used to pay federal taxes.

Step 7: Register with the federal and state governments to file payroll taxes. The Internal Revenue Service (IRS) offers forms and instructions for submitting federal taxes. You may also purchase formal tax forms from the IRS if necessary.

Almost all employers in North Dakota are required to submit withholding tax periodically (dates listed below). These returns may be submitted online via the NDTAP website or by mail to the North Dakota Office of the State Tax Commissioner (P.O. Box 5624, Bismarck, ND 58506-5624).

At the conclusion of each calendar year, all employers in North Dakota are required to submit a Transmittal of Wage and Tax Statement that contains federal W-2 copies with the North Dakota state income tax withholding amount.

Quarterly Return Deadlines in North Dakota

Some workers are only required to file their taxes once a year. In the preceding year, these employers had to satisfy the following conditions.

A $500 or less withholding amount
By the due day, I had paid the whole amount of state income tax.
Quarterly filings for the prior calendar year’s four quarters are required.

Step 8: Keep track of your payroll data. It is critical to keep records for all workers, even those who have left your organization, for many years. Payroll records must be kept for three years and payroll tax records for four years, according to federal law. Please visit our post on preserving payroll records for further information on which documents to maintain.

North Dakota simply needs written proof that each employee is paid at least the minimum wage, as well as full results for each tip pooling vote. The total number of votes cast as well as the identities of those who voted will be included in the results.

Step 9: Complete your year-end payroll tax returns. W-2s (for workers) and 1099s (for non-employees) are the government documents that must be completed (for contractors). Employees and contractors should get these forms by January 31 of the following year. North Dakota requires state W-2s, which must be submitted by January 31.

Please check our guide on how to conduct payroll for more general information on how to handle payroll that is relevant to companies in all states.

North Dakota Payroll Laws, Taxes & Regulations

Income taxes, Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) taxes are all required by federal law. Federal taxes are paid according to a tiered progressive tax structure, with higher-income workers paying more. Social Security and Medicare taxes, often known as FICA taxes, are deducted from each employee’s salary at 6.2 percent and 1.45 percent, respectively. You, as the employer, must also provide a matching sum. On the first $7,000 paid to each employee in a given year, the FUTA rate is 6%.

Taxes in North Dakota

Only a few issues vary from federal rules in North Dakota. It has Income Taxes in Different States and state unemployment insurance, with reciprocal agreements with Montana and Minnesota.

Income Taxes in Different States

North Dakota has five income tax rates and is a progressive income state. There are four tables below (single, Filing Jointly by Married Couples, Filing Jointly by Married Couples, and Head of the Family). Use the North Dakota withholding tables to figure out what you need to withhold.

Employees who live in Montana or Minnesota can provide you with form NDW-R, which means you do not need to withhold Taxes in North Dakota. 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 help with income tax withholdings, the state has a guide to assist you.

Single

Filing Jointly by Married Couples

Separate Filing for Married Couples

Head of the Family

Unemployment Insurance in the State

North Dakota requires you to pay Unemployment Insurance in the Statees (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 for new employers who are not in the construction sector is 1.02 percent, whereas the rate for new employers who are in the construction industry is 6.09 percent. Organizations that have been in operation for less than six quarters are considered new employers. The rate for established firms will be between 0.08 percent and 1.13 percent.

If the reserve fund is negative, the unemployment tax rate for new employers who are not in the construction business is 6.09 percent and for new employers who are in the construction industry is 9.69 percent. A fee of 0.08 percent to 1.13 percent will be charged to established employers.

Note that if you pay SUTA, you may be eligible for a FUTA tax reduction.

Compensation for Employees

Compensation for Employees 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 Compensation for Employees 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 Compensation for Employees 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 occupations need that you pay at least the minimum wage. If you have any questions about the federal exemption criteria, please contact us at: Federal Minimum Wage Exemptions

Non-tipped workers in North Dakota are now paid $7.25 per hour. Tipped workers earn a $2.13 cash compensation per hour if their tips enable them to obtain a minimum wage of $7.25 per hour. The state’s minimum wage is the same as the federal government’s.

Employees may be paid less than the minimum wage in a few circumstances. Students may be paid 85 percent of the minimum wage if they work full-time. Employees under the age of 20 might also be paid a $4.25 minimum “training” pay for the first 90 days of work.

Overtime

In terms of overtime, North Dakota follows the federal requirements. If your workers work more than 40 hours in a workweek, you must pay them one and a half times their usual hourly rate. Please check our guide on calculating overtime for more details.

Employees Can Be Paid in a Variety of Ways

You may pay workers in North Dakota using regular payment methods such as cash, paper check, direct deposit, and payroll card. If you decide to pay workers using a pay card, be sure that all expenses are paid without compromising their compensation.

For additional details, please check our tutorial on how to pay staff.

Minimum Pay Period

Employees must be paid at least once a month on a regularly scheduled pay day in North Dakota. Check out our guide to pay periods for a list of pay schedule possibilities as well as a free payroll calendar.

Pay Stub Regulations

Every time an employee is paid in North Dakota, you must produce a paper or digital account of their wages and withholdings.

Download one of our free pay stub templates if you’d like a template for creating your own pay statements. You may print and use them right away since they’re already formatted.

Payroll Deduction Regulations

There are no rules in North Dakota that specify what may and cannot be taken from an employee’s paycheck. The following are some examples of common deductions:

Taxes
Garnishments
Levies
Benefits
Reimbursements

Laws Regarding Final Paychecks

Employees must be paid their last salary by the following regularly scheduled payday in North Dakota. If an employee is not paid by this date, they may charge wages for up to 30 days for each day the employer is late.

Please utilize one of our suggested free methods to print payroll checks online if you need to generate a check for a dismissed employee immediately to avoid any fines.

HR Laws in North Dakota That Affect Payroll

With the exception of compulsory lunch breaks and child labor rules for 14 and 15-year-olds, North Dakota HR laws mainly follow federal principles.

Reporting of New Hires in North Dakota

North Dakota requires you to report new hires within 20 days of the hire date. You can report using the Reporting of New Hires in North Dakota Form.

Breaks, Lunches & Time Off Requirements

With the exception of a mandatory lunch break for qualified workers, North Dakota follows federal law regarding time off regulations.

Breaks & Lunches: If there are at least two individuals on duty at the time, North Dakota requires you to give a 30-minute lunch break for shifts longer than five hours. If the employee has no job duties, the break might be unpaid. The legislation does not demand rest intervals.
Vacation and Sick Leave: There are no vacation or sick leave obligations in North Dakota. If you do provide leave benefits, you must follow your company’s policies.
Family Leave: There is no distinct state statute governing family leave in North Dakota. In reality, North Dakota has a legislation that prohibits local governments from enacting leave regulations that exceed federal or state laws. Because no state statute exists, companies must follow the federal Family and Medical Leave Act (FMLA). This rule applies to businesses with 50 or more workers who worked for 20 or more weeks in the previous or current year. Employees are eligible for FMLA leave if they have been with the firm for at least a year, have worked at least 1,250 hours in the preceding year, and work at a site with 50 or more employees within a 75-mile radius.

Disability Insurance Provided by the State

North Dakota has no state-run disability program and does not force businesses to get disability insurance. However, having disability insurance for both your staff and yourself is a good idea.

Laws Concerning Child Labor

North Dakota follows federal criteria for 16- and 17-year-olds engaged in youth work. Some occupational professions, such as roofing and using power-driven equipment, are prohibited by federal legislation for this age range.

Employees aged 14 and 15 are subject to extra employment limitations in North Dakota. The following are some of them:

On a school day, you can’t work for more than three hours.
On non-school days, you can’t work more than eight hours.
In a school week, you can’t work more than 18 hours.
In a non-school week, you can’t work more than 40 hours.
From June 1 to Labor Day, minors under the age of 16 are prohibited from working between the hours of 9:01 p.m. and 6:59 a.m.; after Labor Day, children under the age of 16 are prohibited from working between the hours of 7:01 p.m. and 6:59 a.m.
Cannot operate in a sector that requires the use of heavy equipment, chemicals, door-to-door sales, or cooking.

The North Dakota Department of Labor and Human Rights also requires juveniles aged 14 and 15 to present an employment and age certificate. The Department of Labor requires information from the adolescent, employer, and parent in order for the form to be declared genuine.

For more information on Laws Concerning Child Labor, check out our guide on hiring minors.

Forms for Payroll

Some of the state and federal paperwork required for proper employee pay, as well as compliance payroll reporting and tax remittance for firms, are included below.

North Dakota Forms for Payroll

Reciprocity Exemption Form: This form is used to claim income tax exemption status in North Dakota for Montana and Minnesota citizens who work in the state.

Federal Forms for Payroll

W-4 Form: This form assists companies in calculating withholding tax for their workers.
W-2 Form: Shows total annual earnings (one per employee)
W-3 Form: This form summarizes all workers’ total annual pay and taxes.
Form 940 is used to calculate and submit unpaid unemployment taxes to the Internal Revenue Service (IRS).
Form 941 is used to report income and FICA tax withholding on a quarterly basis.
Annual income and FICA tax withholding are reported on Form 944.
1099 Forms: Provides pay information and amounts to contractors to help them calculate their taxes.

North Dakota Payroll Tax Resources & Sources

Please check our payroll compliance guide for additional information on payroll legislation.

Conclusion

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 Compensation for Employees 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.