North Carolina LLC (6 Step Guide) – How to Start an LLC in North Carolina

Form a North Carolina LLC W/ Professional Help

If you’re looking for a way to give your new or existing business the step up it needs, you need to consider a North Carolina LLC. This business structure is a great way to give yourself protection from personal liability and keep your tax burden low.

With North Carolina, your business can benefit from the business-friendly policies this state offers. This state is one of the highest-rated states for business in the country, and it is easy to see why. With some of the best business taxes in the country, a large base of highly skilled workers, and a diverse assortment of industries. Let’s take a look at whether a North Carolina LLC is right for your business and how you can form your own North Carolina LLC in only six easy steps.

Why Would You Want a North Carolina LLC?

The reasons why you would want a North Carolina LLC are many. But let’s take a look at some of the core reasons that you should consider a North Carolina LLC.

  • Flexibility: With a North Carolina LLC, your business can be organized however you choose. You also have the contractual freedom to distribute ownership rights and earnings however you choose.
  • Limited Personal Liability: A North Carolina LLC will protect your personal assets from being held accountable for the debts of your business. Just like a C-type corporation, so long as you completely separate your business and personal assets, the latter will be completely safe, which means no worry about losing your house, car, or personal bank account.
  • Pass-Through Taxation: With a North Carolina LLC, you don’t need to worry about double taxation, a financial burden that C-type corporations must deal with. Instead, the earnings simply pass through the business right to its owner’s personal tax return. This is a big advantage for LLC’s which can receive the same protection from liability for their owners but also the same tax benefits of a sole proprietorship.
  • You Live and Reside in NC: It’s always a good idea to start an LLC in the state in which you currently reside, in order to avoid possible double-taxation.

Quick North Carolina LLCs Pros & Cons

Now before you settle on this structure for your business, it is important to give quick consideration to the advantages and disadvantages it can offer your business. So, let’s take a look at some of the most important.

Pros of a North Carolina LLC

As we said, North Carolina is regarded as one of the best states for business in the country, and there is certainly a reason for it. This includes:

  • A Diverse and Fast-Growing Economy: North Carolina already has more than 128,000 LLCs actively doing business, and every year, more than 30,000 new ones are formed. With the tenth largest population and economy, your business will not be alone.
  • Significant Flexibility: The state of North Carolina specifically codifies in its LLC Act that members of an LLC should have the maximum freedom of contract in creating their operating agreement.

This specifically means that North Carolina LLC owners will have the ability to customize the investments of capital that every member will contribute, what share of earnings they will receive, and what rights they will receive as a member. This offers those forming an LLC an incredible ability to customize how their business is owned and run.

  • Privacy in Formation: Owners of a North Carolina LLC can receive considerable privacy in forming their business. This includes that the state does not restrict owners of an LLC from having a business file on their behalf. This means that the LLC’s owners do not have to be listed as the organizer on the formation documents leaving them at greater privacy.
  • Perpetual Duration: North Carolina’s LLC Act allows for LLCs to have a perpetual duration. This is perfect for business owners that would like to pass down their company to heirs or otherwise outlive its members.
  • Keep Unwanted Business Partners Out: With a North Carolina LLC, members don’t need to worry about losing control of their company to others. In the LLC’s operating agreement, members can specify that if a person allows a lien, security interest, or other control over their membership interest, they will cease to be a member. The operating agreement may additionally prohibit members from assigning their membership interests to others, and even should the documents fail to make such provisions, there are still protections. If a member does make an assignment, that individual will not gain the right to exercise membership rights; instead, they will only gain the financial interests to which the member would have been entitled. Before such an individual may become a full member, every other member would need to consent.
  • Protection From Creditors: Unless the LLC’s operating agreement provides otherwise or the members give consent, an individual will lose their membership rights should they voluntarily make an assignment for creditors, volunteer, or be declared bankrupt, fail to contest a judgment of liquidation or similar actions. If a creditor does gain a charge against a member’s interest, they will only gain the financial benefits to which the member would have been entitled. They will not possess any control over the business without the operating agreement either providing for it or the members unanimously consenting to the arrangement.

Cons of a North Carolina LLC

As with any state and business structure, there are some disadvantages that you should consider as well before forming your business here. This includes:

  • High Filing Fee for Annual Reports: Every LLC is required to file an Annual Report that contains some basic details about the business. This is generally quite easy and required in just about every state. However, North Carolina charges a far higher fee than most states. Though certainly not unmanageable, the fee is a surprisingly high $200.
  • Costly Permits for Many Industries: Many businesses will have to file for a permit to serve alcohol. However, many entrepreneurs may not expect that they will have to file for a separate license for different categories of drinks, each with its own costly filing fee. Business owners should expect each of these permits to run several hundred dollars. Though these costs will still prove minimal over time, they are a fairly high upfront expense to get started.

How to Form Your North Carolina LLC in Six Easy Steps

Now that you have given some thought to a North Carolina LLC, let’s talk about how you can form one. Fortunately, it is a completely manageable process that you can do in only six steps. So, let’s get started

Step 1: Pick a Name for Your North Carolina LLC

Choose-your-LLC-Name-1

Naming your North Carolina LLC is the first step you need to accomplish. This is generally one of the most fun parts of starting your business, and chances are you have already given it some thought. Some things to keep in mind are that you will need to add a designator onto the end of your business name, and your LLC’s name must be unique. Otherwise, it will be turned down when you go to file for your LLC. To prevent this from happening, you will need to do a business name search.

Perform a Business Name Search

To perform a business name search, you will use the search tool on the North Carolina Secretary of States website. Simply select a company and your search criteria generally “any words” will be best, and type in keywords from your chosen name. Hit search and check the results.

If there are any results, take a look at their names and see if they are too close to the one you are considering. If so, then you will need to pick another name. However, if there are no results or they are easily distinguishable from your own, then you are good, and your name can likely be registered.

However, to ensure you can actually use your business name freely, it is a good idea to check if any part of it has been trademarked as well. First, go ahead and check the North Carolina Secretary of State’s Trademark Registry. This will help you to ensure that no part of your name has previously been registered as a trademark or service mark by another business.

You can go a step further by checking the U.S Patent and Trademark Office and see if there are any nationally registered trademarks or service marks that may conflict with your chosen name. This is always good to check before you go making any branded merchandise.

Also, though it is not ordinarily an issue, remember that you cannot include words that might lead customers to mistake your business as providing certain services or possessing another structure. This means no words such as a bank, university, realtor, or university unless you provide additional documentation showing that you are actually going to perform the service.

Plus, unless you change your mind and go to form a different structure, no words such as Inc. or nonprofits. You will need to add the proper identifier to the end of your name. This can be a Limited Liability Company or its abbreviations such as “L.L.C.” or LLC.

Check For An Available Domain

For most businesses, you are going to want to have a business website. You may not want one now, but down the line, it is a good idea so that you can connect with customers and let potential customers find your business. For this reason, you will want to check if there is a suitable domain available that will match your chosen name. That way, customers can easily find your website.

Similarly, you will likely want to create social media accounts for your business as well. This is critical for many businesses and can help to connect with customers and get an idea of how people are reacting to your business. So, check if a suitable handle is available on major platforms such as Facebook. If you can’t find a suitable domain and handle, you may want to reconsider your chosen name.

Reserve your Chosen LLC Name

You do not need to reserve a name at all if you are going to file your Articles of Organization soon. However, if you are going to wait a while before filing, it may be a good idea to reserve your chosen business name to ensure it will still be there when you go to file. You can fill out the name reservation form and submit it to the Secretary of State with a filing fee of $30 and reserve your name for 120 days. After this time, you will not be able to renew the reservation, and anyone will be permitted to use the name.


Step 2: Appoint a Registered Agent for Your North Carolina LLC

Appoint-Registered-Agent

You will need to choose a registered agent to receive official documents on your LLC’s behalf. This important position will be listed with the state on the public record and will serve as the contact point for all official correspondence. These official documents may include tax forms, reminders of official filing deadlines, service of process, and many other important documents.

Your options are pretty open when it comes to whom you can choose as your LLCs registered agent. You and pretty much anyone else you choose can serve as the registered agent so long as they have a physical street address within North Carolina. The registered agent must then be at that address during all regular business hours in order to receive any delivered correspondence; as long as an individual is over 18 and meets these qualifications, they may serve as your official registered agent.

However, most business owners go another route and choose a registered agent service to act as their official registered agent instead. There are several reasons for this, including:

  • Privacy: Your North Carolina LLC’s registered agent is required to provide their name and address on the public record. A registered agent service will place their business name and address on this file keeping your own information private.
  • Flexibility: With a registered agent service, they will be ready to receive official correspondence at all times. This means you don’t have to worry about penalties for failing to be present when official correspondence arrives.
  • Out of State Business Owner: For business owners who don’t intend to live in North Carolina, a registered agent is generally needed, particularly if you do not intend to have a physical business location either.
  • Affordable: You can find registered agent services for as cheap as $100 annually, which is pretty affordable for the simplicity and ease of mind they can offer you.

Step 3: File the Articles of Organization

File-your-Atricles-of-Organization

This is the step that will actually form your LLC. You can file your Articles Of Organization online on the Secretary of State’s website or by mail. It will cost $125.  Whether you choose to file by mail or online, you will need the form, which can be downloaded on the Secretary of State’s website.

There is some information you will need for filling out your Articles Of Organization,  which include:

  • The name of your LLC
  • The names and addresses of the members and organizers of your LLC
  • The name and address of your registered agent
  • The principal office of your business ( There is an option on the form if your business does not yet have a principal office.)
  • Effective date, which can be up to 90 days after the date on your paperwork

If you file online, which is the far faster method, you will generally receive a response within five business days. However, if you choose to file by mail, give it up to two weeks for a response.

If you do file by mail, remember to include a check or money order for the filing fee. If you file online, you will need to download and fill out the documents before submitting them online, along with the filing fee. You can pay online with a credit or debit card.

If you file online, which is the far faster method, you will generally receive a response within five business days. However, if you choose to file by mail, give it up to two weeks. Keep in mind that if you are filing for your business near the end of the current year but do not intend to open for a while, it can be a good idea to set the effective date ahead up to a maximum of 90 days to the start of the next year to avoid the hassle of filing tax returns and other paperwork for a business that is not even running.

Notably, if you want to include more than three members on your Articles of Organization, you will need to attach another approved form in order to include everyone. However, keep in mind that not all of your members need to sign the form. In fact, none of your members need to at all. Another individual or business entity can act as the organizer of your LLC, and this is a popular choice that, in addition to a registered agent, can avoid your name and address ever having to be on public record. You can include all of your LLC’s members in your operating agreement instead, which is a good idea for maximum privacy.


Step 4. Make an Operating Agreement for Your NC LLC

Operating-Agreement-02

An operating agreement is something that every North Carolina LLC should have. This agreement will outline the structure of the business, the rights, and responsibilities of your members,  as well as how the business will be run. North Carolina does not require this agreement, but it is still a good idea to have one to avoid arguments between your members.

You want to include a number of details in your operating agreement,  such as the names of the members and their percentage of ownership,  what type of management your LLC will have, how voting rights will be handled, how profits and losses will be allocated, and what will happen if a member withdraws or you want to dissolve your LLC.  Including these details in your operating agreement will not only decrease the chances of having an argument but may even help prevent legal actions.

Although a number of these details apply more to multi-member LLCs, it is often recommended that even single-member LLCs have an operating agreement.  Also, you may want to have a lawyer look over your operating agreement to make sure that you’ve included everything you should. You can change your operating agreement if you need to, but you will want to have everyone sign the updated operating agreement.


Step 5. Obtain an Employer Identification Number (EIN)

Filing-for-an-EIN-1

The next step you should take is to obtain an Employer Identification Number (EIN).  Not all businesses need an EIN, but it is a good idea for all businesses to obtain this number.  An EIN is a nine-digit number similar to a Social Security number. An EIN is also sometimes known as a federal tax identification number. The IRS will use this number to identify your business. However, this number is useful for other purposes as well, such as opening a business bank account, applying for some business licenses and permits, and processing payroll for your employees.

Applying for an EIN

It is easy to apply for an EIN, and it doesn’t cost anything. You can apply online at the IRS website or by mail.  Applying online is the quickest and easiest way to get your EIN. When you apply online, you receive your EIN as soon as you complete the process. You just need to complete your application in one sitting as there is no option to save your progress.

If you choose to apply by mail or fax, you will need to fill out Form SS-4  and send it to:

Internal Revenue Service
Attn:  EIN Operation
Cincinnati, OH 45999

If you choose to apply by fax, the fax number is (855) 641-6935

For international applicants, you can apply for an EIN by phone. Just call between the hours of 6 a.m. and 11 p.m. Eastern Time. Also, make sure that the caller has the authority to answer the questions on Form SS-4 as well as receive the EIN.


Step 6: Open a Business Bank Account in NC

Open-a-Business-Bank-Account

One of the biggest benefits of forming an LLC is the limited liability it provides for its owners. With an LLC, people can start a business without worrying about losing all their personal assets should the business fail.  However, to maintain this limited liability, it is essential to separate any members’ personal finances from the business finances.

One of the best ways to do this is to open a business bank account. By opening this account, you’ll be able to keep your business transactions totally separate from your personal transactions.  Although, there are a number of advantages to opening a business bank account which you can see below.

  • Preserving Your Limited Liability:  With a business bank account, you can keep your business finances separate from your personal finances. This is important to do because if you fail to do this and get sued, the court could choose to remove your business’s limited liability.
  • Easier Bookkeeping:  Not having to look through all of your personal transactions to find your business transactions will make it a lot easier to keep track of your expenses as well as your revenue. This will also make it easier when it comes time to prepare your taxes.
  • Professional Image: Having a bank account will allow customers to write out checks to your business which will give your business a far more professional image than having customers write out their checks to you.  It will also allow you to accept credit cards, which many customers prefer to use.

Steps To Grow and Maintain Your North Carolina LLC

The work doesn’t stop with forming your North Carolina LLC. Here are a few steps you will need to take down the line to grow and maintain your business.

1. File your Annual Report

Annual-Report

North Carolina LLCs are required to file an annual report each year.  These reports provide the state with some basic information about your LLC and also give you a chance to update any information about your LLC that has changed.  When you file your annual report, you need to pay the $200 annual filing fee to the state of North Carolina. The report is due by the fifteenth of April of the year after you form your LLC. The state will provide a reminder of few weeks before the due date. If you do not file your annual report, your LLC will be automatically dissolved. Although, if you don’t file your report by the fourteenth of June, you may be notified of the pending dissolution of your LLC.

You can file your annual report online or by mail. If you file by mail, be sure to include a check or money order for $200 for the annual filing fee. You can send your annual report to:

Secretary of State
Corporations Division
PO Box 29525
Raleigh, NC 27626-0525


2. File Your Taxes in North Carolina

Pay-your-Taxes

You may need to register your  LLC with the North Carolina Department of Revenue. This will really depend on what type of business you are starting. You will be required to file state income taxes along with any other tax documents that are appropriate for your business. You can contact your local government officials to see which taxes you do need to pay, or you can ask a tax professional.


3. Consult a Tax Professional

It’s important to get your taxes right to avoid any penalties. You also want to make sure that you are not paying any more than you need to. So, to do the best job possible on your taxes, it can be a good idea to consult with a tax professional.


Form a North Carolina LLC With Professional Help Today

Often entrepreneurs are hard-pressed to find time between work and family. So, if you need a little help forming your North Carolina LLC, these are some of the best services to help get your business started.

#1: Start an LLC in NC With ZenBusiness

ZenBusiness hasn’t been around as long as a number of the other LLC formation services. But, they provide excellent service, and their good customer reviews show this. ZenBusiness has reasonable prices and good features. They offer a free operating agreement with all of their packages, which is something every LLC should have.  Additionally, they include worry-free compliance with their packages which alerts you to any upcoming filing deadlines with the state to help you stay in good. ZenBusiness also offers 25% off of registered agent service with any of their packages which will save you money on a service most LLC owners need.

$49

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Form an LLC today with ZenBusiness for only $49. They Have 98% customer satisfaction rating and over 4500+ verified reviews.


#2: Start an LLC in NC With Incfile

Incfile is one of the best LLC formation services available for people who want to form an LLC on a budget. Incfile is one of the few LLC formation services that offer a free package. You just need to pay the state filing fee. Incfile also provides some great features with their packages. They include a year of free registered agent service with all of their packages and free lifetime company alerts. These alerts will inform you of any upcoming filing requirements with the state. Additionally,  the packages include a one-hour free business tax consultation.

Use our special promo and get your LLC started today with IncFile! Hassle-free, cheap and quick.


Final Thoughts

North Carolina is always near the top of the list when it comes to great states to do business. So, if you are looking for a great state to get started, then look no further! With just a little bit of work, you can get your North Carolina LLC off the ground and start doing business in no time.


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About the Author
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Founder & author

Ian Broderick is an avid author and owner of LLCGuys.com. He's been involved with the LLC formation field for over 4 years. On top of that, he has worked in several well-known LLC formation service providers. Now he decided to share his knowledge and advice with everybody. Since there are a lot of questions and concerns surrounding this field - his aim is to make LLCGuys a top-notch information provider in regards to LLC creation, service reviews and etc..

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