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What Do Therapists Need to Know About Taxes in North Dakota?

North Dakota keeps things relatively simple — but that doesn’t mean you can ignore your structure, filings, or state tax rules. Therapists in private practice still need to handle income tax, quarterly estimates, and legal setup correctly to avoid surprises.


Who this guide is for

This guide is built for:

  • Licensed North Dakota therapists (LCSWs, LPCs, LMFTs, psychologists, etc.)
  • Solo practitioners, group practice leaders, and telehealth providers
  • Therapists earning self-employed or 1099 income
  • Clinicians aiming to reduce taxes and stay compliant

Step 1: Pick the right structure for your practice

The right business structure affects your taxes, liability, and how you get paid.

Sole Proprietorship

  • No formation paperwork unless using a trade name
  • Full liability rests on you
  • All income taxed via your personal tax return
  • Must register a trade name if using anything other than your legal name

PLLC (Professional LLC)

  • North Dakota allows licensed professionals to form PLLCs
  • Offers liability protection
  • Taxed as a sole prop by default
  • You can elect S Corp status later
  • File with the North Dakota Secretary of State

S Corporation

  • Saves on self-employment tax by splitting income
  • Requires payroll, bookkeeping, and dual tax filings
  • Typically pays off once your net income is around $75K+
  • Still taxed under ND’s personal income tax system

Professional Corporation (PC)

  • Permitted in ND
  • More formal structure, often used by multi-owner practices
  • Can elect S Corp status
  • Higher admin burden than PLLC

Step 2: Know your state tax obligations

State income tax

    • North Dakota has graduated income tax rates up to 2.5% (2025)
    • Applies to income from pass-through entities like PLLCs or S Corps
  • File using Form ND-1

Annual report

  • Required for PLLCs and PCs
  • Due November 15 annually
  • File with the Secretary of State
  • $25 filing fee

Business registration

  • You must register your PLLC/PC with the state
  • Trade names also need to be registered separately

Step 3: Pay taxes throughout the year — not just in April

Estimated taxes

  • Required if you expect to owe $1,000+ to the IRS or $500+ to ND
  • Due quarterly: April 15, June 15, Sept 15, Jan 15
  • Use ND-1ES or pay online through the ND TAP portal

Self-employment tax

  • 15.3% on net income unless you’re on payroll as an S Corp owner
  • Consider S Corp structure once you're consistently netting $75K+

Filing requirements

  • Sole prop: Schedule C + ND Form ND-1
  • PLLC: ND Form ND-1 + annual report
  • S Corp: Federal 1120-S + ND S Corp Form 60 + payroll + annual report

Step 4: Track and claim your deductions

Deductions reduce your taxable income — don’t leave money on the table.

Deductible expenses for therapists

  • Rent or home office
  • Therapy tools: EHRs, scheduling platforms, telehealth systems
  • CEUs, supervision, and license renewals
  • Malpractice and liability insurance
  • Marketing: website, directories, business cards
  • Office expenses: internet, phone, supplies
  • Health insurance (if self-employed)
  • Retirement plans (Solo 401k, SEP IRA)

Step 5: When it’s time to consider an S Corp

An S Corp becomes financially worthwhile around $75K+ net income.

  • You pay yourself a W-2 salary
  • Remaining income flows through as a distribution (not subject to self-employment tax)
  • Payroll and extra filings required
  • Federal 1120-S + ND Form 60

Step 6: Common mistakes therapists make

  • Forgetting the November 15 annual report
  • Skipping estimated tax payments
  • Electing S Corp but not setting up payroll properly
  • Ignoring deductible expenses
  • Not registering trade names correctly
  • Mixing personal and business finances

Step 7: Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Stay sole prop or PLLC; register trade name; pay quarterly taxes

$50K–$100K

Evaluate S Corp; run payroll; track ND filing deadlines

Over $100K

Full S Corp setup; optimize taxes; use a CPA to help with planning

Need help figuring this out?

We help North Dakota therapists get structured the right way, avoid late filings, and reduce tax burdens with better planning.

Book a consult or email us at david@leichtercpa.com

Disclaimer: This guide is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, state laws and regulations can change without notice. You should consult a licensed professional in your state before making any decisions based on this information. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this guide.