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.
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.
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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 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.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform a North Carolina business name search to make sure the name you want is available.
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.
The information you’ll need to file your Articles of Organization includes the official business name of your LLC, the names and addresses of your LLC’s members and/or organizers, the name and address of your LLC’s registered agent, your LLC’s principal business address, your LLC’s business phone number, the effective date of your formation, the date, your printed name, and your signature.
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.
What are some of the most commonly required business licenses for North Carolina LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Service
Starting an LLC in North Carolina 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 online service. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like ZenBusiness or IncFile) offer basic LLC formation services 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 North Carolina 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, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you need to change your North Carolina registered agent or resign as a North Carolina registered agent, check out our full guides on each of these topics.
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 $500-2,000.
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.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in North Carolina. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
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.
The information required to file your annual report includes the official business name of your LLC, a brief indication of the nature of your business, the name and address of your registered agent, and the names and addresses of each member and/or manager.
For more info on annual reports for North Carolina LLCs, check out our full article on this topic!
LLCs typically don’t have to pay federal or North Carolina corporate 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 “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 maintains 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.
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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 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.
Key Steps for Starting a North Carolina LLC
- The first step to forming a North Carolina LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in North Carolina, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $125 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for North Carolina LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the North Carolina Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of North Carolina!
Key Steps for Maintaining a North Carolina LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in North Carolina.
What are the state business tax rates in North Carolina?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rate of 5.25%. If your LLC is taxed like a corporation, you’re required to pay North Carolina’s 2.5% corporate income tax on your business revenue.
How quickly does North Carolina process LLC formations?
The Secretary of State should be able to process your LLC’s formation within 3-5 business days if you file online, or 5-7 business days if you use a paper form. If you’re in a hurry, you can pay a $100 expediting fee to shorten your turnaround time to roughly 24 hours or a $200 fee for same-day service.
How many small businesses are there in North Carolina today?
The state of North Carolina is home to nearly 835,000 small businesses. Entrepreneurs of all backgrounds and business types find that North Carolina is a great place to own and operate a small business.
What are the top small business resources and websites in North Carolina?
The North Carolina chapter of the Small Business and Technology Development Center is a great place to start, as they offer a wide variety of tools and resources for North Carolina LLCs. The U.S. Small Business Administration’s North Carolina District Office is another valuable resource, and the state’s Economic Development Partnership also has plenty of good info.
Should I form my LLC in North Carolina, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.
Cost to Start an LLC in All 50 States
We break down the LLC costs in detail in all 50 states. View all of our State LLC Costs guides below.
- Cost to Start an Alabama LLC
- Cost to Start an Alaska LLC
- Cost to Start an Arizona LLC
- Cost to Start an Arkansas LLC
- Cost to Start a California LLC
- Cost to Start a Colorado LLC
- Cost to Start a Connecticut LLC
- Cost to Start a Delaware LLC
- Cost to Start a Florida LLC
- Cost to Start a Georgia LLC
- Cost to Start a Hawaii LLC
- Cost to Start an Idaho LLC
- Cost to Start an Illinois LLC
- Cost to Start an Indiana LLC
- Cost to Start an Iowa LLC
- Cost to Start a Kansas LLC
- Cost to Start a Kentucky LLC
- Cost to Start a Louisiana LLC
- Cost to Start a Maine LLC
- Cost to Start a Maryland LLC
- Cost to Start a Massachusetts
- Cost to Start a Michigan LLC
- Cost to Start a Minnesota LLC
- Cost to Start a Mississippi LLC
- Cost to Start a Missouri LLC
- Cost to Start a Montana LLC
- Cost to Start a Nebraska LLC
- Cost to Start a Nevada LLC
- Cost to Start a New Hampshire
- Cost to Start a New Jersey LLC
- Cost to Start a New Mexico LLC
- Cost to Start a New York LLC
- Cost to Start a North Dakota LLC
- Cost to Start an Ohio LLC
- Cost to Start an Oklahoma LLC
- Cost to Start an Oregon LLC
- Cost to Start a Pennsylvania LLC
- Cost to Start a Rhode Island LLC
- Cost to Start a South Carolina
- Cost to Start a South Dakota LLC
- Cost to Start a Tennessee LLC
- Cost to Start a Texas LLC
- Cost to Start a Utah LLC
- Cost to Start a Vermont LLC
- Cost to Start a Virginia LLC
- Cost to Start a Washington LLC
- Cost to Start a West Virginia LLC
- Cost to Start a Wisconsin LLC
- Cost to Start a Wyoming LLC