For North Carolinians wishing to form an LLC, you’re in luck. The state has taken most of the process online in recent years, reducing the length of time it takes to get a business up and going. Why an LLC? This type of business structure has gained popularity as a way to combine the pass-through tax benefits of a sole proprietor with the asset protection of a corporation. An LLC is less complicated than a full-blown corporation, and often perfect for small businesses or professional service providers. By following these steps in order, you could have a legal LLC up and going in North Carolina within a matter of days.
Name the Business
Before anything else, take a look at the business name database maintained by the North Carolina Secretary of State’s office. The rules are simple. You can’t use a name already registered to another business (though making small changes might be okay). The name you settle on must include a suffix that designates it as an LLC. You could spell out “Limited Liability Company” or use some version of the “LLC” abbreviation.
In the event you find a name but aren’t ready to go live with your LLC yet, the state will allow you to reserve a name for 120 days for a $30 filing fee. This is one part of the process that is not available online yet, and must be completed by postal mail.
Before filing official paperwork with the state to open your LLC, you need to choose a registered agent. The primary purpose of this person is to serve as a physical street address where legal papers can be delivered in the event of a lawsuit against your company. You should choose someone who is either a North Carolina resident or foreign or domestic corporation licensed to do business in the state. You may choose yourself, an attorney, or someone you trust.
A North Carolina LLC is recognized as official by the state after filing what are called the Articles of Organization with the North Carolina Secretary of State. Besides designating a registered agent, you should be prepared to also provide names and addresses for the LLC and each member who will sign the Articles. If there is a future dissolution date, list that as well. The Articles of Organization can be filled out online in PDF, printed and then uploaded to the Secretary of State’s website. The cost for the filing is $125.
State, Local, Federal Requirements
You’re probably already aware that if you sell a good or service you need to collect and remit sales tax back to the state. For this, register online with the North Carolina Department of Revenue. Most businesses – depending upon location – are required to get one or more local business licenses. Check with your city government for guidance.
An Employer Identification Number (EIN), available online from the IRS, is needed if you intend to hire employees, have more than one member in your LLC, or have chosen to be taxed as a corporation. This number becomes important when it’s time to remit FICA taxes to Uncle Sam.
North Carolina differs from some states in that an Annual Report might be due for the initial year your LLC operates. The dividing line is April 15. If your business is created prior to that date, you must file an Annual Report. An LLC opened after that date is not required to file until the following year. The North Carolina Secretary of State’s office website allows you to file an annual report online. The cost is $200 plus an extra $2 if you choose to file electronically.
Deciding which direction to go with your business structure is a big decision, perhaps one best made in consultation with tax and legal professionals. It’s difficult, though not impossible, to change the structure after opening. A better strategy would be to consider all the angles ahead of time and be able to stick with your first choice. In many cases an LLC fits the bill perfectly.