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There’s a reason Forbes has put North Carolina in the top 5 best states to start a business, for 12 consecutive years. It’s because North Carolina is dedicated to making it easier for businesses to do business.
From having the lowest corporate income tax in the U.S. and a favorable legal climate to the low cost of doing business and the tons of qualified talent, everything about North Carolina is designed to promote entrepreneurship.
In this blog post you’ll learn step by step how to start your LLC in NC, so you can start living your dream.
Let’s get started!
Table of contents
- Choose a Business Entity for Your LLC in NC
- Create a Business Name
- North Carolina LLC Registration
- North Carolina LLC Filing Fee
- Get Your Employer Identification Number or EIN
- Assign a North Carolina Registered Agent for your LLC
- Open a Business Bank Account
- Tax and Regulatory Requirements
- File Annual Renewals
- Getting Started with Your North Carolina LLC
Choose a Business Entity for Your LLC in NC
To understand how to start an LLC in North Carolina, you need to understand entity formation. Limited Liability Companies (LLCs) and Corporations are the most popular business types. We’ll be focusing on LLCs in this post, but it’s important to know the difference between LLCs and corps.
Corporation
A corporation is a legal entity that courts consider to be separate from those who own and operate it. A corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S corporation and C corporation.
Limited Liability Company (LLC)
LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, LLC formation protects the owner’s personal assets and also shields them from personal liability similar to a corporation. They also possess the “pass-through” tax benefits of a partnership.
There are two types of LLCs. LLC run by just own person (single-member LLC) and LLCs run by multiple people (multi-member LLCs)
Starting a LLC in NC can be difficult and confusing, especially as a first time business owner. But with a company like Inc Authority in your corner, you’ll not only have your LLC formed for you, but you’ll also get expert guidance beyond business formation, so you can expertly enact your business plan of action.
What About DBAs?
DBAs (which stands for “doing business as”) grant business owners the ability to conduct business under an assumed name. A DBA is also referred to as a fictitious business name and is an authorization by the state for your business to operate under an assumed name.
For sole proprietors and owners of LLCs, DBAs offer an affordable way to gain legal recognition for the secondary name of your choice.
- Sole proprietors: For sole proprietors starting a new business, DBAs are a budget-conscious way to gain legal status and work under a creative company name.
- LLC owners: If the name on your LLC paperwork and your business name differ, DBAs offer the opportunity to operate as an LLC under a different legal name.
A DBA provides privileges like the ability to open a bank account, create enforceable contracts and establish federal employer tax status (getting an EIN). It’s possible to file multiple DBAs, allowing a single LLC to operate different businesses under the same legal umbrella. If you’re starting a business or expanding your LLC in NC, get the proper legal recognition early on to start off on the right legal footing.
Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!
Create a Business Name
Forming an LLC in NC also requires you to figure out your corporation or LLC name and reserve that name. Name reservation is actually one of the biggest decisions you’ll make. It may not seem as important as choosing the type business entity, but it is. As a matter of fact, many legal issues can arise from choosing the wrong name for your business startup. So, let’s look at how to register a business name in North Carolina:
Follow the naming guidelines:
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
- Your name must be distinguishable from any other North Carolina limited liability company, corporation, limited liability partnership, or limited partnership.
For a complete list of naming rules in North Carolina, you can read the North Carolina Secretary of State’s guidelines.
Under North Carolina law, an LLC name must contain the words “Limited Liability Company” or the abbreviation “LLC.”
North Carolina LLC Registration
Let’s take a look at business registration in NC, including payables such as the cost, government fees, and so on.
North Carolina LLC Filing Fee
The North Carolina Secretary of State charges $125 to file the Articles of Organization (or Articles of Incorporation if you’re starting a corporation). This can be filed by mail or in-person. You can file an LLC name reservation for $50 if filed by mail and $55 if filed online or in-person. You are also required to file an Annual Renewal each year. It costs $25 to file this renewal by mail and $45 if filed online or in-person.
Articles of Organization
To register your North Carolina LLC, you will need to file Form L-01 – Articles of Organization with the Secretary of State. You can apply online, by mail, or via PDF upload. The articles must include:
- the LLC’s name
- the name and address of the LLC’s registered agent
- the name, address, and signature of the LLC’s organizer, and
- an email address and phone number.
Operating Agreement
An LLC operating agreement is not required in NC, but it is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
Issues that should be defined by your LLC Operating Agreement include:
- Member powers
- Rules for meetings
- Members’ voting rights
- How your LLC will be managed
- Guidelines for losses and profits
- Buyout provisions
Once the operating agreement has been adopted, it will provide protection for the members of your LLC. When the members of your LLC have agreed on the terms of your operating agreement and have signed the document, you should keep the agreement in a secure location.
You can handle all of this paperwork yourself, or let Inc Authority handle it for you!
| North Carolina State Filing Fee: | $125 |
| North Carolina State Filing Time: | 2 weeks |
| Annual Report | $202 (online) / $200 (in person) |
Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!
Get Your Employer Identification Number or EIN
The next step you’ll want to tackle is getting your EIN or Tax ID number (TIN). This number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.
Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services and credit cards, and pay for any LLC cost that NC laws require.
To apply for your EIN, you’ll need to complete form SS-4, which can be found on the IRS website.
Assign a North Carolina Registered Agent for your LLC
There are an estimated 38 million home-based businesses in the U.S., so if you’re thinking about starting a business in your home, you’re definitely not alone.
But did you know that by law, all businesses are required to have an address where they can accept service of legal documents (like a service of process) from the state or government agencies during normal business days and hours? Without an office address, that would be your street address or P.O. box.
As you can imagine, that’s not always possible (or advisable) with a home-based or foreign-filed business. That’s where a registered agent comes in.
A registered agent is a responsible third-party in the same state as your business who receives official government notifications (usually tax forms and notice of lawsuits) on behalf of your small business in NC.
Even if you aren’t planning on starting a home-based business or foreign LLC, having a registered agent is still advisable because it will:
- Limit third party access to your personal information
- Ensure that you never miss important documents
- Protect the privacy of owners
- Eliminate junk mail
- Ensure you’re never served with legal papers in front of your clients
- And more!
Ensure all your business needs are met by hiring a professional registered agent.
Setting up a Registered Agent Service
The registered agent must be a North Carolina resident, a North Carolina business entity, or a foreign business entity authorized to do business in North Carolina. Your LLC may not act as its own agent. The registered agent must have a physical street address in North Carolina.
Lastly, in North Carolina, an annual report is a regular filing that your LLC must complete every year. The report is essentially updating your registered agent address. All LLC owners are required to file their annual report with the North Carolina Secretary of State. The purpose of this report is to keep your business records up to date with the state of North Carolina.
Learn more about our registered agent services here.
Open a Business Bank Account
To keep your personal and business expenses separate and to stay in good standing with the Internal Revenue Service (IRS), you need to open a business bank account for your LLC or corporation.
Setting up a separate bank account for your company makes it easier to for you do business, manage a cash balance, complete, and file your income tax returns with the North Carolina Department of Revenue, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. Bank accounts also provide better protection in the event of legal action.
Additionally, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions.
Tax and Regulatory Requirements
Additional business tax (federal tax) and regulatory requirements may apply to your North Carolina LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN). This is necessary even if it has no employees. If you form a one-member LLC, you must obtain an EIN only if you elect to have it taxed as a corporation – instead of a sole proprietorship (disregarded entity). Additionally, you may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses. For local licenses, check with the clerk for the city where the LLC’s primary place of business is located (or county if it is in an unincorporated area). For state license information, check the State of North Carolina E-licensing portal.
Department of Revenue: In some cases, if you have employees or will be selling goods and collecting sales tax, you’ll need to register with the North Carolina Department of Revenue (DOR). You can register online using the DOR’s e-Services webpage.
File Annual Renewals
All LLCs doing business in North Carolina must file an annual renewal once every calendar year with the North Carolina Secretary of State. You can file the renewal any time before December 31. Even better, you can file the renewal online or by mail. The fee for an LLC to file their annual report is $202 to file online and $200 to file a paper version.
Getting Started with Your North Carolina LLC
Forming a professional LLC or corporation in North Carolina is an exciting opportunity, but like starting any business it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?
We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the business resources you need, including the licenses and permits needed to run your business. We can also advise you on the things you need to pay, such as LLC cost, NC state fees, and other payables.
Not to mention we offer a ton of free management and report tools to help make running your business as simple as possible. You can contact us or visit our website today to get started!
Incorporating is the most powerful thing you can do to legitimize your business. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your free LLC today and enjoy the protection due to you and your business under the law.
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