How to Start an LLC in North Carolina (Step-by-Step Guide)

When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

Forming an LLC in North Carolina follows a standard process without atypical requirements, making it easy for entrepreneurs to start a business in the state.

Starting an LLC in North Carolina step-by-step

1. Select a name for your North Carolina LLC

Follow naming requirements

There are 2 major guidelines to follow when naming your LLC in the state of North Carolina:

1. An LLC’s name must be distinguishable from the names of existing businesses on file with the North Carolina Secretary of State.
2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, or “L.L.C.” The combinations “ltd. liability company”, “limited liability co.” and “ltd. liability co.” are also acceptable.

Need help coming up with a business name? Check out our free business name generator.

Check the availability of your LLC name

Confirm that your chosen LLC name is available in North Carolina by performing a search with the Secretary of State Business Search.

Reserve your LLC name with the Secretary of State

Reserving your LLC name with the North Carolina Secretary of State is a good idea because it protects the name from being used by another business entity before your LLC is legally formed in the state.

File an Application to Reserve a Business Entity Name by mail to reserve a name for up to 120 days. The filing fee is $30.

2. Designate a registered agent

As in every U.S. state, forming an LLC in North Carolina requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.

The registered agent must either be a state resident or business entity with a street address in North Carolina OR if the individual or business is based out-of-state, they must have a business office in North Carolina.

3. File Articles of Organization

An LLC is legally formed in North Carolina through the filing of Articles of Organization with the North Carolina Secretary of State.

The Articles of Organization must provide the following details:

• LLC’s name, principal office address, email address (optional), and phone number
• Registered agent name and address
• Date Articles become effective (if not immediate)
• Names and addresses of the signers of the Articles
• The signature of one LLC member, organizer, or representative

The filing can be done online (must create an account) or by mail. The filing fee is $125.

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in North Carolina, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN)

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your legal obligations

Once your LLC is officially formed, the journey to establish and grow your business is just beginning. The next steps will set the stage for your company’s operational success and compliance with state laws.

File annual reports

Any LLC that does business in North Carolina will need to file an annual report each year through the North Carolina Secretary of State. These reports are due on April 15th, beginning in the calendar year after the LLC formation date.

The filing fee is $200 for paper formats and $203 to be filed online.

Obtain business licenses and permits

There is no single general business license that all LLCs in North Carolina need. However, almost all LLCs will need some kind of licensure, depending on their type of business and other factors.

• Business tax license: Because North Carolina has sales tax at the state level, businesses that sell products or provide services will need to collect these taxes and pay them back to the state appropriately. To do so, the LLC must register for Sales and Use Tax through the North Carolina Department of Revenue. There is no fee to receive your certificate of registration.
• Occupational licenses: Businesses that provide professional services, like lawyers and accountants, and other industries may have their own requirements based on regulatory bodies. These occupational licenses will have different requirements and processes, and not every business will need them, but it is important to verify if your LLC does.
• Local licenses: Regulations can also vary between cities and counties within North Carolina, and each municipality can have its own requirements for licenses and permits.

Check out the North Carolina Secretary of State’s Business Licensing Guide to determine what licenses you may need. For information on local licensing requirements, contact a city or county clerk in the area where your LLC is based.

Check the NC Governor’s Boards and Commission Profiles directory for links to the state boards and commissions that regulate your LLC’s industry. The individual sites will have instructions on how to obtain the necessary licenses and permits to legally operate in the state.

Understand state taxes

For tax purposes, North Carolina LLCs are typically treated as pass-through entities, meaning the profits and losses of the business pass through to the owners’ personal tax returns, avoiding the double taxation faced by C corporations. However, LLCs can also elect to be taxed as corporations if that proves more beneficial for their financial circumstances.

• North Carolina tax rates: Members are taxed according to North Carolina’s personal income tax rates, which are 4.5% as of 2024 and will decrease over time.
• Self-employment taxes: LLC owners are subject to self-employment taxes, which cover Social Security and Medicare obligations. This tax is calculated based on the net earnings from self-employment, requiring LLC members to pay both the employer and employee portions of these taxes.
• LLCs with employees: An LLC with employees is responsible for withholding payroll taxes, which include federal taxes, Social Security, and Medicare taxes from employees’ wages. Additionally, the LLC must federal and state unemployment taxes and workers’ compensation insurance costs.

Most LLCs need to register with the North Carolina Department of Revenue to properly pay sales and other taxes. You can complete this business registration and obtain a state tax ID through the NCDOR website.

Register with the North Carolina Department of Revenue

Some LLCs active in North Carolina must register with the North Carolina Department of Revenue in order to fulfill state tax obligations. This includes LLCs that collect sales tax and those with employees.

You can register to pay state taxes online on the DOR website.

Understand BOI reporting

As of January 2024, the Beneficial Ownership Information (BOI) Reporting Rules, were initiated by the Corporate Transparency Act (CTA) and must be followed by LLCs in North Carolina.

These rules aim to increase transparency by requiring most US companies, including LLCs and corporations, to report information about their beneficial owners to FinCEN, a government body focused on tracking financial crimes. This reported information includes details like name, address, and date of birth for any individual with significant control over the company, helping to combat money laundering and other illicit activities.

Filing deadlines:

The rules set different deadlines based on when a company was established in relation to the rules:

• Entities in existence before the start of 2024 have until the end of the calendar year to submit their initial report.
• Those established or registered after the start of 2024 have 90 days after their formation notice to file.
• Businesses registering in 2025 have 30 days to submit their report.

The submission process is all done via FinCEN’s dedicated BOI reporting system.

Learn more about BOI Reporting.

Post LLC tasks

Set up business bank accounts

Although it’s not legally required, having a separate business bank account is important for LLCs. It helps keep personal and business money apart, which is essential to protecting personal assets under the LLC structure. This separation makes managing your books, taxes, and business spending easier and makes your business look more professional to clients and suppliers.

For LLC owners looking for good banking options, platforms like Found, Relay, and Mercury are excellent choices. These services are tailored for small businesses and offer online banking, low fees, and tools that help manage your finances more easily. These features make them great for LLCs that want to keep their financial operations smooth and efficient.

Obtain a Certificate of Existence

Upon request, North Carolina provides businesses with a “Certificate of Existence,” an optional document that confirms a business’s legal compliance within the state.

• What it is: The “Certificate of Existence” in North Carolina serves as official proof that a business is duly registered and compliant with state regulations. It verifies that the business has met all legal requirements, including filings and fee payments, which are necessary for lawful operation within the state.
• How to get it: To obtain this certificate, businesses must go through the North Carolina Secretary of State’s office. Online processing costs $12 and allows for immediate access to the document; for $15, you can receive a copy in the mail within 4 business days plus mailing time.

Build a website

No matter what type of business you are starting, creating a website is crucial for getting off the ground. It is highly advisable for an LLC to establish a professional online presence, which not only makes it easier for potential customers and partners to find you but also allows you to showcase your products or services, build trust, and attract new business.

Follow these steps to get started:

1. Select a domain name that reflects your business name or industry and register it through a reputable domain service.
2. Pick a hosting provider that suits your budget and technical needs. Consider factors like uptime, customer support, and scalability.
3. Choose a website builder like GoDaddy or Domain.com, which offers customizable templates and design flexibility.
4. Before going live, thoroughly test your site on different devices and browsers to ensure it works smoothly. Make sure all links are functional, and the layout looks good on both desktop and mobile. Then publish it!

Costs to set up an LLC in North Carolina

LLCs are known for being a cost-effective way to start a business, but there are still costs to consider for new business owners in North Carolina.

• Incorporation fees: The most important cost when starting your LLC is the state fee for filing your North Carolina Articles of Organization. There is a $125 fee to file online, by mail, or in person through the North Carolina Secretary of State’s office.
• Annual Report filing fee: North Carolina requires LLCs to file an annual report every year, starting in the year after they were formed, and due by April 15th. Depending on when you start your LLC, this may be due quickly, or you may have some time. Filing can be done online for $203 or by mail for $200.
• Registered agent services fees: In North Carolina, every LLC is required to appoint a registered agent to handle official correspondence and ensure legal compliance. Business owners can act as their own registered agents, but because they are required to be available during all business hours, some choose to hire a service. The cost of a registered agent service typically ranges from $50 to $300 annually, depending on the level of services provided.

Foreign LLC registration

An LLC formed outside of North Carolina that intends to do business in the state must register with the North Carolina Secretary of State.

Follow these steps to do business in North Carolina as a foreign LLC:

1. Comply with North Carolina LLC naming guidelines and confirm that your LLC’s name is available for use in the state using the Secretary of State Business Search.
2. Appoint a North Carolina registered agent.
3. File an Application for a Certificate of Authority For Limited Liability Company with the North Carolina Secretary of State. The application can be filed online or by postal mail. The filing fee is $250. The certificate must be accompanied by either a Certificate of Good Standing or a Certificate of Existence from LLC’s state of origin that is less than six months old.