How To Set Up A North Carolina LLC

Are you thinking about starting your own small business in North Carolina? If so, you’ll need to decide on a business structure. 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 starting an LLC in North Carolina and highlight some of the key things you need to know before you get started.

Related: Starting A Business In North Carolina Checklist

Why choose an LLC?

An LLC is a type of business structure that can help protect your personal assets if your business is sued. Unlike a North Carolina 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 business’s assets.

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

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 want to verify that your chosen name is available.

You can search by LLC name or by keyword. If your name has already been chosen, you will 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 entity 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 North Carolina Assumed Business Name Certificate and the filing fee to the Register of Deeds office in the county where the LLC is located.

Step 2: Appoint a North Carolina Registered Agent

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

Many LLC owners select themselves as registered agents, but some choose to hire a registered agent service. Reasons for hiring a registered agent service include when the owner lives in another state or prefers that their personal address not be on public record.

Related: How To Appoint 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, 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

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

LLC organizers: An LLC Organizer, such as a mentor, attorney, or advisor, is involved with forming the Articles of Organization. The organizer may or may not become an LLC member, 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: Answering the Principal Office question has two parts. Section “A” is used if the LLC has a principal office, and Section “B” is used if it does not.

• 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 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 must be identified by the time the first annual report is due.

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

Company officials: This section is optional but lists the company officials. It is most often used for LLCs where a member may hold a job with connections or hold 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 to start.  The main reason for delaying the LLC start date is when the filing is done close to the end of a calendar year, and the business will not have any activity until the start of the year. 

What To Do After Starting A North Carolina LLC

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

Prepare a North Carolina LLC Operating Agreement

The LLC operating agreement is a document that governs the framework of an LLC and 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.

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). Like an individual’s social security number, the EIN identifies business entities for tax purposes.

Related: How To Register 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 official 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.

Apply for Business Licenses and Permits

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

• Business license: North Carolina does not have a statewide business license, 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 and use tax number: A sales and North Carolina Sales and Use Tax Number from the North Carolina Department of Revenue is necessary to sell products and certain services.

Related: How To Register A Business In North Carolina

File the North Carolina LLC Annual Report

LLCs are required to file a North Carolina LLC 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

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.

North Carolina LLC FAQs