Are you ready to form an LLC in NC?
If yes, how much will it cost you, and how long does it take to start an LLC in North Carolina?
How do you go about forming an LLC and having the business legally operational? For answers to these questions and more, follow our detailed step-by-step guide.
You can also find the best LLC formation service in this article, the best states to form LLC here, and you can also check out our objective review on Rocket Lawyer.
How Long Does It Take to Form an LLC in NC?
How long will it take me to start a limited liability company in North Carolina?
This is one question that investors want to find out before forming an LLC business in North Carolina. The duration of starting a North Carolina LLC differs from that of other states. However, some factors determine how long it will take, irrespective of the state. Also, find out if it similar to, let’s say, effortless LLC forming in Colorado, or Ohio for that matter, here.
For instance, how long will it take you to fill in and file all the necessary legal documents that give you the green light to start a business in North Carolina state?
Your choice of filing method, whether by mail or filing online, also determines the duration. How about the time it takes the secretary of state to approve the documents such as the Articles of the organization?
Ordinarily, it will take the secretary of state three to five business days to process the legal documents and allow you to operate.
Are you in a hurry and can’t wait for the five business days to end?
If yes, you can use the expedited method route. Here, you’ll have the process complete within 24 hours or the same day. However, you’ll have to pay an extra $100 in addition to the normal filing fee.
When the processing is complete, you receive your notices of acceptance electronically. Thus, you can proceed with other requirements, such as starting a business bank account for the business immediately.
We also covered IncFile and Zen Business review in this post. In addition we give a ZenBusiness vs LegalZoom side-by-side review.
How Much Will It Cost You to Start an LLC in North Carolina?
To start operations, you need to file LLC Articles of Organization with the secretary of state. You can file the article online or by mail and pay a $125 filing fee.
If you wish, you can go the expedited process route that will take you 24 hours to have the process complete. However, it will cost you an additional $100 in addition to the normal $125 filing fee.
Before you can settle on a business name, you should check for its availability with the North Carolina Secretary of State business name database.
If the name is available, you can reserve it for 120 days. You need to file for an Application to Reserve a Business Entity name by mail. It will cost you $30 to reserve the name.
Can you file an LLC for free?
If you want to start a North Carolina LLC but don’t have the money for it, you can do the process yourself.
Note, the North Carolina LLCs state filing fees are unavoidable, and you should make sure you budget for them.
So, what is the process of starting an LLC in the state of North Carolina?
Step 1: Register an LLC name ith the North Carolina Secretary of State
When you start an LLC in North Carolina, you must distinguish it from any other business in North Carolina. As such, the first step towards starting your LLC in North Carolina is coming up with an LLC name.
According to North Carolina law, the LLC name must and you should choose a name that contains the phrase “limited liability company” or the abbreviations, LLC, L.L.C. You can also use the combinations “ltd. liability company, “ltd. liability co.,” or “limited liability co.”
You can also use an alternate name or DBA (doing business as) instead of the legal name of your LLC in North Carolina. You should file an Assumed Business Name Certificate with the County register of deeds to use an assumed name.
You should file the application by mail and pay a $26 filing fee.
Step 2: Appoint a Registered Agent for your LLC in North Carolina
Every LLC operating in North Carolina should have a registered agent for service of process in the state.
Why do you need a registered agent for your North Carolina LLC?
As an LLC, you may sometimes receive lawsuits, court orders, and tax forms. Instead of receiving the documents yourself, a registered agent receives them on your behalf. Think of a registered agent as the link between your North Carolina LLC and the state.
A registered agent must be an individual who is a legal resident of North Carolina. It can also be a company registered to transact business in the state and also allowed to act as a registered agent. For instance, you can get a registered agent service to act on behalf of your business. However, you’ll have to pay a registered agent service fee.
Nothing stops you from appointing yourself, your family or friend, or any other member of the LLC as a registered agent. The registered agent must have a physical street address in North Carolina.
In other states, a registered agent is known as a statutory agent.
The secretary of state can dissolve your limited liability company and withdrawal your good standing status if you don’t comply with the registered agent requirement.
Step 3: File Articles of Organization for your Limited Liability Company
The Articles of Organization is the legal document that allows you to operate as a North Carolina LLC.
You should file the Articles of Organization with the secretary of state in North Carolina, Business Registration Division. The Articles of Organization should include:
- Name of LLC
- Name address of everybody signing the Articles of Organization
- Name and address of the registered agent
- Address and phone number of the LLCs principal office
- The effective date of the Articles of Organization for your limited liability company, if not upon filing
You can file the articles of organization online or by mail and pay a $125 filing fee.
Step 4: Prepare an Operating Agreement for the North Carolina LLC
It is not a requirement for you to prepare an LLC operating agreement though it is highly advisable.
The operating agreement establishes the rights, obligations, duties, and responsibilities of members and managers towards themselves and the company.
The operating agreement is an internal document, and you don’t need to fill it with the North Carolina secretary of state.
The main advantage of having an LLC operating agreement is to avoid future conflicts. With the managers and members knowing their rights and duties, it is unlikely any conflict will arise.
Why else do you need an operating agreement for your North Carolina LLC?
An LLC operating agreement is also essential as it enhances your personal limited liability.
The operating agreement establishes the business as a limited liability company. As such, in case of any legal suits or court orders, the court will go after the company assets and not your personal ones.
Step 5: Obtain an EIN for the North Carolina LLC
After preparing an operating agreement, you should then get an employer identification number for your LLC in North Carolina for federal tax purposes.
An EIN is also known as an employer identification number (EIN) or a federal tax identification number (FTIN). The EIN acts as a social security number that identifies your business.
Why do you need an EIN while forming an LLC in North Carolina state?
Every LLC in the state of North Carolina must obtain an EIN. The requirement applies to both single-member or multi-member LLCs. Getting an EIN for single-member LLCs ensures that it is taxed as a corporation and not a sole proprietorship.
You require an EIN for your LLC business in the state of North Carolina for the following reasons:
- opening a business account
- filing and managing federal and state taxes
- hire employees
Depending on the nature of your business, you may have to get other business licenses. Make sure you inquire from licensing boards and local authorities on the business licenses you need.
- An LLC in North Carolina is looked at as a corporation, limited partnership, or a single-member LLC. As Such, the LLC in North Carolina is subject to federal income tax classifications. Depending on the classification you choose, you will have different federal tax responsibilities.
The North Carolina LLC personal income tax is an example of the income taxes that the LLC must file with the North Carolina Department of revenue. If you are selling goods and collecting sales tax, you should also make sure you register with the department of revenue.
For many tax classifications, you can register online at the state department of revenue website. When you are through, the secretary of state offers you a good standing status.
Step 6: File your North Carolina LLC Annual Report
Every North Carolina LLC must file an annual report with the North Carolina secretary of state.
Any North Carolina LLC that is in business on or before April 15th should file the annual report for that year. If North Carolina LLC is in existence after April 15th, it should file an annual report next year.
The LLC may file the annual reports with the North Carolina secretary of state by mail or online and pay a $200 filing fee. If you file online, there is an additional $18 electronic filing fee.
If you don’t file the annual reports, the secretary of state can revoke the LLC in North Carolina and withdraw the LLCs good standing status.
The annual report for the North Carolina LLC should be mailed to the Secretary of State, Corporations Division, Post Office Box 29525,
Raleigh, NC 27626-0525.
Conclusion
Understanding the North Carolina LLC formation process is vital as it makes it seamless for business owners to register their business. It also helps the business owners to save costs that they would use to hire a formation service.