How to File an LLC in North Carolina

Understanding what business structure suits your needs will help you run your company more efficiently. Sole proprietorships give you a lot of control but can expose your assets. An S corp or C corp structure means better liability protection, but strict guidelines constrain you. A North Carolina LLC offers the best of both worlds and can be set up easily if you know how.

Key Takeaways

• A North Carolina LLC combines the liability protection commonly found in corporate business structures with the freedom and flexibility of sole proprietorships.

• North Carolina doesn’t require prospective small business owners to reserve their business name prior to filing LLC formation documents, but it is strongly recommended.

• Despite not being required by the state, it is strongly recommended that North Carolina LLCs have an operating agreement to cement management and ownership structures.

What Is LLC Formation?

According to the North Carolina Secretary of State, limited liability companies or LLCs share characteristics from multiple business structures. The result is a business entity with elements of corporations, partnerships, and sole proprietorships.[1]

Think of an LLC as a company where members, not shareholders, decide how the business should run. The business entity’s daily management isn’t governed exclusively by state laws and guidelines. Instead, the members may operate under a set of internal guidelines called an operating agreement.

In addition, a North Carolina LLC comes with liability protection similar to that of corporations. For instance, creditors and other institutions have a more challenging time going after personal assets when trying to settle debts.

Therefore, an LLC combines the protection corporations often enjoy with the extra freedom and control of proprietorships and partnerships.

The Pros and Cons of Using an LLC Structure

Before moving forward with your LLC formation, understanding this business structure’s upsides and potential downsides is essential.

The upsides include:

• You create a legal entity separate from you, gaining liability protection

• Your company’s leadership structure remains flexible

• You’re free to draft an operating agreement to set operating guidelines

• Your business’s profits and losses are passed through to your personal income tax returns, saving you money come tax season

Here are the downsides of using a limited liability company structure in North Carolina:

• Ownership transfers can be tricky without an outlined operating agreement

• LLCs have continual upkeep and must still submit various documents, like an annual report

• The formation process requires paying state fees and may involve yearly renewal fees and taxes

Step-By-Step Guide To Starting Your North Carolina LLC

If starting a North Carolina LLC formation process seems right for you, it’s time to learn about the different stages and requirements.

The following step-by-step process for forming your LLC covers the actions, filing fees, paperwork, and other elements needed to obtain authorization to transact business in the state.

Step 1: Choose a Business Name for Your LLC

Forming your LLC starts with picking an LLC name. While this sounds simple, the process is more intricate than you think. It would be best if you didn’t rush to create an LLC name. Remember that it’s what customers read and remember about your brand and what you do.

The LLC name must be relevant to your industry and what you offer. Likewise, it shouldn’t lead to any trademark issues. Usually, choosing a business name for your LLC is done in four stages.

Stage 1 — Conduct a Name Search

You can’t use the same business name as another North Carolina company for several reasons. Firstly, it can confuse customers and make it difficult to reach your target audience. Secondly, you can infringe on the other company’s trademark, opening your business to legal action.

Before you pick an LLC name, it’s best to check its availability with the North Carolina Secretary of State. The online Business Search database makes finding exact and similar matches easy. The website doesn’t require creating an online account to search for a business name. And remember that an abbreviation of the term-limited liability company is mandatory, including:

• LLC

• LC

• Limited Liability Co

• Ltd. liability company

• Ltd. liability co

Another important consideration is the assumed business name or the doing business as name (DBA).

This is the name a company might use for branding purposes. For example, imagine registering your company with the LLC name “North Carolina Real Estate Advisors, LLC.” While it’s a good name for a real estate company, it’s not an appealing brand name like “N.C. Real Estate Experts”.

Businesses typically drop the LLC to create an assumed business name. Therefore, it’s best to check the availability of various DBA name ideas. This would require additional internet searches, as the North Carolina Secretary of State Business Search database might only sometimes contain DBA information.

Stage 2 — Look for Internet Domain Names

Small businesses without a website risk leaving a lot of money on the table. Over 80% of retail shoppers and service buyers do online research before making a purchase. Unfortunately, almost 30% of small businesses lack an online presence that can tap into the market.[2]

Having a website is crucial for your LLC, regardless of your industry. It’s an excellent way to inform customers about your service and mission and a powerful digital marketing tool.

But all websites are attached to domain names. The domain is what people type in their web browsers when looking for or accessing a particular website. Therefore, your LLC needs a business name you can use as a domain name for branding and marketing purposes.

Doing a domain name search is easy enough:

• You can use search engines to see if other companies use the domain name you would like to use.

• You can use a dedicated domain registrar service to find available domain names and buy one directly.

If you find an existing website with your desired domain name, you may still be able to use it. Many website owners can sell their domain names for the right price. That doesn’t mean it’s always worth paying a premium.

Browsing a domain registrar database is the quickest way to find suitable domain names for your business. And unused names are always cheaper to buy and maintain. Under the right circumstances, you might not have to pay more than $20 annually to retain a domain name.

Stage 3 — Reserve the Business Name

North Carolina doesn’t require you to reserve a business name. Suppose your desired business name is available when you file the Articles of Organization. In that case, you can move forward with the formation process. But that doesn’t mean you shouldn’t reserve the name.

Deciding on a name doesn’t mean you’re ready to file for an LLC business structure. Therefore, reserving your name gives you another 120 days to finish your filing, eliminating the possibility of another company using that name before you file.[3]

Like most business forms, the Application to Reserve a Business Entity Name has a filing fee. You must pay $30 to the Secretary of State. Use the following mailing address to send the form:

North Carolina Secretary of State

Business Registration Division

P.O. Box 29622

Raleigh, NC 27626-0622

However, suppose you fail to submit your formation documents using the reserved LLC name within those 120 days. In that case, you need to repeat the process to secure the name for your company.

Stage 4 — Trademark the Name

Just because your LLC name is in the Articles of Organization doesn’t mean it has much legal protection. Someone can still infringe on your business name, and you must use legal action to stop them.

Registering a trademark is crucial for covering all bases. For instance, you can trademark the LLC name, doing business or DBA name, the company logo, and other identifying marks.

The North Carolina Secretary of State website has all the forms you need to register trademarks.[4] A typical registration application costs $75 in state fees, and renewals cost $35. The office of the Secretary of State accepts mail-in and online applications.

Step 2: Fill Out North Carolina Articles of Organization

The second step of forming your LLC takes less time and research than picking a name. However, doing this before starting to do business in the state is crucial. The North Carolina Secretary of State requires all companies that want to conduct business to file the Articles of Organization document.

Think of this as a paper that outlines what you do, who runs the business, and who serves as the registered agent. Also, depending on your location, you should know about the domestic LLC and foreign LLC filing process..

Creating a Domestic LLC in North Carolina

The Limited Liability Company Articles of Organization for a North Carolina LLC formation is a simple document to file. It costs $125 in state filing fees and requires the following information:

• The North Carolina LLC name

• The name and address of the LLC members and organizers

• The registered agent’s name

• The registered agent’s office address

• The principal office address, mailing address, and telephone number

• The company officials (optional)

You can send the document to this address:

North Carolina Secretary of State

Business Registration Division

P.O. Box 29622

Raleigh, NC 27626-0622

Filing for a Foreign LLC in North Carolina

A foreign LLC is an out-of-state company looking to do business in North Carolina. Alternatively, it can be an international company incorporated in a different country interested in obtaining a business license in North Carolina.

Unlike domestic LLCs that file Articles of Organization, a foreign LLC must file an Application for Certificate of Authority for Limited Liability Company form. This document has a higher filing fee of $250 but, generally, has a similarly simple application process.

The document may ask for the following information:

• The name of the limited liability company

• The alternative name the company wishes to use in North Carolina, should the original LLC name be unavailable in the state

• The original country of the LLC formation

• The principal office information

• The name and address of the LLC’s North Carolina registered agent

• The North Carolina mailing address

• The names, addresses, and titles held by the company officials

• The certificate of existence

You can mail this formation document to the following address:

North Carolina Secretary of State

Business Registration Division

P.O. Box 29622

Raleigh, NC 27626-0622

Step 3: Hire a North Carolina Registered Agent

Another crucial step when handling LLC formation documents is to get a North Carolina registered agent. All businesses must have one to conduct business in the state. But who can serve as a registered or resident agent for your LLC?

• A state resident over 18 with a valid physical street address in the state

• A business entity with a physical street address listed in the public record

• The LLC owner, provided they can maintain a physical address in the state

Before naming a registered agent in the formation documents, it’s essential to understand a couple of elements. For example, these agents have what’s known as a registered office. It’s a physical street address used to receive documents and legal correspondence on behalf of their clients.

A PO Box or mailing service doesn’t qualify as a registered office. 

Furthermore, the state mandates a North Carolina registered agent to maintain regular business hours when actively representing clients. That’s necessary so the North Carolina Secretary of State and other organizations or business entities can contact an LLC representative and deliver service of process notices.

Before filing the Articles of Organization or the Certificate of Authority form, you must get consent from the registered agent to name them in the formation documents.

Why You Should Use a Registered Agent Service

Electing and maintaining a registered agent with a registered office is crucial in North Carolina. Failure to do so can result in penalties, losing your good standing with the state, and even business dissolution. 

Repercussions aside, there are more reasons to use caution when picking a registered agent and hiring a third-party service rather than naming yourself or a company office:

• You don’t have to make your North Carolina LLC’s physical address part of the public record

• You have more time to focus on business operations instead of paperwork

• Your privacy is protected

• You can create a foreign LLC in North Carolina without needing office space in the state 

• You can keep irregular business hours, accommodate business in different time zones, etc.

• You can leverage their regulatory knowledge to ensure your business stays compliant 

Swyft Filings offers a registered agent service your LLC can use for all formal correspondence with the North Carolina Secretary of State and other entities. The service starts at $149/quarterly, plus state fees.

Our team focuses on giving your company complete privacy and timely notifications on legal correspondence. Simultaneously, we filter out junk mail, promotional materials, and other non-essential paperwork sent to the registered office.

Step 4: Create an LLC Operating Agreement

In theory, this step is optional. North Carolina doesn’t require LLCs to draft and formalize an operating agreement. However, a North Carolina LLC operating agreement simplifies things for entrepreneurs, business owners, and senior company officers.

Think of this document as a legally binding contract that outlines and defines all your LLC members’ roles and responsibilities. It also dictates whether you have a member-managed LLC or a manager-managed business entity.

There are many benefits to creating an operating agreement, including but not limited to:

• You avoid falling under state rules and can run your LLC as you see fit

• You formalize personal liability protection

• You make it easier for members to understand their roles and communicate about business operations

You may want to touch on the following topics when drafting your North Carolina LLC operating agreement:

• The ownership percentage of all members

• The voting rights of all LLC members

• The profit and loss distribution structure

• Core responsibilities, decision-making powers, and duties of all members

• Buyout, ownership transfer, and similar clauses

Step 5: File for an Employer Identification Number and Business Licenses

When you reach Step 5, you’re almost ready to start operating in North Carolina. That said, you may want to check on a couple more elements.

For instance, your North Carolina business may need an Employer Identification Number (EIN) and extra business licenses.

Getting Your EIN

The Internal Revenue Service (IRS) dictates that all businesses wishing to hire employees must obtain an EIN. But an EIN isn’t required only by the IRS. For instance, your LLC needs an EIN to get a business credit card and bank account.

This unique identifier functions similarly to a Social Security number. The IRS uses the EIN to identify your business and determine its income, state, and federal tax responsibilities. You also need an EIN to pay employment taxes.

Granted, having an EIN isn’t mandatory, especially if you use an LLC like a sole proprietorship. But getting one doesn’t cost anything, and it’s best to have it before moving away from a self-employment LLC structure.[5]

Besides, the IRS website makes applying for your EIN with a Tax Identification Number easy. The business owner or another party responsible for controlling the LLC can apply for the EIN.

North Carolina Business Licenses

A North Carolina business can be ready to conduct business after the state processes its Articles of Organization or Certificate of Authority. However, some LLCs need additional documentation.

Some situations require additional business licenses, depending on the industry, the trades they focus on, the services or goods offered, etc. For example, occupational licenses are required to operate in various sectors like real estate, healthcare, law, etc.

An LLC might also need a sales tax permit. This is usually necessary when selling tangible goods and services. Sometimes, the state or professional licensing boards may require LLCs to obtain additional permits and licenses to operate in specific cities and counties.

Let Us Handle Your LLC Paperwork

Filing your own LLC formation documents as an entrepreneur is a straightforward process. Once you know the paperwork required and understand the business name and trademark issues, starting a small business is easy.

However, you don’t have to form your North Carolina LLC alone. As an owner, you already have enough on your plate, from sales to marketing to building operational systems and processes. That’s why an LLC formation service like Swyft Filings can help.

Our team has been helping businesses get started since 2015. The Swyft Filings LLC formation experts know North Carolina regulations and provide a quick, efficient, personalized formation service. Contact our team and tell us about the business you want to incorporate in the state.

FAQs

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

The North Carolina Secretary of State charges a standard $125 or $250 in filing fees to let you start an LLC. Domestic business entities pay less, while foreign and out-of-state LLCs pay more. But you may have additional expenses in hiring a registered agent, buying a domain name, registering your trademark, etc.

How is an LLC taxed in North Carolina?

A North Carolina LLC is a pass-through entity. Therefore, the profits and losses go through its members’ personal tax filings.

What are the benefits of a North Carolina LLC?

LLCs offer better liability protection than sole proprietorships and allow more control over management and business operations than corporations. Both benefits are enhanced by formalizing an LLC operating agreement.

How do you dissolve an LLC in North Carolina?

You can dissolve your North Carolina LLC by submitting the Articles of Dissolution form and paying the $40 filing fee with the Secretary of State.

Bibliography

1. North Carolina Secretary of State. “Limited Liability Company.” Accessed January 29, 2023.

2. PR Newswire. “76% of Consumers Look at Online Presence Before Physically Visiting a Business.” Accessed January 29, 2023.

3. North Carolina Secretary of State. “Business Registration Forms – Limited Liability Companies.” Accessed January 29, 2023.

4. North Carolina Secretary of State. “Business Registration Forms – Limited Liability Companies.” Accessed January 29, 2023.

5. Internal Revenue Service. “How to Apply for an EIN.” Accessed January 29, 2023.