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.

To avoid a misstep in the filing process, follow these steps to start an LLC in North Carolina, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.  

Find more information on starting an LLC here.

 

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.

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

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

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 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.

4. Draft 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 North Carolina LLC’s additional legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.  

File annual reports

All LLCs active in North Carolina are required to file an annual report with the Secretary of State each year. This includes the year an LLC was formed if it was formed on or before April 15 (LLCs formed after this date can wait until the following year to file its first annual report.

An annual report can be filed online or by mail. The mail filing fee is $200 and the online filing fee is $202.   

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. 

Obtain business licenses and permits

Certain North Carolina LLCs may be required to obtain one or more state or local business licenses, permits, or certifications depending on the nature of their business and their location. 

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. 

For guidance on how to comply with local regulations, contact a city or county clerk in the area where your LLC is located.

North Carolina LLC checklist

Naming requirements:

A North Carolina LLC’s name must obey the following guidelines:

  1. Must be distinguishable from the names of existing businesses on file with the North Carolina Secretary of State. 
  2. 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.

Formational documents and filing fees:

Registration procedure:

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

Additional legal obligations:

  • File annual reports – Required for all LLCs doing business in North Carolina, foreign and domestic
  • Register with the North Carolina Department of Revenue – Required for certain North Carolina LLCs
  • Obtain business licenses and permits – Required for certain North Carolina LLCs