How to Form an LLC in North Carolina in 7 Steps
Forming a North Carolina limited liability company (LLC) involves many steps including choosing an LLC name, appointing a registered agent, filing articles of organization, applying for an EIN, and setting up business and tax accounts.
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You make many choices when starting a new business, including the legal structure. One popular business entity type for a small startup is the limited liability company (LLC). Many small business owners choose the LLC structure because of its flexibility, tax treatment, and limited liability. If you would like to start an LLC yourself, follow along with the step-by-step process below.
7 Steps to Form an LLC in North Carolina
Name Your LLC
You should choose an LLC name that is memorable, distinctive, and makes your business stand out from the competition. Further, you must ensure that the company name is available in North Carolina and follows state naming rules.
Your North Carolina LLC name must:
- Be unique: Your name must differ from all other registered North Carolina business names (N.C. Gen. Stat. §55D-21).
- Contain an LLC designator: Your name must contain language to indicate that it’s an LLC (N.C. Gen. Stat. §55D-21). You can use the full words “limited liability company” if you like. If you prefer, you can use the abbreviation “Ltd.” and “Co.” in place of “limited” and “company.” For example, “limited liability co.” Or you can abbreviate the entire string of words to “LLC” or “L.L.C.” Note that using “ltd. liability company” or “ltd. liability co.” does not meet the requirements.
Name Search. To find out if your name is available, you should conduct a business entity name search on the Secretary of State’s website. If the name is unavailable, you should choose a new one.
Internet Search. You should do a simple screening name search on the internet. Type your desired name into a search engine to see if any business outside of North Carolina is using your name. If there are matches, create another name.
Trademark Search. Continue your search at the United States Patent and Trademark Office (USPTO) trademark database. You should make sure that there are no matches for your name on this database. This will help you avoid getting into legal trouble for trademark infringement.
Protect the LLC Name. Once you have settled on a unique name, you should check for domain name availability. Although you might not launch your website immediately, you may want the domain name ready to make it easier to build your web presence when the time comes.
Additionally, you may want to register your name with the USPTO or apply for a trademark registration with the North Carolina Secretary of State.
Reserve the LLC Name. You can reserve the name for a few months while you prepare to file your LLC. To do so, you need to apply to reserve a business entity name with the North Carolina Secretary of State. This will reserve your LLC name for 120 days (N.C. Gen. Stat.§55D-23). The filing fee is $10. After completing the paperwork, you should submit the document to the address listed on the form. If you prefer, you can submit the document through the Secretary of State’s online portal.
Get a Registered Agent
Under N.C. Gen. Stat.§55D-30, all LLCs must have a registered agent. A registered agent is an entity or person who agrees to receive official legal papers on behalf of the business. This includes service of process if anyone sues your business.
The registered agent can be an individual who is a resident of the state of North Carolina or a business entity that’s registered to do business in the state. The registered agent’s address must match your registered office address. It must be a physical street address, not a P.O. Box. You should choose a person or entity available to receive legal papers during standard business hours.
Many LLCs choose one of their members to serve as their own registered agent. But if none of your LLC members are willing and able to take on this task, you can use a registered agent service. The registered office must be open during normal business hours on regular business days.
You will need to list your registered agent’s name and address in your articles of organization in the next step.
File Your Articles of Organization
To officially form your LLC as a legal entity, you will submit North Carolina articles of organization to the state. Articles of organization form a legal document with basic identifying information about your LLC. Under North Carolina law N.C. Gen. Stat.§57D-2-21, you will need to provide the following:
- Your LLC’s name
- Your registered agent’s name and address (registered office address)
- The address of your principal office
- Your LLC’s mailing address if this is different from your registered office
- The names and addresses of all the people signing the articles of organization, and whether they are members or managers
- The effective date of your LLC
Further, if you are starting a professional LLC, you will need to state the services you will offer.
North Carolina has an online portal and a PDF form to file your articles of organization on the Secretary of State website. There is a $125 filing fee.
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Draft an Operating Agreement
Although North Carolina does not require you to have an LLC operating agreement, it is wise to have one. An operating agreement is an internal company document. You use it to establish rules and create key agreements among members. This includes:
- Member rights and responsibilities
- If the LLC is manager-managed or member-managed
- Voting rights
- Procedures for adding and removing members
- Ownership percentages
- Procedures for dissolving the LLC
- Anything else that’s important to your business
Putting these agreements into writing can help to avoid future conflict among members and promotes more organized operations. Even a single-member LLC should have an operating agreement. Although you will not have to worry about member disputes with a single-member LLC, there are other reasons to have an operating agreement. You may need to show this document to professionals like lawyers and accountants to receive services. You will also likely need to provide it when seeking financing for your business.
Get an EIN
You will need an Employer Identification Number (EIN) if you have a multi-member LLC or plan on hiring employees. An EIN is a unique identifying number. The Internal Revenue Service (IRS) uses EINs to distinguish between companies for tax purposes. It’s like a Social Security Number for businesses. You will need this number for employee payroll and to open a business bank account. An EIN is free and easy to get at the IRS website. You can apply by mail, fax, or online.
You should check the Internal Revenue Service (IRS) Business Taxes page for more information about your federal tax obligations.
Set Up Business and Tax Accounts
When you start a new business, you must register for tax and business accounts in the state. And if you have employees, you will need a federal EIN number. Your tax and licensing requirements depend on the location and nature of your business.
If you think your business may be subject to federal licensing requirements, you should check the Small Business Administration (SBA) website. There, you will find more information on the business activities that give rise to federal regulation.
Check for Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
Business and Tax Requirements in North Carolina
Depending on the type of business you run, you may need to register for state taxes at the North Carolina Department of Revenue (DOR). For example, if you pay employees and sell goods, you must register with the DOR for withholding tax and sales tax.
State Business Tax
If your North Carolina LLC is a pass-through entity, the profits and losses of the LLC go on the members’ individual tax returns. The LLC does not pay state income tax. However, if you elect to have your LLC taxed as a corporation, you will be required to pay an annual corporate income tax and franchise tax. And you may be subject to the franchise tax as well. Both taxes are payable to the Department of Revenue.
State Employer Tax
The first time you hire employees, you must have state employer accounts for withholding, unemployment insurance, and worker’s compensation. When you set up your new business with the Department of Revenue, you will register for these accounts.
- Register to pay withholding taxes.
- Sign up for an unemployment insurance account with the North Carolina Department of Commerce Employment Security.
- Report new hires in a new hire directory.
- Provide worker’s compensation if you have three or more employees.
Sales and Use Taxes
If you are a vendor in North Carolina, you must register for a sales and use tax account. You can do so when you set up a new business account with the Department of Revenue.
Business Licenses and Permits
You should contact your city clerk to check for local licensing requirements. State licensing requirements may apply too. Visit the North Carolina Secretary of State website to learn more. There, you will find North Carolina state licensing information and contact details for the office.
Registration in Other States
If you want your North Carolina LLC to do business in another state, you must register as a foreign LLC. Contact the state’s secretary of state office in that state for registration requirements. You may need proof of your LLC’s good standing in North Carolina. You can request a certificate of existence (North Carolina’s version of a certificate of good standing) from the online portal.
You file the state’s application for a foreign LLC, and if accepted, you must also follow that state’s rules for setting business tax accounts and business licenses. And if you plan to hire employees in that state, you must comply with state tax laws and withholding.
Annual Requirements in North Carolina
To keep your business in good standing, you must file annual reports with the state. You can file online or by mail. You need to submit a $200 state filing fee along with your report. Note: If you file online, there is an additional $3 charge.
In your annual report, you will need to provide the following basic information:
- Your LLC’s name and address
- The location where you organized your LLC (if a foreign LLC)
- Contact information for your company officials
- Your registered agent’s contact details
- The nature of your business
- The address of your principal office
This information will mostly confirm the details you initially provided with your articles of organization. Your annual report is due by April 15th of every calendar year following the year you created your LLC.
North Carolina LLC Formation FAQs
The filing fee for the initial articles of organization for a domestic LLC in North Carolina is $125.
Single-member LLC. If a sole proprietor or solo entrepreneur opens an LLC, it is known as a single-member LLC. Single-member LLCs have similar formation and filing requirements as multi-member LLCs.
Multi-member LLC. If an LLC has two or more members, it is a multi-member LLC. Members can be managers, or they can name a person or a group of people to operate the LLC.
Professional LLC. If your LLC has members practicing in professional services such as law, medicine, dentistry, or accounting, you can form a professional limited liability company (PLLC). When you create your PLLC, you must show proof of your license issued by your state licensing board and complete the articles of organization for a professional limited liability company.
Articles of organization accepted by the North Carolina Secretary of State prove your LLC’s existence. You use it to open business bank accounts, tax accounts, or get a credit card merchant account. However, North Carolina does not issue a copy of your articles of organization. Instead, you can order a certificate of existence for your LLC, which will serve the same purpose.
A certificate of existence in North Carolina verifies your LLC is active in North Carolina and complies with state requirements. Other states refer to the certificate of existence as a "certificate of good standing." You can request a certificate of existence from the online portal. The fee for an electronic certificate is $10 plus $1 per page. You can also order a paper certificate by calling 919-814-5400. The cost for the paper certificate is $15 plus $1 per page.
To form a North Carolina LLC, you must:
- Have an acceptable business name for your LLC
- Have a registered agent and office address
- File articles of organization with the Secretary of State
- Pay a $125 filing fee
Although you do not have to file an operating agreement with the state of North Carolina, it is an important document to complete since it allows you to plan and strategize how you will divide responsibilities and buy out any members who wish to leave.
You may want to start an LLC if you want a flexible business structure that helps you to limit your personal liability for business obligations.
LLCs are popular among small business owners due to the personal liability protection they offer. Personal liability protection keeps business debts separate from your personal assets. So, in case of a lawsuit, your personal car, home, and accounts are not at risk for business liabilities. This is not the case with all business structures. For example, if you have a sole proprietorship, your business’s creditors could seize your personal assets to cover business debts.
An LLC is also an easy business structure to set up and maintain. This is an advantage over corporations, which have more formal requirements and record-keeping obligations.
Further, LLC owners can choose pass-through tax treatment for the business. This means the LLC pays its taxes through the members’ personal income tax returns. Pass-through taxation can be preferable to corporate tax treatment, which can result in double taxation. Double taxation occurs when corporations pay taxes on their profits at the corporate level, and stockholders then pay taxes on their dividends too.
Each year you are required to file an annual report with the state and pay a $200 filing fee to keep your LLC operational and in compliance. The report is due by April 15th.
Articles of organization is the initial document you file to register your LLC with the state. It contains basic information about your company’s name, location, and purpose. The articles of organization is a public document. An operating agreement, however, is a private company document. It is a detailed plan for running your business and sets out rules and procedures you will use as you run your LLC.
Yes. If your LLC would like to do business using a name other than the legal LLC name, you will need to file an assumed business name certificate with the county where you do business. There is no fee. An assumed business name is also referred to as a "fictitious name," " doing business as," or "DBA."
There is no general business license for businesses operating in North Carolina. However, depending on your type of business or profession, you might need a license or permit. Business Link North Carolina or your state occupational board can provide more information.
You can create your LLC with the online template on the Secretary of State’s website. You can also use online business formation services to handle it quickly and easily.
You can mail LLC forms to the business address for the Secretary of State at:
Business Registration Division
P.O. Box 28622
Raleigh, NC 27626-0622
The office is located at:
North Carolina Secretary of State
2 South Salisbury Street
Raleigh, NC 27601
Yes. You can use a registered agent service company to act as your North Carolina registered agent. The company will protect your privacy, receive all service of process for your LLC, and ensure that your LLC remains compliant with state laws.
Registered agent service companies can also file your articles of organization to create your LLC. There are some benefits to using a registered agent service company:
- Privacy. Since your agent receives service of process, any business disputes go directly to them. Lawsuits and claims don’t go to your place of business or in front of your customers.
- Compliance. Registered agent service companies remind you of critical deadlines to keep your LLC compliant. If you miss an annual report filing or tax payment, your good standing in North Carolina is at risk. Plus, late fees are costly.
- Administrative services. Registered agent service companies can order documents for you, such as a copy of articles of organization or a certificate of existence.
- Availability. Your business may not be available during regular business hours to accept service of process. A registered agent service company is open to accept service of process Monday through Friday during regular business hours.
A domestic LLC is an LLC that filed articles of organization in the state.
If you have formed your LLC in North Carolina but would like to do business in another state, check that state’s Secretary of State website for details on registering your LLC in that state. Generally, you will have to do the following:
- Confirm you can use your business name in the state
- Complete a foreign LLC registration form
- Pay the state foreign LLC application fee
To legally operate an LLC you have formed in another state, you need to file an application for a certificate of authority. The state fee is $250. You will need to include a certificate of existence (sometimes called a certificate of good standing) from the state or country where you organized your LLC. This certificate should be less than six months old.
Before filing your application for a certificate of authority, you need to make sure that your LLC name is available in North Carolina. Checking for name availability is covered in more detail in step one above. If you discover that your name is unavailable in North Carolina, you must operate under an assumed business name by filing an assumed business name certificate.
To close your limited liability company, you must follow the dissolution process in North Carolina:
- Complete any dissolution procedures in your LLC operating agreement
- Close all LLC tax and business accounts
- File articles of dissolution for a limited liability company (Form L-07)
- Pay a $30 fee to the Secretary of State
Mail the articles of dissolution to the NC Secretary of State, Business Registration Division, PO Box 29622, Raleigh, NC 27626-0622. Checks should be made payable to the NC Secretary of State.
North Carolina does not offer an anonymous LLC, allowing owners to keep their identities private. Some states do offer this. If you are concerned about protecting your privacy, using a registered agent service enables you to use that company’s address for service of process.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
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