Setting up your business in the state is easy if you know how to start an LLC in North Carolina. That stays true even if you’re hiring an agent or company to take care of the setup process. Staying informed is the way to get the best results.
An LLC or limited liability company is a structure that keeps your personal assets safe in case your business is sued. Personal liability protection is what makes LLCs a very popular choice for businesses. Your North Carolina LLC can also be used to hold assets like real estate, vehicles, etc.
Setting up an LLC needs a few steps, and this quick guide will take you through them. The cost of setting up an NC LLC is a $125 fee for filing the Articles of Organization. The Annual report has a filing fee of $200 and must be filed every year. Let’s know more.
1. Naming Your North Carolina LLC
Finding a good name for your North Carolina LLC is the first step. The name you choose should be “distinguishable upon record”. That means it cannot be the same or very similar to existing entity names registered with the NC Secretary of State.
A good way to go about this is to do a quick search at the Secretary of State website. This database will give you a good idea of the possible existence of similar names. It’s also a good idea to keep 2-3 options for names. That way, if the first one is taken, you can try the next best choice.
As you think of a name, it’s also worthwhile to check the USPTO Website. This can help keep you clear of running foul of existing trademarks.
NC LLC Name Designators
The name of an LLC in North Carolina should end with a proper designator. Accepted designators usually include ‘Limited Liability Company’ and its variants. These include:
- Limited Liability Company
- Ltd. Liability Co.
- Ltd. Liability Company
- Limited Liability Co.
2. Appoint A North Carolina Registered Agent
Any LLC in NC must maintain a registered agent in the state at all times. A registered agent is a person or entity that receives ‘service of process’ on behalf of your LLC. This includes, but is not limited to legal information, lawsuits, summons, and subpoenas.
Failure to maintain a registered agent can result in the state administratively dissolving the offending LLC. Technically, anyone over the age of 18 can serve as the registered agent, provided they’re a legal resident of the state and have a valid street address. PO box addresses are not permissible.
Additionally, an entity can serve as the registered agent for your LLC. This is how commercial registered agents are available. If you have multiple companies/entities/businesses, one of them can serve as the registered agent. However, an LLC can’t be its own registered agent.
Hiring commercial agents is fairly popular since they can handle the task professionally. This may also provide a benefit in terms of privacy since the address of the registered agent of a company is entered into the public record.
3. Articles Of Organization NC
Filing the Articles of Organization NC means that you’re prepared to register your company. This document must be filed with the Secretary of State of NC. Once the articles are approved by the state, your LLC can come into existence.
It is possible to specify a future/delayed date for the Articles of Organization to come into effect. You can add this date when filing the Articles of Organization. A delayed effective date can go up to 90 days after the day of filing.
You can register the LLC in NC by filing the documents online, via mail, or in-person.
Filing the documents online is the simplest and most effective way. The NCSOS website offers “interactive tools” to submit the documents online. The filing fee of $125 can be paid by using most credit or debit cards.
When you access the website for the first time, you’ll be asked to create a (free) ID and password. Once you’re done, the process is fairly simple and straightforward.
Filing the Articles of Organization NC via mail or by walk-in requires filing Form L-01. Apart from the name of the LLC and registered agent, the form also requires listing all members/organizers of the LLC.
Even if you choose to download the form, it is possible to upload it online through the PDF upload portal on the SOS website. NC also needs a cover sheet for corporate filing, available with the forms provided on the NCSOS website. Should you choose to mail it, the address is:
North Carolina Secretary of State
PO Box 29622
Raleigh, NC 27626-0622
The filing fee can be sent as a check or money order payable to ’NC Secretary of State’.
NC LLC Approval Times
When you submit the Articles of Organization to form an LLC in NC, the approval process comes into action. The time it takes can vary depending on the mode of submission of the documents.
For documents filed online, the NC LLC usually gets approval within 3-5 business days.
Documents filed via mail usually get approved within 4-6 business days.
You can expedite the process, though this will increase your NC LLC cost for filing.
- Same day guaranteed filing for documents received by 12 noon ($200)
- A 24-hour guaranteed filing ($100)
Do note, these filing costs are separate from the $125 filing fee.
If the state accepts the documents, you’ll receive a stamped and approved copy of the Articles of Organization, and a Cover Letter acknowledging the formation of your NC LLC.
4. Operating Agreement For Your NC LLC
An Operating Agreement is an internal document of your LLC. It doesn’t need to be filed with any government agency. Nevertheless, it is important to have an agreement in place. In essence, this can be the document that governs the operation of your LLC.
The agreement, for example, can contain information on how much of the company is owned by each member, approach to taxation, distribution of profits/losses, and more. As such, this agreement can help with the operation of the LLC.
If necessary, it may also provide a method of dispute resolution between the members. Responsibilities, by-laws, hiring arrangements, etc. can form a part of this agreement.
While this may not appear important for single-member LLCs, it’s still a good idea to have an operating agreement.
5. Get A Federal Tax ID (EIN)
Apply for a Federal Tax ID for your LLC only after the Articles of Organization have been approved. Getting an EIN (Employer Identification Number) is relatively easy and free. All you have to do is to file a form with the IRS.
In most cases, you can file for the EIN online. However, in case this is not possible, you can download and fill form SS-4. It’s possible to file this form with the IRS via mail or fax.
Form SS-4 is especially relevant to LLCs that are owned by another LLC or entity, or if the person requesting is a foreign national or someone without an SSN.
Getting an EIN is important for hiring employees for your LLC. You’ll likely need it for setting up bank accounts and getting credit cards for your NC LLC. These activities also help build credit for your company, which can come in pretty handy.
6. Filing Annual Reports For Your North Carolina LLC
Every LLC in North Carolina must file an annual report with the secretary of state. The report is due by April 15 every year, except the year in which the LLC was formed. For example, if your LLC was formed in Jun 2020, you’ll have to submit the annual report by April 15, 2021. This is a recurring requirement and must be completed every year.
Failure to file the annual report can invite action from the state. LLCs that go 60 days (or more) beyond the due date risk getting administratively dissolved by the state.
Annual reports require a filing fee of $200. You can file the report online or via mail.
Filing it online makes more sense since it’s convenient and quick. As the SOSNC website says, “You may file your annual reports online. This process is a real-time filing, which means you have completed the filing as soon as you click submit.” That makes it super easy and convenient. The filing fee can be paid using a debit or credit card.
If you choose to file via mail, remember to include a check or money order for the filing fee. When filing a paper annual report, you can download a pre-populated form. The completed form can be mailed to:
Business Registration Division
PO Box 29525,
Raleigh, NC 27626-0525
7. Licenses And Permits
When you’re ready for business, it’s time to look for the licenses and permits needed to run your company. This requirement varies by the city or county where you’re running your business. The local authorities may choose to require specific licenses or permits.
Similarly, state permits are needed for some industries. NC doesn’t offer a single generic business license, so you’ll have to check if your business needs specific permits. For reference, the state offers more than 700 regulatory state-issued licenses and permits.
Business owners can seek advice through Business Link North Carolina (BLNC). This is a partnership with the NC Department of Commerce and provides free consultation. BLNC can be reached online through this link, or via phone at 1-800-228-844.
There is no avoiding the tax man. Your LLC must consider taxation relevant to the local, state, and federal levels.
Local taxation varies depending on the city/county of the operation of your business. State taxation can vary depending on the industry, revenue, and other aspects of your LLC.
Federal taxation for LLCs is usually ‘pass through’, which means the profits/losses can be a part of the returns you file with the IRS. Efficient tax management and compliance are important, so it is useful to consider hitting the services of a professional.