A limited liability company (LLC) is a way to legally structure a business. It combines the limited liability of a corporation with flexibility and lack of formalities provided by a partnership or sole proprietorship, as well as certain tax advantages. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
To start an LLC in North Carolina you will need to take the following steps:
- Choose a name for your LLC
- Appoint a registered agent
- File Articles of Organization
- (Optional) Prepare an LLC Operating Agreement
1. Choose a Name for Your LLC
Under North Carolina law, an LLC’s name must contain the words: “Limited Liability Company,” or the abbreviations “L.L.C.,” or “LLC,” or the combination “ltd. liability co.,” “limited liability co.,” or “ltd. liability company.” Your LLC’s name must be distinguishable from the names of other business entities already on file with the North Carolina Secretary of State.
2. Appoint a NC Registered Agent
Every North Carolina LLC must have a registered agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be a North Carolina resident, such as the member or organizer, as well as a business entity authorized to do business in North Carolina. The registered agent must have a physical street address in North Carolina.
3. File Articles of Organization
A North Carolina LLC is created upon the approval of a filed Articles of Organization with the North Carolina Secretary of State. The articles must include:
- the LLC’s name;
- the name and address of of each person signing the articles;
- the name and address of the LLC’s registered agent;
- the LLC’s address and phone number of the LLC’s principal office, if any;
- the effective date of the Articles if not upon filing, and
- the signature of a member, the organizer or their representative.
The state filing fee for the Articles of Organization is $125.
4. Prepare an Operating Agreement
An LLC operating agreement is not required in North Carolina, but can be helpful. The Operating Agreement is the primary document that establishes the rights, powers, duties, liabilities, and obligations of the members among themselves and to the LLC. The Operating Agreement is an internal, in-house document that is not filed with the Secretary of State.
5. Tax and Regulatory Requirements
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN
If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). Our business attorneys are able to help our clients obtain their new EIN.
Business Licenses
Depending on its type of business and where it is located, your LLC may need to obtain local and state business licenses or permits. For local licenses, check with the clerk for the city where the LLC’s primary place of business is located (or county if it is in an unincorporated area). For state license information, check state boards and commissions websites.
NC Department of Revenue
If you have employees or will be selling goods and collecting sales tax, you will need to register with the North Carolina Department of Revenue (DOR).
File Annual Reports
Domestic and foreign North Carolina LLCs must file an annual report with the North Carolina Secretary of State. LLC annual reports are due for the year in which they are filed. Any LLC in existence on or before April 15th of any given year owes an annual report for that year. LLCs that form after April 15th will not owe an annual report until April 15 of the next calendar year. The NC Annual Report filing fee is $200.
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This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney. For more information please contact: Sonya Tien | Tel: (888) 920-8180