How to Start an LLC in North Carolina in 7 Steps
With steady population growth, proximity to top colleges and universities, an affordable cost of living, and a pleasant climate, North Carolina is one of the best places in the country to start a business. Therefore, if you’re looking to launch your business in this state, one of your first steps will be selecting a business entity structure. In particular, if you want to limit your personal liabilities on business matters, you might consider starting an LLC in North Carolina.
And we’re here to help. In this guide, we’ll break down the seven simple steps you can follow in order to form an LLC in North Carolina—plus, we’ll answer frequently asked questions about the process.
Starting an LLC in North Carolina
The North Carolina Secretary of State dictates the guidelines businesses need to follow in order to successfully register and form an LLC in the state.
Let’s break down the process, step-by-step.
Step 1: Choose a name for your LLC.
First, starting an LLC in North Carolina requires that you select a business name. Your business name will have to adhere to the requirements set out by the Secretary of State.
Name Availability and Reservation
When choosing a name for your North Carolina LLC, you’ll need to ensure that it ends with the phrase “limited liability company” or with the abbreviations “LLC” or “L.L.C.” Additionally, there are restrictions on using any of the following words in your LLC’s name: corporation, incorporated, Inc., bank, trust, mutual, co-op, insurance, engineering, and architect.
Moreover, it’s important to note that the Secretary of State will reject your business name if it’s too similar to the name of another business entity. For example, if a company called “A Delicious Restaurant, LLC” already operates in North Carolina, then you can’t call your LLC “The Delicious Restaurant, LLC.”
Therefore, once you have a name in mind for your North Carolina LLC, you’ll want to check that it’s available by using the Secretary of State’s business name search (shown below).
We’d recommend also searching through local and online business directories to ensure that no other business is using your preferred name. To this point, it’s a good idea to search through North Carolina’s trademark database and federal trademark database as well.
After finding an available name, you can reserve the name for up to 120 days by filing an Application to Reserve a Business Entity Name with the Secretary of State. The name reservation fee is $30, and you can file online, by mail, or in-person (if you’re located in or near the Raleigh area).
Professional LLCs in North Carolina
Different from a traditional LLC, a professional limited liability company is a specific type of LLC that can be formed only by members of licensed occupations, such as doctors and attorneys. In North Carolina, if you’re looking to start a PLLC, at least one member of the PLLC must hold a license to practice the occupation.
This being said, the PLLC’s name should end with “professional limited liability company,” “PLLC,” or “P.L.L.C.” PLLCs will file a different formation document with the Secretary of State, but otherwise, the setup process for PLLCs is similar to that for regular LLCs.
North Carolina LLCs With Trade Names
In some instances, your business might want to operate under a trade name—also called an assumed name, fictitious business name, or “doing business as” (DBA) name—that’s different from the company’s legal name.
For example, your business’s legal name might be “Jane Smith Gardening and Landscaping Services, LLC,” but you might want to operate informally as “Jane’s Gardens.” In this case, you’ll need to ensure that the trade name “Jane’s Gardens” is available on the Secretary of State’s assumed name database.
You’ll also need to file an assumed business name certificate at the register of deeds in your county, along with a $26 filing fee.
Step 2: Select a registered agent.
Once you’ve successfully chosen a business name, the next step to starting an LLC in North Carolina is designating a registered agent.
The duty of the registered agent is to accept official mail and government notices on your business’s behalf and forward them to you. The registered agent can be an individual who resides in North Carolina or a commercial entity. The agent must maintain a physical address in North Carolina (not just a P.O. box).
This being said, it is possible for you, a business partner, or a friend or family member to serve as the registered agent for your LLC, but that person’s name will appear in public records. For more privacy and convenience, most small business owners opt to use a commercial provider as their resident agent.
As an example, IncFile is an online legal service that is licensed to provide registered agent services in all 50 states. If you form your LLC on IncFile, they’ll serve as your registered agent for free for the first year, and you’ll have the ability to renew after that.
Step 3: Obtain North Carolina business licenses, if applicable.
After you’ve selected a registered agent, you’ll want to determine if you need a business license to operate your LLC in North Carolina. If you’re wondering, “Is a business license required in NC?”, the answer is generally no—North Carolina does not require a general business operating license at the state level. Instead, most licensing is handled at the city or county level.
Therefore, you’ll want to consult your local government agency to determine if you’ll need to meet any licensing requirements. Additionally, it’s important to note that businesses in certain industries might need a state license. The North Carolina Department of Commerce has a business license search which you can use to check the requirements for your business.
You can also contact a business counselor for free who can advise you more about licensing requirements in North Carolina.
Finally, businesses that sell taxable goods or services must register for a sales and use tax number from the North Carolina Department of Revenue. You’ll be required to collect sales tax from your customers, file tax returns, and remit the tax to the state on a monthly, quarterly, or annual basis. The filing frequency depends on the amount of tax you collect from customers.
Step 4: File your LLC articles of organization.
The next step to starting an LLC in North Carolina is to file your LLC articles of organization (Form L-01) with the Secretary of State. Once approved by the state, the articles of organization will officially grant your LLC the authority to operate in North Carolina.
The following information will be needed to complete the North Carolina articles of organization document (shown below):
- Business name and address
- Name, address, and signature of all LLC members
- Name and street address of the registered agent (no P.O. boxes)
- Desired effective date of the LLC’s formation, if not the date of filing
As we mentioned above, if you’re in a professional occupation and are forming a PLLC, then you’ll need to file a different document. You’ll file PLLC articles of organization (Form PLLC-02).
Once you’ve completed the articles of organization document, you can file online, by mail, or in-person—you’ll also need to pay the $125 filing fee. For the fastest processing, you’ll want to file online.
After you’ve filed, the Secretary of State will look over your articles of organization to make sure all the required information is provided. Assuming everything is accurate, they will file a copy of your articles in the state records and return the original to your registered agent’s address.
Generally, it takes about five to seven business days for the Secretary of State to receive, process, and return your documents.
Foreign LLCs Operating in North Carolina
If you’ve already formed your business under the laws of another state and now want to operate in or expand to North Carolina the process is slightly different. In this case, you’re considered a foreign LLC and must file a certificate of authority (Form L-09) with the Secretary of State. The filing fee is $250.
You’ll also have to attach a certificate of good standing from your home state to this form.
Step 5: Create an LLC operating agreement.
Once you’ve filed your articles of organization and they’ve been processed and returned by the Secretary of State, you’ve officially formed an LLC in North Carolina.
This being said, however, there are a few additional steps you’ll want to take to fully complete the process.
To this point, you’ll want to start by drafting an LLC operating agreement. This document describes the daily operations of your LLC, as well as the rights and responsibilities of each member. North Carolina business owners are not obligated to create an operating agreement, but having one creates guidelines that govern your LLC throughout the life of your business.
At a minimum, here’s what you should include in the operating agreement for your North Carolina LLC:
- Description of your LLC’s products or services
- Each member’s name and address
- Each member’s asset contributions to the LLC, voting rights, and profit share
- Whether your LLC is member-managed or manager-managed
- The manager’s name and address if the LLC is manager-managed
- The LLC’s meeting schedule and voting procedures
- The procedure for admitting new members to the LLC
- The procedure for electing a manager if applicable
- Terms and procedures for dissolving the LLC
Every member of the LLC should have an opportunity to review and sign the operating agreement, ideally after consulting with a lawyer. After every member signs, you can store your operating agreement with other business records.
Again, because an operating agreement is not required in North Carolina, you do not have to file this document with the state.
Step 6: Comply with federal, state, and local regulations.
Now that you’ve formed your LLC, the next step you’ll want to take is to review and follow the various federal, state, and local regulations that may apply to your business. Although the specifics will vary based on your business’s location and industry, overall, these regulations might include:
- Getting an EIN: It’s very likely that your LLC will need a federal tax ID number, also known as an EIN. This number will be used for your federal taxes, among other purposes. You can apply for an EIN from the IRS online.
- Employer guidelines: If your North Carolina LLC has employees, you’ll need to follow particular regulations as an employer—including new hire reporting, withholding payroll taxes, paying unemployment taxes, and purchasing workers compensation insurance.
- Paying taxes: Unless you choose otherwise, your LLC will be taxed as a pass-through entity, meaning each member will pay LLC taxes on their personal tax return for both federal and states income tax. On top of income taxes, you might have additional tax responsibilities including self-employment taxes, payroll taxes (withholding income tax and FUTA taxes), sales taxes, etc.
Step 7: File your annual report and keep your LLC in good standing.
Once you’ve done everything required to start your LLC in North Carolina, you’ll want to ensure that your business retains an active status and remains in good standing with the state.
First and foremost, this means filing an annual report with the Secretary of State. The annual report gives you an opportunity to update any business information that’s on file with the state.
You can file your annual report or online or by mail. If you file online (shown below), you’ll need to pay a $202 filing fee. If you file by mail, on the other hand, you’ll pay a $200 filing fee. The annual report is due April 15th of each year after the year of creation of your LLC.
In addition to completing an annual report, you’ll also want to pay your taxes on time, maintain any and all business licenses, and abide by any applicable regulations we discussed above, in order to keep your business in good standing with the state of North Carolina.
Moreover, you’ll want to ensure that you hold regular member meetings and document decisions in writing when a member or manager acts on behalf of the LLC.
FAQs About Starting an LLC in North Carolina
At this point, you should have a solid understanding of the steps you can follow in order to form an LLC in North Carolina. If, however, you have more specific unanswered questions, you can consult the information below:
How much does it cost to start an LLC in North Carolina?
Overall, starting an LLC in North Carolina is fairly affordable. Generally, you’ll only need to pay the $125 filing fee for your articles of organization to get started.
After the initial forming of your LLC, however, you’ll face the $202 or $200 filing fee for your annual report each year.
Additionally, depending on your business, you may face some of these fees throughout the process as well:
- $30 filing fee to reserve a business name for 120 days
- $26 filing fee to operate under a fictitious name
- $250 filing fee (instead of the typical $125) if your business was formed in another state and is looking to expand or move to North Carolina
How long does it take to set up an LLC in North Carolina?
As you’ve seen, the process of starting an LLC in North Carolina is fairly straightforward—and can be completed on your end in a matter of hours. For the state to approve your filings, however, it may take anywhere from five to seven business days for the Secretary of State’s office to receive, process, and return your documents.
This being said, as we’ve mentioned, you’ll expedite your timeline for approval if you file online, as opposed to filing by mail. In addition, it’s worth noting that the state does offer two options for expedited services:
- 24-hour: This option allows you to submit your documents between 8 a.m. and 5 p.m. on a specific business day and guarantees that your document will be reviewed and filed, if acceptable for filing, or rejected, if not acceptable, within 24 hours from the time received. This expedited service will require a non-refundable fee of $100.
- Same-day: With this option, you can submit your documents before 12 p.m. on a single business day and the office guarantees that the document will be reviewed and filed, if acceptable for filing, or rejected, if not acceptable, prior to 5 p.m. of the day received. Same-day service requires a non-refundable fee of $200.
What are the North Carolina single-member LLC filing requirements?
Although this may not be the case in every state, in North Carolina, the steps to form a single-member LLC are generally the same as a multi-member LLC.
Therefore, whether you’re forming a single- or multi-member LLC in North Carolina, you can follow the steps we’ve outlined above.
What are the pros and cons of starting an LLC in North Carolina?
If you’re trying to decide whether to start an LLC or another entity type in North Carolina, you might refer to the following pros and cons to help you through the process:
- The members of an LLC aren’t personally liable for business debts and lawsuits
- Comparing an LLC vs. a corporation, it’s easier and less expensive to start an LLC—plus, LLCs have fewer recordkeeping requirements
- LLC members can vote for the company to be taxed either as a pass-through entity or a corporation
- LLCs are more difficult and expensive to start than sole proprietorships and partnerships
- LLC members must pay federal self-employment taxes on all profits, even retained earnings
- LLCs can’t issue stock, making it difficult to raise money from investors
- North Carolina LLC formation fees are higher than average, costing $125 for filing articles of organization, and at least $200 each year for annual reports
How do you dissolve an LLC in NC?
If you decide to close your business and cease operations, you’ll want to officially dissolve your LLC. To dissolve an LLC in North Carolina, you’ll need to complete Form L-07, Articles of Dissolution of Limited Liability Company, and file it with the Secretary of State.
The filing fee for this document is $30.
The Bottom Line
At the end of the day, starting an LLC in North Carolina is a fairly simple and straightforward process. In addition, although at $125, the initial filing fee isn’t too consequential, North Carolina does require a significant yearly fee (at least $200) for annual reports.
This being said, as you’re trying to decide if an LLC is right for your business, as well as how to get started in North Carolina, you can always consult a business attorney or online legal service for assistance. These professionals can answer any questions you have, as well as ensure that you understand and follow any and all government regulations that apply to your business.