If you want to start and run a North Carolina limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for North Carolina LLCs.
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. Blank report forms are not available for download; instead, you can download a form already containing key information for your LLC from the SOS website. Only a few pieces of information, such as a brief statement of the nature of your LLC's business, and the name of your LLC's registered agent, the street address of your LLC's registered office, and information about your LLC's principal office and company officials, are required to complete the report. If you file by mail you will send your report directly to the North Carolina Department of Revenue (DOR).
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. The filing fee is $200.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states do impose a separate tax or fee on LLCs for the privilege of doing business in the state. North Carolina, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of North Carolina, like almost every other state, has a corporation income tax. In North Carolina, the corporate tax is a flat 5% of taxable income. In addition, North Carolina assesses a so-called corporation franchise tax. Your LLC may also be subject to this tax. Both taxes are payable to the state's Department of Revenue (DOR). Use the state's corporation income tax return (Form CD-405) to pay both taxes. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, North Carolina employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering your business with the DOR either online or on paper (Form NC-BR). Once you've registered, you'll need to file withholding taxes on a periodic basis (typically monthly or quarterly) using Form NC-5. You'll also need to use some version of Form NC-3 each year to reconcile your LLC's tax withholding.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through North Carolina's Division of Employment Security (DES) which is part of the state's Department of Commerce. You can register for these taxes online or by using Form NCUI 604. Then, each quarter, use Form NCUI 101 to report on wages and pay the UI taxes. For more information, check the DES website.
If your LLC will sell goods to customers in North Carolina, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online or mail in Form NC-BR. After you've registered, you'll be sent a Certificate of Registration. Then, on a periodic basis (usually monthly or quarterly), you must submit sales tax returns to the DOR. You can do this by mail or online. For more information, check the DOR website.
If you will be doing business in states other than North Carolina, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in North Carolina, see Nolo’s article,50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.