North Carolina's company formation laws and how to form an LLC

Are you planning to start a business in the state of North Carolina? Starting a business in North Carolina necessitates more than just an entrepreneurial mindset. There are specific filing requirements and fees to create an LLC in North Carolina.

Things to consider before you file for LLC in North Carolina

First and foremost, prepare the necessary forms to fill out and the filing fees in advance. Pricing and documents for an in-state or domestic entity will differ from those for an out-of-state or foreign entity.

The filing fee for a domestic LLC in North Carolina is $125, and $250 for a foreign entity. LLCs must also file an annual report with the Secretary of State, costing $200.

How to form an LLC in North Carolina

Choose a name for your LLC

When choosing a name for your company, remember that your company name should be distinguishable from any other company registered under the North Carolina Secretary of State.

That being said, you can choose any name that works best for you, but you must ensure it is available before you file. You can use the North Carolina Secretary of State's Business Registration search engine to check whether your desired company name is available.

Simultaneously, you need to keep in mind that your company name must include the phrase "limited liability company." You can also use abbreviations such as "L.L.C." or "L.L.C." It is possible to reduce the word limited to "Ltd." and the word company to "Co."

Choose a registered agent in North Carolina

To operate an LLC in North Carolina, you must have a registered agent and specify the location of your "registered office" in North Carolina, where the agent can be found during regular business hours.

The function of a registered agent is to accept and forward legal documents and notices to the business owner.

A person residing in North Carolina over 18 can qualify as a registered agent. And the registered agent is required to be already active in North Carolina before the LLC is formed.

Additionally, a corporation, nonprofit, or LLC may act as a registered agent, given that their business address is the same as their registered office address.

Fill Out and Submit Your North Carolina LLC Forms

To officially register your company with the Secretary of State in North Carolina, fill out and submit Form L-01 Articles of Organization if you are forming your LLC as a domestic entity.

Alternatively, you need to fill out and submit Form L-09 Certificate of Authority if you are a foreign business entity and wish to register an LLC in North Carolina as authorized to do business. You can apply online or by mail, or by uploading a PDF file.

Create an Operating Agreement

An operating agreement outlines how your company will operate, assigning each individual a role or level of financial responsibility.

Creating an operating agreement is not mandatory while forming an LLC in North Carolina, but it is generally recommended. It makes the legitimacy of your company even stronger. It also aids in preventing disputes or confusion among the LLC owners.

Get an EIN (Employer Identification Number)

EIN or Employer Identification Number, also known as Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN). These are nine-digit numbers assigned by the Internal Revenue Service (IRS).

The EIN helps the IRS to identify businesses for tax purposes. It is your business's Social Security Number. You will require an EIN to open a business bank account, hire employees, and file and manage federal and state taxes.

You can obtain an EIN from the IRS for free online or by mail.

North Carolina LLC tax requirements and fees

North Carolina LLC taxation requirements and fees are as follows:

Annual Report

LLCs in North Carolina must file an annual report on or before April 15, for which the fee is $200.

Federal Tax

A Federal Tax Identification Number (FTIN or EIN) is mandatory for every LLC in North Carolina with employees.

State Tax

A State Tax Identification Number is not a requirement in North Carolina.

How to form a Non-Profit Corporation in North Carolina

Forming a Non-Profit Corporation in North Carolina and obtaining the status of 501(c)(3) requires following certain steps.

Non-profit organizations are established mainly for religious, charitable, scientific, literary, or educational purposes and are exempt from federal and state taxes. These are classified as 501(c)(3). The steps to form a non-profit corporation in North Carolina are mentioned below.

Choose the board of directors and officers for your North Carolina non-profit corporation

The board of directors is in charge of managing the nonprofit's operations. Forming a non-profit corporation in North Carolina requires a minimum of 18 years of age for organizations involved in youth activities.

Choose a suitable name for your North Carolina non-profit corporation

The name of your North Carolina non-profit corporation must be unique, distinct, and memorable. It should express what your non-profit corporation is about and should be distinguishable from the names of other businesses or non-profit corporations, limited liability companies, limited partnerships, and limited liability partnerships in North Carolina.

Besides that, the name of your non-profit corporation must include the words; "corporation," "incorporated," "company," or "limited," or their abbreviation like "corp.," "inc.," "co.," or "ltd."

You can contact the Secretary of State to check your chosen name's availability or search the North Carolina Secretary of State's business name database. Furthermore, there are a few restricted words, for example, bank, trust, mutual, co-op, and wholesale. You may require special permission from legal authorities for these terms.

Choose a Registered Agent in North Carolina

Every non-profit corporation operating in North Carolina is required to have a registered agent in North Carolina. It can be an individual or a corporation agreeing to accept legal documents and notices on behalf of the corporation.

The mailing address of the registered agent must be included on file with your organization's paperwork, which becomes a public record.

You may even appoint yourself as your corporation's registered agent. However, a registered agent in North Carolina must meet the following requirements:

• A registered agent must be a person who lives in North Carolina and has a business address the same as the registered office.
• Alternatively, a registered agent may also be a domestic business corporation, a non-profit corporation, or an LLC (a foreign business corporation, a non-profit corporation, or an LLC authorized to do business in the state) with the business address the same as the registered office.

Prepare and file articles of organization for your non-profit organization

To establish your non-profit corporation, the first legal document you will need to file is the Articles of Incorporation. The fee for filing the Articles of Incorporation is $60. You may file it online or by mail.

It includes necessary information such as:

• Your non-profit organization's name and objectives include its charitable or religious mission.
• The registered agent's name and address.
• Whether or not the corporation will have members, the names and addresses of each incorporator, and the rules for how assets will be distributed in the event of dissolution.
• The county where the principal office is situated, its street address, and its mailing address, if different.

Get an EIN (Employee Identification Number)

An EIN is a nine-digit number you can obtain from the IRS, which helps your non-profit organization to accomplish important administrative tasks. Some of these include applying for 501(c)(3) status, submitting annual Form 990 to the IRS, or opening a bank account.

You can get an EIN by submitting IRS Form SS-4. You can submit the form online for free or by fax and mail, although online may be processed faster.

Hold an organizational meeting and create non-profit bylaws

An organizational meeting refers to your first board meeting, where you must address essential matters like creating bylaws, appointing officers, setting an accounting period, etc.

Bylaws are rules and procedures that your non-profit will use to hold meetings, elect officers and directors, and handle other corporate formalities required by North Carolina. However, your bylaws must comply with North Carolina laws.

Apply for Federal and State Tax Exemptions in North Carolina

You need to apply for federal and state tax exemptions in North Carolin to obtain the status of 501(c)(3) non-profit.

You will need to file and submit IRS Form 1023 to acquire federal tax-exempt status from the IRS. You can submit this form online for $275. You are advised to apply for federal tax exemption before applying for tax exemption in North Carolina.

Once you submit your Articles of Incorporation, the Secretary of State will inform the North Carolina Department of Revenue. The Department of Revenue will send your registered agent a notification letter and a questionnaire. You need to complete the questionnaire to the Department of Revenue with a copy of your Articles of Incorporation.

Obtain the necessary North Carolina Business licenses

Nonprofits in North Carolina are not required to obtain a general state business license. However, a license or permit may be required depending on the nature of your nonprofit's activities and location. For instance, if your business activities involve selling wine or beer at a fundraising event.

Final Thoughts

Like any other state, North Carolina has particular requirements and procedures for forming and operating a company.

Whether you want to expand your company's operations in North Carolina or start a new one, it is necessary to understand the steps involved.

These include choosing an appropriate name for your company, a registered agent, obtaining an EIN, understanding tax requirements, etc., to establish your LLC or nonprofit corporation successfully.