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Beginners Guide To Start A North Carolina LLC

Beginners Guide To Start A North Carolina LLC

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Beginners Guide To Start A North Carolina LLC

Are you thinking about starting your own small business in North Carolina? If so, you’ll need to decide what business structure to use. One popular option is a Limited Liability Company (LLC). A North Carolina LLC offers several benefits, including limited liability for its owners and flexibility in how it’s taxed.

In this guide, I’ll provide an overview of the process of starting an LLC in North Carolina and also highlight some of the key things you need to know before you get started.

Related: How to start a business in North Carolina

Why choose an LLC?

An LLC is a type of business structure that can help protect your personal assets in the event that your business is sued. Unlike a sole proprietorship or partnership, an LLC provides its owners with limited liability protection (like the corporation, but the LLC is not as complex to start and run), which means that their personal assets are separated from the assets of the business.

The liability protection of an LLC is important because it generally protects the owners (who are called members) if the business is sued. There are also potential tax benefits to the LLC as LLCs have some options in how they’re taxed. By default, they’re treated as pass-through entities, but they can choose to be taxed like an S corporation, which is generally more beneficial once the business is profiting over $40,000 per year. This flexibility allows LLC owners to pick the tax treatment that results in the lowest overall tax.

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Steps To Form A North Carolina LLC?

Step 1: Choose a Name for the LLC

One of the first steps in forming a limited liability company (LLC) is to choose a name for your business. But before you can register your LLC with the state of North Carolina, you need to make sure that your chosen name is available.

You can search by LLC name or by keyword. If your chosen name is already taken, you’ll need to choose another one. Once you’ve found an available name, you can proceed with the LLC formation process. The North Carolina Secretary of State makes it easy to do a North Carolina LLC name search, so you can quickly verify if your LLC name is available. 

In addition to the name needing to be unique, the name of the LLC must include one of the following phrases or abbreviations (also referred to as designators) at the end of the business name:

  • Limited Liability Company
  • Ltd. Liability Co.
  • Limited Liability Co.
  • Ltd. Liability Company
  • L.L.C.
  • LLC

A comma may be used after the business name and before the designator.  “Outer Bank Outfitters LLC” and “Outer Bank Outfitters, LLC” are both acceptable.

If you plan to use a different name from the one you register (perhaps you want to run multiple businesses under the LLC), you can file an assumed name (sometimes referred to as a fictitious business name, trade name, DBA, or Doing Business As name).  To register this name, file the Assumed Business Name Certificate, along with the filing fee, to the Register of Deeds office in the county where the LLC is located.

Before settling on a name, you may want to see if a domain name is also available to match your business name and website address.

Step 2: Appoint a North Carolina Registered Agent

Every LLC in North Carolina is required to have a registered agent, which is simply someone with a North Carolina street address who will be responsible for any legal correspondence, for example, if the business is served papers in the event of a lawsuit.

Many LLC owners are their own registered agent, but it is possible to hire a registered agent service like Northwest Registered Agent. The reasons why someone would hire a registered agent service include when the owner lives in another state or if the owner prefers that their personal address not be on public record.

Related: What is a North Carolina registered agent?

Step 3: File the North Carolina LLC Articles of Organization

The paperwork to officially create an LLC in North Carolina is called the Articles of Organization. To submit the paperwork, either file online through the North Carolina Secretary of State’s website or download and mail the Articles of Organization Form L-01 to the Secretary of State’s office. 

Related: How to fill out the North Carolina Articles of Organization

When filling out the LLC Articles of Organization, a few sections and terms can be challenging to answer, especially when seeing them for the first time. I’ll explain a few of these sections to help get your LLC started right.

LLC organizers: An LLC Organizer is involved with the formation of the Articles of Organization.  The Organizer may or may not become an LLC member, such as a mentor, attorney, or accountant, but the initial members will all be listed as organizers.

In this section, enter the name and address of each person responsible for executing the Articles of Organization and whether they are a member, organizer, or both by checking the applicable boxes.

Principal office: There are two parts to answering the Principal Office question.  Section “A” is used if the LLC has a principal office, and Section “B” is used if the LLC does not have a principal office.

  • Section A: In this section, enter the street address, city, state, and zip code of the LLC’s initial principal office.  This address can be the LLC’s physical address, or it can be the address where the business records are stored.  You may not use a PO Box for the designated office.
  • Section B: This is usually selected if the principal office has not been secured yet.  A principal office will need to be identified by the time the first annual report is due.

Additional provisions: This is an optional section and is not used by most LLCs.  Here you would include the business purpose or additional rules for the operation of the LLC.

Company officials: This section is optional but is used to list the company officials. This is most often used for LLCs where a member may hold a job with connections or holds professional licensing through the state of North Carolina.

Effective date: If you want the LLC to start on today’s date, choose Yes; otherwise, select No, and enter a date less than 90 days in the future to start.

If you want the LLC to start immediately, choose today’s date.  If you want the LLC to start later, enter a date less than 90 days in the future to start.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business will not have any activity until the start of the year. 

If you are worried about making a mistake when forming your LLC, or just don't want to deal with filling out state paperwork, an LLC formation service will help guide you through the process. My top recommended services include:

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  • Bizee - Best prices for additional business services (starting at $0 plus state fees)
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What To Do After Starting A North Carolina LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a North Carolina LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states (including North Carolina) do not require an LLC to have an LLC operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: North Carolina LLC operating agreement template

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.

Related: How to apply for an EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally, the bank will request a North Carolina Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Related: How to open a business bank account for your LLC

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting the business. Some common registrations include:

  • Business license: There isn’t a statewide business license in North Carolina, but some cities require businesses to obtain licensing before they can start.
  • Professional license: Certain services, such as barbers, accountants, and stylists, must be registered in the state.
  • Sales & use tax number: In order to sell products and certain services, a sales & use tax number from the North Carolina Department of Revenue will be necessary.

Related: What business licenses are needed in North Carolina?

File the North Carolina LLC Annual Report

LLCs are required to file an annual report with the NC Secretary of State.  The annual report is due by April 15th of each year and has an annual state fee of $200

Related: How to file a North Carolina LLC Annual Report

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in North Carolina or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

This material is property of StartingYourBusiness.com

North Carolina LLC FAQs

How much does it cost to start an LLC in North Carolina?

The Secretary of State’s filing fee to start an LLC in North Carolina is $125.

How long does it take to start an LLC in North Carolina?

It normally takes 4-6 business days to start an LLC in North Carolina when filing online or 2-3 weeks when filing by mail for the state to process the LLC paperwork.

What is the total expected cost of operating an LLC in North Carolina?

In addition to normal business expenses, every year, North Carolina LLCs will pay the $200 annual report fee.

What is a Foreign Limited Liability Company?

A North Carolina foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state but wants to operate physically in North Carolina. Physically operating means having a presence, such as having an office or hiring an employee.

Related: What is a foreign LLC?

What is a Professional Limited Liability Company?

Businesses that require occupational licensing in North Carolina, such as accountants, architects, veterinarians, etc., can file for a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.

Related: What is a Professional Limited Liability Company?

What is the difference between LLC, Ltd., and Co.?

LLC, Ltd., and Co. refer to entity designators that can be used at the end of a Limited Liability Name in North Carolina.

Related: What Do LLC, Inc., Co., and Ltd. Mean?

Can you have a single-member LLC in North Carolina?

An LLC in North Carolina can be operated by one individual or many. An LLC owned by one person is referred to as a single-member LLC

Should I use an LLC formation service or do it myself?

Following our guide, most people will be able to form an LLC on their own, however, LLC formation services like Bizee, ZenBusiness, and Northwest help take the pressure off and guarantee it's done right!

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Beginners Guide To Start A North Carolina LLC

Beginners Guide To Start A North Carolina LLC

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