Think about your LLC a year from now: raking in profits and taking North Carolina by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in North Carolina.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common North Carolina startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in North Carolina
- Optional: LLC Name Reservation Fee
- $30 to file online or on paper.
- Required: Articles of Organization Fee
- $125 to file online or on paper. Expedited options: 24-hour processing for $100 and same-day processing for $200.
Overall North Carolina LLC Formation Costs
LLC Name Reservation Fee
Because it’s an optional step in the process, reserving a business name isn’t necessary unless you aren’t ready to start your business yet. If you have a great name in mind, but you can’t file the Articles of Organization yet, consider paying $30 and submitting an “Application for Registration.” Otherwise, jump straight to the Articles of Organization, as that will automatically lock in your name.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your North Carolina LLC. If the Secretary of State doesn’t have your Articles of Organization on file, they won’t recognize your LLC, and you won’t be able to conduct business in North Carolina. You can submit it online or using a hard copy, but either method will cost $125. And if you just can’t wait to get your business started, you can choose expedited 24-hour processing for $100 or same-day processing for $200.
Business and Professional Licenses
Not every North Carolina LLC needs to obtain licensure, but many do. It all depends on the type and location of your business. For example, veterinarians need to get licensed by the North Carolina Veterinary Medical Board and Automobile Dealers need to apply for licensure through the Department of Transportation. On top of that, cities and/or counties have their own local licensure requirements. Check out the Department of Commerce Licensing page and contact your local government to determine which licenses you might need.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with North Carolina business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. Considering the sheer number of business lawyers out there, you may be asking: how do I choose the right one? A site like Avvo can help. Avvo provides access to a whole database of North Carolina business attorneys, so you can compare rates, locations, areas of expertise, and more.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into North Carolina. If this describes your business, you will file the Application for Certificate of Authority rather than the Articles of Organization.
All foreign business entities are required to foreign qualify in North Carolina, or they could incur some pretty severe penalties. The Application for Certificate of Authority will set you back $250, a bit more than the Articles of Organization. But like the Articles, it’s a one-time filing and fee, so as long as your application is accepted, you won’t have to pay it again.
LLC Annual Fees
Up until now, every fee we’ve discussed has been solely associated with the startup process. But LLCs have recurring maintenance fees too, namely the Annual Report. The Annual Report’s purpose is to ensure that the state has your company’s most current, accurate information. Your LLC must file an Annual Report and pay a fee of $200 either online or by mail before Apr. 15 each year, so make sure to write that expense into your yearly budget.
LLCs don’t have to pay federal or North Carolina income taxes. This is because they’re classified as “pass-through” entities, meaning that they don’t have to file separate corporate income taxes. Instead, their owners and/or members report income and losses on their personal returns. North Carolina doesn’t impose a “franchise” or “privilege” taxes on its LLCs either.
But there are circumstances that would make your LLC subject to certain business-related taxes.
- If your LLC sells merchandise, it must pay a Sales and Use Tax.
- If your LLC maintain employees, it must pay a Withholding Tax and an Unemployment Insurance Tax.
- If you’ve set up your LLC to be taxed as a corporation, it must pay corporate income taxes and a franchise tax.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
If you skip the Articles of Organization or Application or Certificate of Authority, your LLC won’t be authorized to do business in the state and can be fined for doing so. Miss an Annual Report and you won’t be fined, but your LLC will fall out of good standing with the state. Entities without good standing cannot foreign qualify in most other states, apply for business loans, renew most professional licenses, and more. If the LLC goes 60 days without filing an Annual Report or without a valid registered agent, it can be administratively dissolved.
Delinquent taxes come with penalties too. Failure to file a Sales and Use Tax will result in a penalty of 5% of the total amount per month (up to 25% total). A late Withholding Tax will accrue a penalty of 10% of the amount due, plus 5% of the tax due per month (up to 25% total). See the Department of Revenue’s Taxes & Forms page for more information.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in North Carolina.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Annual Reports – so your business doesn’t fall out of good standing.