How to form an LLC in North Carolina

Starting a limited liability company (LLC) is one way to start a new business while enjoying unique benefits, including – as the name suggests – limited liability protection. This guide will explain all you need to know to get your North Carolina LLC up and running.

Key takeaways

• Forming a North Carolina LLC involves several steps, including picking a business name, assigning a registered agent, and filing the Articles of Organization.
• The standard filing fee for new North Carolina LLCs is $125, and there’s also a $200 fee payable each year along with your LLC’s annual report.
• Block Advisors’ Business Formation Service makes creating an LLC easy for a new business owner.

What is an LLC?

LLC stands for “limited liability company.” This business structure primarily stands out for its limited liability protection. In other words, LLC owners generally don’t have to worry about losing their personal assets to pay off any debts their company might accrue during its operations.

Liability protection is why many entrepreneurs choose to start an LLC instead of another type of business, like a sole proprietorship.

How LLCs pay and manage income tax is also often considered more advantageous than that of other business entities. LLCs may elect pass-through taxation, which means profits and losses pass through to the members. Members then pay taxes accordingly on their own income tax returns.

Benefits of forming an LLC in North Carolina

There are many advantages to forming an LLC in North Carolina. First, like all LLC owners, North Carolina LLC owners enjoy limited liability protection. That means their personal assets are generally protected, even if their business gets into debt or financial trouble.

Many consider the state of North Carolina a prime place for doing business. In 2023, it topped the list of CNBC’s Top States for Business for the second year. It also has the tenth-highest new business survival rates in the nation.

One final perk? North Carolina requires minimal paperwork to form an LLC. Entrepreneurs must only submit Articles of Organization to the North Carolina Secretary of State.

How to start a North Carolina LLC

Below are some helpful steps to getting your North Carolina LLC operational, from tips on naming your business to details on filing Articles of Organization with the Secretary of State.

1. Choose your North Carolina LLC name

No matter what kind of North Carolina business you’re forming, from a partnership to a C Corporation to an LLC, the first step is usually to come up with a name. A unique business name isn’t just necessary for filling in the LLC formation documents; it can also be a powerful marketing tool to attract customers and make your first sales.

However, as in other states, North Carolina state law lays out a specific set of rules regarding what kind of name you’re allowed to have. Here are the main guidelines to keep in mind when naming your North Carolina LLC:

• Must end in either LLC, L.L.C., or some other variation of the phrase “Limited Liability Company,” like “Ltd. Liability Co” or “Ltd. Liability Company”
• Must be unique from all existing business names in North Carolina.
• It cannot contain any words or abbreviations related to a governmental agency, like “FBI” or “Treasury”
• Can only use specific occupational words if they’re relevant to the type of business, like “architect,” “engineer,” “insurance,” or “surveyor”
• Cannot contain words offensive to accepted standards of decency

To find out which names are available, it’s best to conduct a name search via the North Carolina Secretary of State website.

In some cases, you may know what name you want to use but are not ready to complete the full LLC formation process. In that case, you can fill out a name reservation form. This will allow you to reserve your chosen name and prevent anyone else from using it until you can claim it. Note that state fees apply if you opt for a name reservation.

2. File your LLC Articles of Organization

The next step in setting up your North Carolina LLC is to file Articles of Organization.

Articles of Organization contain basic information about your business. Usually, they include things like the name and street address of its members, details on the purpose of the business, and so on. Here’s some information you should include:

• LLC name you have chosen for your company
• Member names and contact information
• Business address
• Registered agent name and street address
• Company officials, if applicable

You can complete the form online or by hand before filing it with the North Carolina Secretary of State. To start an LLC, you must also pay the relevant state fees. The standard filing fee in North Carolina is $125, but it is subject to change.

3. Choose a Registered Agent service

Along with filing your Articles of Organization, you’ll need to decide on a registered agent for your North Carolina LLC. A registered agent is either an individual or a business that accepts service of process documents and other mail on behalf of your North Carolina business.

Your chosen registered agent must generally be available during business hours to accept documents and letters addressed to your LLC. They also need to meet other requirements, like being above the age of 18 and having a physical address in North Carolina.

It’s vital to have a reliable registered agent to maintain good standing with the North Carolina Secretary of State and other authorities. Given the importance of this role, many entrepreneurs opt to use a trusted registered agent service.

4. Prepare an LLC Operating Agreement

To protect your North Carolina LLC against issues and disputes that may arise in the future, you should draft an LLC operating agreement. This legal document sets out the general rules of your LLC. All members should follow the tenets outlined in the LLC operating agreement when voting, adding new members, or dealing with losing previous members (among other things).

In the state of North Carolina, an LLC operating agreement is technically not mandatory. You don’t need one to start an LLC, and you don’t file it with the North Carolina Secretary of State. However, having an LLC operating agreement to clarify potentially difficult or unclear aspects of your business’s operations is widely recommended.

Many business owners find operating agreements valuable and help the LLC run smoothly. If you want to maximize your liability protection and safeguard your personal assets, it’s worth making one. A simple online search will yield many templates to help you build your own operating agreement.

5. Obtain an Employer Identification Number

To hire employees or open a business bank account, you must also get an Employer Identification Number (EIN) for your North Carolina LLC.

An EIN is a unique identifier for your company. Some people compare it to an individual’s social security number. It’s useful and even necessary for obtaining various business licenses and paying taxes, such as state or sales tax. You can apply for an EIN online via the IRS website.

6. Maintain your North Carolina LLC

If you follow the steps above, you’ll be well on your way to completing your LLC formation. However, in the years to come, it’s also important to maintain your North Carolina LLC and ensure that you comply with all the state’s rules and guidelines.

That includes paying all relevant federal taxes, keeping your business in good standing, and filing an annual report with the North Carolina Secretary of State. Specifically, each year, all LLC owners in North Carolina must file an annual report and pay the filing fee by April 15. 

A note on BOI reporting

Along with the annual report to the North Carolina Secretary of State, LLC owners should explore if they are required to file a Beneficial Ownership Information (BOI) report. As of January 2024, new regulations from the Financial Crimes Enforcement Network (FinCEN) via the Corporate Transparency Act require small businesses to disclose their beneficial ownership information.

It is likely that your LLC will be required to submit a BOI report if you formed your business by filing with the Secretary of State. New businesses have 90 days after registration to complete their first BOI report. In 2025, this window will be shortened to 30 days.

This is a one-time report unless your company’s information changes in the future, at which time you must file an updated report. However, it’s not a good idea to skip this step. Business owners who fail to file their reports risk hefty daily fines and possibly even imprisonment. To avoid penalties, file your report now.

North Carolina LLC formation doesn’t have to be stressful

Setting up a North Carolina LLC can be confusing, especially if you’re a new small business owner. But Block Advisors’ Business Formation service is here to help if you’re feeling overwhelmed. As you decide if becoming an LLC is the right move for your situation, keep in mind that laws vary from state to state. An attorney can walk you through considerations for your specific situation.

Block Advisors is here to help when you’re ready to form your LLC. With our Business Formation service, you can begin the LLC registration process in less than ten minutes. You can also rely on Block Advisors expertise to alleviate the headache other parts of your small business to-do list may give you. Let us help you save time and money with our tax preparation, bookkeeping, and payroll services. You can have peace of mind knowing that our guarantees always back our services.

This article is for informational purposes only and should not be construed as legal advice. You may want to seek the advice of an attorney to evaluate all relevant considerations.

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FAQs

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

LLC filing typically costs $125 in North Carolina. However, you may have to pay other costs for business licenses, insurance, and so on, depending on what type of business you plan to operate.

How do I start an LLC in North Carolina?

First, decide on an LLC name. Then, complete and file Articles of Organization with the North Carolina Secretary of State. You’ll also need to select a registered agent, obtain an EIN from the IRS, and create an LLC operating agreement.

What are the benefits of a North Carolina LLC?

The main benefit of starting an LLC in North Carolina, and generally, is liability protection for your personal assets. That means that your own personal property and possessions generally can’t be claimed or targeted if your business falls into debt. North Carolina is also advantageous for business owners due to its strong economy and range of business opportunities.

Does North Carolina allow single-member LLCs?

Yes, you can start a single-member LLC in North Carolina.

What is the minimum number of members for a North Carolina LLC?

You need at least one member to form an LLC in North Carolina. Multi-member LLCs are allowed in North Carolina.

What is the annual fee for an LLC in North Carolina?

To maintain your LLC’s good standing with the North Carolina Department of Revenue, you’ll need to pay an annual filing fee alongside your annual report. As of this article’s writing, the fee is $200, plus an additional $3 if you file online.

How long does it take for an LLC to be approved in North Carolina?

It usually takes two to five business days for a new LLC to be approved in North Carolina.

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