If you’re looking for a reliable DIY guide for starting an LLC in North Carolina, look no further. Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.
That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire an business incorporation service – they’ll take care of the paperwork so you can spend more time growing your business.
Recommended: Compare the Top LLC Services
If you’re new to the process of starting an LLC, you might also be unfamiliar with the LLC formation services that are reliable and offer great value – like ZenBusiness. As a reference point we compared them to the two most well known LLC formation services, IncFile and LegalZoom. See our comparison guides for more information:
Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your North Carolina LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain state requirements that it must follow.
Any name you choose must contain a term that designates its business type, like “Limited Liability Company,” “limited company,” “L.L.C.,” “LLC,” “L.C.,” or “LC.” And it must not contain any of the state’s restricted words.
Lastly, and most importantly, it must be distinguishable from every other business name reserved or registered with the Secretary of State. But what makes a name distinguishable? Making changes to the following elements will NOT be enough:
- Expression of numbers as Arabic numerals, Roman numerals, or words
In short, you can’t distinguish a name by just altering its syntax or minor words. You must make significant changes or rearrangements to its key words.
Consider this: your friend Fanny wants to open a flower shop in Asheville, North Carolina. The name she is considering, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of State’s records.
Determine the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Articles of Organization without first confirming it’s available. Use the Secretary of State’s Business Search to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in North Carolina for a total of 120 days.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can hold her name by downloading and completing an Application to Reserve a Business Name, then uploading it online or mailing it to:
PO Box 29622
Raleigh, NC 27626-0622
Or, you can drop it off in person at 2 South Salisbury Street Raleigh, NC 27601.
Any option will cost $30, although processing times vary depending on which you choose. Online submissions generally take 3-5 business days, while hard copy submissions often take 5-7. If that’s not a fast enough turnaround, the Secretary of State offers two expedited options: 24-hour service for a $100 fee and same-day service for $200. You must include a cover letter designating your expedited option along with your filing.
Step 2: Choose a Registered Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in North Carolina, she’ll need a go-between for state and legal communications. This is called the registered agent.
A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. But maintaining an agent isn’t just a convenience, it’s required. According to the North Carolina Statutes § 55D-30, “each domestic corporation, nonprofit corporation, limited liability company, limited partnership, and limited liability partnership […] must continuously maintain in this State a registered office […] and a registered agent.”
And the Secretary of State website adds: “the sole duty of the Registered Agent is for forward to the business entity at its last known address any notice, process, or demand that is served on the registered agent.”
Taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside North Carolina.
Now for the practical application, the “how-to.” Fortunately, declaring your registered agent is a simple, one-step process. All you need to do is include the agent’s name and address on your Articles of Organization. This will put that information on your LLC’s public record, so make sure you notify your agent before you file.
You have two options for who can serve as a registered agent: an individual or a company.
Individual as Registered Agent
You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are a North Carolina resident, have a physical address in the state, and are at least 18 years old.
Business partners, attorneys, and accountants are all good third-party options, but you can appoint a friend or family member as well. You can even appoint yourself as long as you meet the requirements and don’t mind the additional responsibilities.
Registered Agent Service
It can be a lot easier, though, to use an LLC formation service like IncFile or Northwest Registered Agent, so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your North Carolina LLC on your own, you can use a national registered agent service to cover your agent duties.
During the life of your LLC you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the State
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the North Carolina Secretary of State, giving it the authorization to commence business in the state.
You can file the Articles of Organization online, by mail, and in-person, and each option costs $125. Whether you like the feel of a paper form or prefer to keep things digital, you can choose the method that works best for you.
Submitting your form electronically is the fastest way to register, so this is a good option for anyone short on time. Use the Secretary of State’s online filing system to complete the process. Processing time is typically 3-5 business days.
Download and complete the paper application. Then send it, with your payment, to:
North Carolina Office of the Secretary of State
P.O. Box 29622
Raleigh, NC 27626-0622
If you live in Raleigh and want to drop it off while you’re out on the town, you can hand-deliver it to 2 South Salisbury St., Raleigh, NC 27601.
Hard copy forms are processed in 5-7 business days, but if you don’t have that kind of time, you can request 24-hour service for an extra $100 or same-day service for $200. You must include a cover letter with your expedited request.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
North Carolina doesn’t have a specific law that manadates the use of an operating agreement. However, it’s the backbone of your business, your bylaws, and your legal safety net. Even though it isn’t required, an agreement gives your LLC the standardized processes and legitimacy in front of courts, banks, and other business entities. We strongly recommend creating one.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to tax structure.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend getting one through ZenBusiness, which includes a free LLC operating agreement with every package. This will save you a lot of time and money.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Articles of Organization, designated a registered agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a North Carolina LLC running smoothly and in good standing with the state.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
As a North Carolina LLC, you’re in luck. That’s because the state’s income taxes are pretty simple. Like federal income taxes, they “pass-through” to the owners’ personal returns. Plus, North Carolina doesn’t impose a tax for the privilege of doing business in the state (commonly called a “franchise” or “privilege” tax).
But you’re not off the hook just yet. If your LLC meets certain conditions, it will be responsible for specific business-related state taxes. For example, if you sell merchandise, your LLC will need to pay a Sales Tax and Use Tax. And if you hire employees, it will owe a Withholding Tax and an Unemployment Insurance Tax.
Plus, depending on your LLC’s location, it may owe a local tax to the city, municipality, or county where it resides. Consult your local government’s website to find out.
The Articles of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.
Take our friend Fanny, for example, who may someday want to sell sandwiches to customers as they browse her beautiful floral creations. If so, she may first need to obtain a license from the Department of Health. Likewise, your LLC might need certain licensure before doing business in North Carolina. Check this licensing page to find out.
Certain cities and counties require their own specific licenses on top of any state ones, so you should also check with your local government.
Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when you’re rolling along and things are moving 100 miles per hour, don’t forget that North Carolina requires all of its businesses to submit one important recurring filing: the Annual Report.
North Carolina makes it easy – your Annual Report is due on tax day (April 15) each year. It costs $200, which isn’t cheap, so write it into your yearly budget.
North Carolina Office of the Secretary of State
P.O. Box 29525
Raleigh, NC 27626-0525
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your North Carolina LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC formation service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a registered agent.
Sound good? Whether you know that you’ll need an LLC service or you’re just exploring your options, take a look at IncFile and Northwest Registered Agent. These are two of the top services available. And you can take our word for it because we’ve done a whole lot of research on the topic.