How Much Does It Cost to Form an LLC in North Carolina in 2023?

North Carolina is a state in the southeastern region of the United States. North Carolina is the 28th largest and 9th-most populous of the 50 United States. It is bordered by Virginia to the north, the Atlantic Ocean to the east, Georgia and South Carolina to the south, and Tennessee to the west. Raleigh is the state’s capital and Charlotte is its largest city.

The Charlotte metropolitan area, with an estimated population of 2,569,213 in 2018, is the most-populous metropolitan area in North Carolina, the 23rd-most populous in the United States, and the largest banking center in the nation after New York City. The Raleigh metropolitan area is the second-largest metropolitan area in the state, with an estimated population of 1,362,540 in 2018, and is home to the largest research park in the United States, Research Triangle Park.

Do you intend starting an L.L.C. in North Carolina and have no idea on what to do? You have come to the right place. In this article, we will be sharing a step-by-step guide on forming a limited liability company in North Carolina. However, before we get started, let us take a quick look at North Carolina and the benefits of creating an L.L.C. in the city.

The Cost

If you want to form an LLC in North Carolina, you are required to file your Certificate of Formation with the North Carolina Secretary of State and wait for your LLC to be approved. You can only file your LLC by mail (there is no online filing yet). The state filing fee is $125 and this fee can change hence you are advised to check with the Corporations Bureau for the most recent fees.

How to Form an LLC in North Carolina

Here are some steps to follow if you want to form an LLC in North Carolina;

STEP 1: Choose A Name for Your Limited Liability Company (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. Names may be checked for availability at the North Carolina Secretary of State business name database.

You may reserve a name for 120 days by filing an Application to Reserve a Business Entity Name with the North Carolina Secretary of State. The application must be filed by mail. The filing fee is $30.

Although not required, you might want to register your LLC’s name as a federal or state trademark.

To give you a better understanding, here are some of the naming guidelines for North Carolina:

• Your company name must contain the phrase “Limited Liability Company” or any of its abbreviations (L.L.C. or L.L.C.)
• Your company should not include words or phrases that might make the public confuse your company with a government agency such as F.B.I., State Department, NASA, Treasury. Examples of such restricted words include Bank, University, and Attorney.
• If you want to make use of restricted words like Attorney, Bank and the rest, you will need more paperwork as well as a licensed individual such as a lawyer or doctor to be members of your L.L.C.

So also, you must make sure that the name you want to use is not already taken. You can be check if the name is unique by searing the name on the State of North Carolina Website. Also, make sure your business can use its name as a web domain. Even though creating a business website is not on your plan, it is best you purchase the URL to stop others from using it.

After you have registered a domain name, consider creating a professional email account. A professional email that makes use of your domain name is vital to establishing trust between your business and its customers. In this modern era, where scam is on a high, companies need to make use of a professional email address to provide a sense of professionalism and credibility.

Please note that you don’t have to use your LLC’s official legal name registered in your Articles of Organization when you do business out in the real world. Instead, you can use an assumed name, also called a trade name, “DBA” (short for doing business as), or fictitious business name.

To do so in North Carolina, you must register your assumed name with the county where your LLC does business. File an Assumed Business Name Certificate with the county register of deeds. A single application can cover multiple counties if your LLC does business in more than one. The application must be filed by mail. The filing fee is $26. No renewal registration is required.

Step 2: Appoint A Registered Agent in North Carolina

Next, you are required to choose a registered agent for your L.L.C. in North Carolina. A Resident Agent is the person or company who receives your LLC’s documents, notices and legal mail (called Service of Process). Because of this, the Resident Agent must have an actual street address in North Carolina (PO boxes are not allowed by the state). Picture your registered agent as your company representative to the state.

It is important to note that not everyone can be a registered agent. For a person to be eligible to become a registered agent, the person or corporation must be a resident of North Carolina. That is to say, the individual or corporation must have a physical address within the state.

If any member knows the ropes of being a registered agent, you may elect him or her rather than hiring one. This will help you save some dollars, especially if you are running a small business. However, hiring a seasoned registered agent offers tons of benefits like privacy and peace of mind. Please note that you, your friend or family members or a commercial resident agent are qualified to be your LLC’s Resident Agent.

Step 3: Prepare and File an Articles of Organization

A North Carolina LLC is created by filing Articles of Organization with the North Carolina Secretary of State, Business Registration Division. 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 (or check box indicating no principal office)
• the LLC’s email address (optional)
• the effective date of the Articles if not upon filing, and
• the signature of a member, the organizer or their representative.

Please note that the articles may be filed online or by postal mail. The filing fee is $125.

Step 4: Create an Operating Agreement

An LLC operating agreement is not required in North Carolina, but is highly advisable. 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 purely an internal document and is not filed with the Secretary of State. If an existing or newly created LLC does not adopt an operating agreement, its existing articles of organization, bylaws or operating agreement, and/or its member control or limited liability company agreement will collectively become its operating agreement.

An Operating Agreement lists the rights and obligations of the members of the LLC. These include rules on how the LLC should be run, how taxes are to be paid, and how profits/losses are to be shared among the members.

The Operating Agreement also contains the list of members of your LLC and how much their stake is in the business. Even if you have a Single – Member LLC (you’re the only owner), it’s still best practice to have an Operating Agreement.

The bottom line is that, in case your LLC is sued, having an Operating Agreement shows that your LLC is operating properly. This helps maintain your personal liability protection.

Step 5: Acquire an Employer Identification Number

An EIN is sometimes referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN) is a 9 – digit number similar to a social security number. The Employer identification number will be used to identify your business.

It is like a social security number for your company. An Employer Identification number is essential because you will need it to open a business account for your company, to hire employees as well as tax purposes.  You can obtain your E.I.N. from the I.R.S. after creating your company. You can do it via mail or online. Note: It won’t cost you a dime to get an E.I.N. from the I.R.S.

You can obtain an EIN from the IRS either

• Via mail (approval takes 4 weeks)
• Via fax (approval takes 4 business days)
• Via online application (approval is instant at the end of the application)

Step 6: North Carolina Tax and Regulatory Requirements

Please note that an 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). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.

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.

Department of Revenue: In some cases, for example if you have employees or will be selling goods and collecting sales tax, you’ll need to register with the North Carolina Department of Revenue (DOR). For many taxes, you can register online at the DOR website.

Step 7: Securing Business Licenses and/or Permits

The next step you are expected to take is to secure your business license and permits as the case may be. The type of business licenses and/or permits your LLC will need to legally operate in North Carolina will depend on its location and the industry it is involved in.

Please note that in order to operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc. The details of business licenses and permits vary from state to state. Make sure you read carefully. Don’t be surprised if there are short classes required as well.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain. To find out more, contact your local agencies in the city, town or county where your LLC is located.

Step 8: Open Your LLC Bank Account

In order to keep your business finances apart from your personal finances, it is advisable that you open a separate bank account for your North Carolina LLC. It will indeed help you maintain your personal liability protection. A separate bank account helps maintain your liability protection and it also makes business accounting and taxes a lot easier.

The items needed to open an account in North Carolina are your approved Articles of Organization, EIN Confirmation Letter from the IRS, and your driver’s license or passport. We also recommend calling the bank ahead of time to find out if additional documents are required.

Tips: Look for free business checking: Call a few banks in North Carolina and take down notes for comparison. Some banks charge monthly maintenance fees for your LLC’s checking accounts, others don’t.

Debit card: A debit card for your LLC will be issued when opening the account.

Credit card: If you want to start building business credit for your North Carolina LLC (or get travel and cashback rewards), you can get a credit card or two for your LLC. We recommend using creditcards.com to find a business credit card.

Step 9: Apply and Obtain Your Business Phone Number

Instead of using your home telephone number or your cell phone, you can purchase an affordable “virtual business number” specifically for your North Carolina LLC. You can set this virtual business phone up to forward to your cell phone, go through voice prompts, or configure it any way you’d like.

You can check out Phone.com as they have the cheapest plans and their customer service is excellent. They offer local phone numbers as well as 1-800 toll-free numbers. You can easily setup call forwarding, pre-recorded prompts, and get voicemail messages forwarded to your email.

Getting a separate business phone number for your North Carolina LLC is also a good idea in order to keep your actual number private from those pesky “public record” websites.

Step 10: File Your LLC Annual Report

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. In other words, 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 annual report may be filed online at the Secretary of State Online Annual Report Editor or by postal mail. The filing fee is $202, $200 for postal mail filings.

It is important to point out that in North Carolina, an LLC may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.

Step 11: Hiring of Employees

Of course, registering an LLC means that you will need employees and in order to get it right as regard hiring employees, then you should ensure that you stay on the side of the law and here are some steps you should follow:

• Verify that new employees are able to work in the US
• Report employees as “new hires” to the State
• Provide workers’ compensation insurance for employees
• Withhold employee taxes
• Print compliance posters and place them in visible areas of your workspace

Lastly, ensure that you find out more information from the North Carolina Department of Labor, Licensing, and Regulation website.

Conclusion

Please, note that the information in this article is provided only for general purpose and it is no way a legal advice. No lawyer – client relationship is established or should any such relationship be assumed. For legal advice, please consult a professional lawyer.