LLC Annual Report and Tax Filing Requirements in North Carolina

If you've organized your limited liability company (LLC) in North Carolina, you might wonder what you need to do to meet your ongoing legal obligations. In North Carolina, LLCs have to file annual reports, pay income taxes depending on their tax entity status, and potentially file additional tax returns.

North Carolina LLC Annual Report

The State of North Carolina requires you to file an annual report for your LLC. You can mail in the report or complete it online at the Secretary of State website.

The report asks you to update or confirm basic information such as your LLC's:

• registered agent
• principal office address, and
• company officials.

The annual report must be filed each year by April 15 except that new LLCs don't need to file a report until the first year after they're created. As of 2023, the filing fee is $200.

State Business Taxes in North Carolina

North Carolina, like the federal government, treats LLCs as pass-through tax entities. In other words, the company income passes through to the owners (members) who report and pay taxes on their share of the income on their individual income tax returns.

Electing corporate tax status. One of the benefits of an LLC is its flexible tax structure. LLC members can choose to have their LLC taxed as a pass-through entity (namely, a partnership) or as a corporation. When an LLC elects to be taxed as a corporation, the company itself must file a separate tax return and pay the income tax applicable to corporations. As of 2023, the tax rate for North Carolina corporations is a flat 2.5% of taxable income. Use Form CD-405 to file your corporation tax return with the Department of Revenue (DOR).

Might pay a franchise tax. Some states charge an additional tax or fee on companies for the privilege of doing business in their state. This type of tax is called a "franchise tax." North Carolina imposes such a tax on some types of tax entities:

• No franchise tax on LLCs taxed as partnerships (or single-member LLCs taxed as sole proprietorships).
• Franchise tax of $1.50 per $1,000 for LLCs taxed as C corporations (regular corporations).
• Franchise tax of $200 for the first $1 million and $1.50 per $1,000 for any amount that exceeds $1 million for LLCs taxed as S corporations.

The minimum franchise tax for both C corporations and S corporations is $200.

North Carolina Employer Taxes

Does your LLC have employees? If the answer is yes, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and aren't covered here—such as Social Security and Medicare taxes. North Carolina employers also must pay taxes to the state.

Withholding employee wages. You must register your business with the DOR to receive a withholding tax identification number. Submit Form NC-BR, Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Other Taxes and Service Charge, to register your business. You can submit this form online or mail a completed application to the DOR.

Once you've registered, you'll need to file withholding taxes on a periodic basis—either monthly, quarterly, or semiweekly. For monthly and quarterly filers, you can submit Form NC-5. All filers can pay the tax online with the DOR's eServices. Semiweekly payers also need to submit Form NC-5q quarterly to reconcile their payments. Regardless of your filing frequency, you'll need to use some version of Form NC-3 each year to reconcile your LLC's tax withholding. (You can find more information on the withholding tax FAQ webpage.)

Unemployment insurance (UI) tax. You must also pay UI tax to the North Carolina Division of Employment Security (DES), which is part of the state's Department of Commerce. You can register for these taxes online. Then, each quarter, use Form NCUI 101 to report on wages and pay the UI taxes. Starting in fall 2023, North Carolina will use a new system called "NCSUITS" for its UI tax program.

North Carolina Sales and Use Tax

If your LLC intends to sell taxable goods and services to customers in North Carolina, you'll need to collect and pay sales tax. You must register with the DOR to receive a sales and use tax number. After you've registered, the DOR will send you a certificate of registration. Then, on a periodic basis (usually monthly or quarterly), you must submit sales tax returns to the DOR. You can file and pay online using Form E-500.

In addition to state sales and use tax, you might be responsible for reporting and paying sales and use tax to your city or county. Make sure you check with your local taxing authorities for your reporting responsibilities.

Check the sales and use tax section of the DOR website for more details.

LLC Registration in Other States

Sometimes companies will do business outside of the state where they were initially formed. For example, suppose you organized your LLC in North Carolina, but you do business in North Carolina and South Carolina. In that case, you'd likely need to apply to do business in South Carolina.

Each state has its own rules for when you should register your out-of-state business and how. Typically, you'll need to obtain a certificate of authority or a similar document from that state to conduct business there. For more on registering your out-of-state LLC, see our state guide to qualifying to do business outside of your state.

Most businesses can file their annual reports and pay business taxes on their own or with the help of a tax adviser or accountant. But if you have legal questions specific to your situation, it could be a good idea to consult a business lawyer. An attorney can help you determine your filing and payment obligations. (For more on LLCs, see our section on running an LLC.)