How to Form a North Carolina LLC in 10 Steps
Limited Liability Companies or LLCs are common business structures in North Carolina. These business structures allow one individual or several to own their own portions of a given company. Any profits that the LLC earns will be passed on to individual members. One of the benefits of an LLC is that it reduces owners’ exposure to liability from various company activities. Separate tax returns do not need to be filed for LLCs the way they do with corporations.
You’ll need to follow several key steps when forming your Limited Liability Company in North Carolina. They are as follows:
1. Choose Your Company Name.
Company names cannot be names used by any other business in North Carolina. If you prefer a filing service to run your name search or reserve your LLC name on your behalf, SunDoc can certainly do this for you. Just remember that you need to choose a name that is available according to the state.
2. Understand the LLC Organizer Requirement.
You must name an LLC organizer on the Articles of Organization form. If you prepare and upload your own Articles, by default you are the organizer. However, anyone can be named as organizer, not necessarily a member or manager of the LLC. For example, an attorney involved with the business formation often acts as organizer. If you choose SunDoc to file your Articles of Organization, then SunDoc can be named as your organizer.
3. Designate a Registered Agent.
Your company needs to have a registered agent, which can be either a firm or an individual. Find out more about registered agents and why you need them for your LLC with the following article: Registered Agent Service. Your registered agent will be designated on your Articles of Organization form. Go to step six for additional information on Articles of Organization.
4. Decide Your Ownership and Management Structure.
In addition to choosing a registered agent, you also need to designate your management structure. You’ll need to decide this on your Articles of Organization form. You can choose between management by all members, multiple manager management, or management by one individual (one manager).
5. Create an Operating Agreement.
North Carolina doesn’t require an LLC to have an Operating Agreement. An implied operating agreement will be formed according to the default conditions specified in North Carolina law. On the other hand, you should determine if the default conditions will be in your best interest.
Is your LLC going to be manager-managed? If so, you will need to create an Operating Agreement. This will be essential for your business records. A manager-managed LLC will only be valid when you declare it in both the Operating Agreement and Articles, according to North Carolina law.
The Operating Agreement is the legal engine that runs your business. Serious, crucial matters concerning voting, fiduciary constraints, money, and liability are at play with the Operating Agreement. It does the following:
- Creates its governance
- Manages its working capital
- Pays out profits
You may also consult an attorney or accountant for advice.
6. File the Articles of Organization.
The actual moment that your LLC will be created according to the state of North Carolina is when the Secretary of State accepts the Articles of Organization that you file. Fortunately, filing this document is simple. The Articles of Organization is a three-page form.
This form simply provides basic company details, which the state needs to know. Filing your Articles of Organization requires knowledge of certain criteria, however. You’ll need to know the following:
- The new name of your LLC
- The address of your LLC
- Your LLC organizer
- Your chosen method of management
- Your registered agent
You will need to pay a filing fee. Publication in a newspaper of record is not necessary and neither is the filing of member names.
Would you prefer SunDoc to file your Articles of Organization for you? If time is an issue or you’d simply like to have a filing service work on your behalf, SunDoc can file your Articles of Organization for you.
7. Obtain an EIN and Open a Business Bank Account.
Congratulations! You’ve formed a registered North Carolina LLC. If you have an LLC with more than one member, you need to file for an Employer Identification Number with the IRS. This is true whether your business has employees or not. SunDoc can file for you or you can file with the IRS yourself.
An Employer Identification Number is also required by most banks in order to open a business account. Up until now, if you've been paying business expenses out of a personal account, this is a great time to set up your company's fiscal management. Be sure, from now on, to keep all receipts for reimbursement no matter the account you’ve used for payments. At this point you may also want to find an accountant for help with business matters.
8. Pay North Carolina State Taxes.
As with any business, you’ll need to pay North Carolina state taxes each year on behalf of your business. Selling any goods within North Carolina state lines will require that you collect sales tax as well. If you would like to learn more about paying North Carolina taxes, go to the Secretary of State of North Carolina’s website.
9. Determine Necessary Licenses and Permits.
Many business owners do not know this, but you will need to have business licenses or permits in order to operate your North Carolina business at the county level and at the city level. You might be surprised to find the hefty fines that are charged if you fail to operate with the proper business licenses.
10. File an Annual Report.
Your Annual Report is due on April 15th of each year after the year of formation. The Annual Report is a simple form that keeps the state up to date on your company information. And down the road when you make changes to your company, it will invariably be one of the forms you’ll need to file with the state.
You can locate the Annual Report form that you need to fill out on the Secretary of State of North Carolina’s website.
Important Notice: It is beyond the scope of this article to discuss your potential insurance needs, or matters relating to employees. You should consult an attorney or accountant with any questions about legal or financial matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.
For additional learning, please visit our LLC FAQs.
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