A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to form an LLC in North Carolina. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
Under North Carolina law, an LLC's name must contain the words: "Limited Liability Company," or the abbreviations "L.L.C.," or "LLC," or the combination "ltd. liability co.," "limited liability co.," or "ltd. liability company."
Your LLC’s name must be distinguishable from the names of other business entities already on file with the North Carolina Secretary of State. Names may be checked for availability at the North Carolina Secretary of State business name database.
You may reserve a name for 120 days by filing an Application to Reserve a Business Entity Name with the North Carolina Secretary of State. The application must be filed by mail. The filing fee is $30.
Although not required, you might want to register your LLC’s name as a federal or state trademark. For details, see Nolo's section on Trademark Law.
Every North Carolina LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be a North Carolina resident, or a business entity authorized to do business in North Carolina. The registered agent must have a physical street address in North Carolina.
A North Carolina LLC is created by filing Articles of Organization with the North Carolina Secretary of State, Business Registration Division. The articles must include:
The articles may be filed online or by postal mail. The filing fee is $125.
An LLC operating agreement is not required in North Carolina, but is highly advisable. The Operating Agreement is the primary document that establishes the rights, powers, duties, liabilities, and obligations of the members among themselves and to the LLC. The Operating Agreement is purely an internal document and is not filed with the Secretary of State. If an existing or newly created LLC does not adopt an operating agreement, its existing articles of organization, bylaws or operating agreement, and/or its member control or limited liability company agreement will collectively become its operating agreement.
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain local and state business licenses or permits. For local licenses, check with the clerk for the city where the LLC's primary place of business is located (or county if it is in an unincorporated area). For state license information, check state boards and commissions websites. For more information, see Nolo's article How to Get a Small Business License in North Carolina.
Department of Revenue: In some cases, for example if you have employees or will be selling goods and collecting sales tax, you’ll need to register with the North Carolina Department of Revenue (DOR). For many taxes, you can register online at the DOR website. For more information on North Carolina LLC tax registration, check Nolo's article, North Carolina Annual LLC Filing Requirements.
Domestic and foreign North Carolina LLCs must file an annual report with the North Carolina Secretary of State. LLC annual reports are due for the year in which they are filed. In other words, any LLC in existence on or before April 15th of any given year owes an annual report for that year. LLCs that form after April 15th will not owe an annual report until April 15 of the next calendar year. The annual report may be filed online at the Secretary of State Online Annual Report Editor or by postal mail. The filing fee is $202, $200 for postal mail filings.
If you are just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the right business structure for you, see What is a Limited Liability Company (LLC)?
It is important to make sure that your LLC's name is distinguishable from the names of other existing businesses on file with the North Carolina Secretary of State. You can conduct a name search for free on the North Carolina Secretary of State website to make sure your proposed name is available.
Filing yourself is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will often cost you hundreds, if not thousands, of dollars in the process. Nolo's Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $79.00.
North Carolina does not require LLCs to have operating agreements, but it is highly advisable to have one. An operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law by default. For more information, see The LLC Operating Agreement.
To do business in North Carolina, all LLCs organized outside of the state must register with the North Carolina Secretary of State. Foreign LLCs must appoint a registered agent for service of process physically located in North Carolina. To register, file an Application for Certificate of Authority For Limited Liability Company. The application may be filed online or by mail. The filing fee is $250.
The completed application must be accompanied by a certificate of legal existence or good standing from the foreign LLC’s home state, dated no more than six months old.
Before filing, make sure the LLC’s name is available in North Carolina by checking the North Carolina business name database. If the name is not available, the foreign LLC must adopt a fictitious name for use in North Carolina. A copy of the resolution of the LLC's managers adopting the fictitious name must be attached to the application.
For most formation purposes, a North Carolina single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in North Carolina are the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see Nolo’s article, How Single-Member LLCs Pay Federal Income Tax.
If you provide a licensed professional service in North Carolina and want to form an LLC, you will be required to form a professional LLC (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to obtain a North Carolina state license before practicing, then you are a professional service. Each member of the company must be licensed in order to form a PLLC. To learn more about forming a North Carolina PLLC, see our article, How to Form a Professional LLC in North Carolina.
If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. Learn about the steps you will need to take in How to Dissolve an LLC in North Carolina.