Start an LLC in North Carolina

Quick facts about forming a North Carolina LLC

Filing Fee	$125
Processing Time	3-5 business days; same-day service available for an extra fee
Annual Report Fee	$200, due each year by April 15
Registered Agent Required	Yes, must have a physical North Carolina address
State Franchise Tax	None for LLCs
Business License	No statewide general license, but local governments often require business privilege licenses
Managing Authority	North Carolina Secretary of State, Business Registration Division

A limited liability company (LLC) is one of the main types of business entities that are relevant for someone who wants to start a business in any of the US states. There are several reasons and benefits to forming an LLC, especially for small businesses.

LLC registration may help you protect your personal assets if someone sues your business. For instance, should you fall behind on loan payments while you run your business as legally required, creditors might have a tough time coming after your personal assets to pay them when you have registered your business as an LLC.

If you’re considering North Carolina as the place to open your LLC, know that the state has consistently enjoyed a reputation as a business-friendly state. When CNBC News ranked the best states for businesses, North Carolina came in first among all 50 states. Access to capital, workforce, economy, and cost of doing business were just some of the many factors the news outlet evaluated in its annual ranking for 2022. 

The state requires all business owners except sole proprietors to register their business as a separate legal entity from themselves.

How to start an LLC in North Carolina in 5 steps

Here are the steps you’ll need to take in order to get open an LLC in North Carolina.

1. Name your North Carolina LLC
2. Choose a Registered Agent
3. File articles of organization
4. Create an Operating Agreement
5. Apply for an EIN

Below, you’ll find a detailed explanation and a short video to walk you through each step.

Step 1: Name your NC LLC

The first step to registering as an LLC in NC is to choose a business name in accordance with the state’s laws. If needed, you can reserve it until you can file your llc documents, and you can register for an assumed name if you’re gonna use a different one while conducting business.

In addition, after you have your business name you’ll want to think about a domain name and possibly registering for a trademark in order to add a layer of protection.

Choose a business name in accordance with NC’s requirements

North Carolina enforces some unique business naming requirements that you should know before you select the name.

• LLCs are required to choose a name that is not the same or substantially similar to other business names in the state (otherwise you could find yourself facing a lawsuit from another business).
• You can’t include any of the following in your business name unless you receive permission from a state licensing board: Architect; Bank; CPA; Insurance; Pharmacy; Realtor; Trust
• You need to choose a business name that a typical person would not find offensive due to race, disability, age, or any other protected class.
• You’ll need to include the phrase “limited liability company” or the abbreviation LLC somewhere in your business name.

Starting with a North Carolina business search is best. The following are resources you can use to make sure your business name is unique:

• North Carolina Association of Registers of Deeds
• North Carolina Trademark Registration
• United States Patent and Trademark Office

If you plan to trademark a symbol or any part of your business name (see more below), you will want to use one or both of the second two links to make sure no one else has claimed it.

Reserve a business name if needed

If you came up with an available name that you like and is in accordance with all of the state’s requirements, but for whatever reason you’re not yet ready to register your LLC, you can file for name reservation (Form BE-14) to assure the name will remain available. The fee is $10 and the reservation is for a period of 10 years.

File for an assumed name (if relevant)

Registering for an assumed name in NC, also known as DBA North Carolina (Doing Business As) allows you to operate your business under a different name than its legal registered name. Some business owners choose this option for branding purposes, or maybe after the business changed it’s offering and wish to use a name that better fits the market. People operating a franchise business also use different names for the LLC and DBA.

Assumed business name filings are processed by the relevant local County Register of Deeds. You’ll need to fill a form and pay a $26 fee.

Register your name for trademark (optional)

A trademark is a symbol, name, or word used to identify your business (like the Nike’ swoosh for example). If you plan to use a trademark, North Carolina requires you to register it.

You start by completing a trademark search at the North Carolina Trademark Registration or the United States Patent and Trademark Office links above. The next step is to submit three complete and original renderings of the mark that your company has used in the last six months.

For the final step, complete a trademark application and mail it with a $75 fee to the Trademark Section at North Carolina Department of the Secretary of State, PO Box 29622, Raleigh, NC 27626-0622.

Step 2: Choose a registered agent

A registered agent is the person designated by the business partners to receive tax, legal, and other documents on behalf of the LLC. Pursuant to North Carolina’s state laws, the person selected must meet all three of these requirements:

• Be a business entity that have previously registered as a business in North Carolina, or a domestic or foreign individual which is at least 18 years old and reside in North Carolina
• List a street address in North Carolina. Post office box numbers are not sufficient
• Be consistently available at the business address during regular business hours previously furnished to the Secretary of State

You can act as your own NC registered agent if you meet each of the criteria above. Another option is to hire a registered agent service (such Tailor Brands), which can save you time, protect your privacy and business reputation, and ensure prompt handling of all correspondence.

Step 3: File articles of organization

The Articles of Organization is the document you file with the North Carolina Secretary of State’s to officially form your LLC, which you can do once you have selected a business name and a registered agent.

How much does it cost to open an LLC in NC? The NC LLC filing fee is $125 for submitting your Articles of Organization, plus a $3 electronic processing fee, bringing the total cost to $128.

Before you turn in your final LLC Articles of Organization paperwork, be sure that you have included the following information:

• Name of the business
• Names of all LLC partners
• Each LLC partner’s role in operating the business
• Physical address, email address, and telephone number for your business
• Operating hours for your business

Choose your preferred NC LLC filing alternatives

You have the following options to file your articles of organization in North Carolina:

• Submit Form L-01 and pay the fees online via credit card, debit card, or direct bank withdrawal at this link.
• Pay in person at the Secretary of State’s office, located at: 2 South Salisbury Street in Raleigh.
• Mail your form and fee to the Business Registration Division at: PO Box 29622, Raleigh, NC 27626-0622.
• Expedited filing: If you are in a hurry for the state to process your LLC Articles of Organization, you can include an extra $100 with your application for 24-hour service. North Carolina also offers same-day service for $200.

Step 4: Create an operating agreement

An LLC Operating Agreement is a written document that outlines how you and your business partners will operate the business, and should cover topics like how to divide profits and losses, and the responsibilities of each member of the LLC.

North Carolina does not require that businesses formally file an operating agreement LLC NC. However, it is vitally important and best practice to create this document, especially when you create an LLC with one or more business partners. The agreement will help solve disputes that could lead to legal action after the business has been in operation for a while.

Step 5: Apply for an EIN (Employer Identification Number)

The Internal Revenue Service (IRS) requires people operating a business under any structure other than sole proprietor to apply for an EIN, which stands for Employer Identification Number. An EIN for your business is similar to what a Social Security number (SSN) is for your personal affairs.

Do you need an EIN?

The following situations are examples of the when a business might need an EIN:

• Banks and other lenders require business borrowers to list an EIN when applying for financing.
• If you plan to hire employees for your new business, the IRS uses your EIN to track hiring activity. This is to ensure that your LLC complies with payroll regulations.
• You will also need an EIN to file tax returns and issue payments on behalf of your business.

If you’re not sure whether you need an EIN or not, check this link.

How to get an EIN?

You do not have to pay a fee to obtain an EIN. Simply navigate to this link and follow the on-screen instructions, or you can hire a service like Tailor Brands to apply for an EIN on behalf of your new business to save you time and focus on your other tasks.

After you’ve opened your LLC in NC

Once you have filed the documents to create an LLC in North Carolina you will need to comply with the relevant state regulations, local licenses and tax obligations. You will also have some ongoing compliance requirements and should open a separate business bank account.

Understand your ongoing LLC fees and regulations

Your LLC must pay ongoing fees to North Carolina to remain operational and in compliance. Mainly, you need to submit an NC LLC annual report and pay a $200 fee, plus a $3 fee if filed online. 

It’s important to note that if you do not pay the required annual fees, you run the risk of the state shutting down your NC LLC and losing the limited liability protection.

Comply with North Carolina’s tax requirements

North Carolina requires LLC owners to abide by several tax regulations. Be sure to educate yourself further on each of the tax topics below to ensure that you remain in compliance with these requirements. You may wish to consult with a tax advisor before deciding how to file taxes on behalf of your LLC for the first time.

The flexible structure of an LLC means that you can also choose to pay your federal tax obligations as a sole proprietor, partnership, or S-corp.

First, decide on the tax structure of your LLC: Most LLC business owners choose the pass-through structure for federal income tax purposes. This means that each member of the LLC reports their share of profits and expenses on their individual tax return. In this regard, LLCs operate like sole proprietorships.

Income tax

The LLC itself does not pay federal income taxes with pass-through taxation in North Carolina (there are some states that require LLCs to pay federal income tax at the corporate level).

If you choose to pay your taxes as an S-corp instead of on a pass-through basis, you will need to complete IRS Form 2553.

Form 2553 is for organizations paying taxes as a business and will accompany your LLC’s official tax return. Before choosing this option, you should know that North Carolina charges a 5% flat tax on annual business income along with an annual franchise fee (based on your revenue).

Sales tax

North Carolina charges a flat 4.75% rate on all taxable merchandise. Cities and counties can also assess sales tax at a combined maximum rate of 2.75%. State laws cap total tax collected per transaction at 7.5%.

Your LLC must remit sales taxes to the state, city, and county once each month if it collects more than $100 in total. If your business collects less than that in sales tax, you can remit the amount due every 90 days.

North Carolina requires businesses selling certain products and services to register with the Department of Revenue. Typical examples include (not solely): appliances, digital items like online movie downloads, furniture, physical items like cleaning supplies for the home, and vehicles.

NC does not collect sales tax on gasoline, groceries, and prescription drugs.

If you plan to mainly sell services with your LLC, check this list to see if you need to collect and remit sales tax.

The North Carolina Department of Revenue (NCDOR) provides the option to register online or download and mail Form NC-BR.

Self-employment tax

North Carolina LLC laws require each member to pay state income tax on any income they pay to themselves and list on their federal income tax return. The current income tax rate is 5.25%.

Payroll tax

The IRS requires employers to deduct the following from every employee’s paycheck (if you don’t have any employees, not all of these are relevant):

• Federal income tax, which is based on the employee’s income and the number of exemptions and deductions claimed on their I-9 form.
• Social Security tax at a flat rate of 6.2%. As the employer, you must also contribute 6.2% towards Social Security based on the gross amount of every employee’s paycheck.
• Medicare tax at a flat rate of 1.45%. You pay the same percentage of Medicare tax as your employees.
  If you have employees earning over $200,000 each year, your LLC must collect an additional 0.9% in Medicare tax from them.
• In addition, NC requires employers to deduct state taxes from every employee’s paycheck at a rate of 5.25%. If you offer shared-cost benefits to your employees, you will use payroll deduction to recoup the cost of the benefits.

Obtain relevant business licenses and permits

One of the main things that are very important to cover early on is understanding whether and which business licenses and permits you might need to obtain, and what are the relevant regulations you need to comply with. 

NC business licenses

You do not need a general North Carolina business licesne to operate your LLC. However, several cities do require that you register for a business license before you begin serving customers or clients. As of early 2022, these cities include: Charlotte, Greensboro, Raleigh and Winston-Salem. 

Relevant regulations and permits in NC

• Each city has its own zoning regulations for businesses. Be sure to contact the city government office where you intend to conduct business to find out if your LLC is subject to zoning regulations. This includes most home-based businesses.
• You will need a building permit from the city or county if you plan to construct a new facility or renovate an existing facility. Some cities and counties in North Carolina also require that business owners obtain permission before putting up certain types of signs.
• North Carolina requires businesses selling physical products and certain digital products to register for a seller’s permit (see above on Form NC-BR which is needed to obtain a seller’s permit). The state does not charge a fee to process this form.
• If your business qualifies as a reseller, you will need to obtain a Sales Tax Certificate of Exemption to avoid having to collect sales tax from customers and remit it to the state.
• Several types of industries also require special licenses in North Carolina. Daycare facilities, restaurants, and salvage dealers are just three common examples.
• You will also need to register for a seller’s permit by providing the following information to the Secretary of State’s office: Business name, Contact information, EIN, AND Information about your goods for sale.

Open a separate bank account

Too many entrepreneurs have learned the hard way that not separating their business and personal finances causes major headaches, especially tax-wise.

Sole proprietors can get away with having a single bank account because the person and the business are one entity in the eyes of the law. However, this is not the case with LLCs – by mixing your finances, you run the risk of losing the limited liability this type of entity provides.

Apart from the legal reasons for opening a bank account, there’s also a professional angle to this. Consider how it would look to customers and vendors to receive a check from your personal account, as they may assume you are unprofessional and don’t take your business seriously.

Another benefit of having a business checking account is that you can delegate payroll and accounting tasks to employees or your business partners. Having an EIN and a business bank account also makes your LLC come off as more professional with potential creditors.

What will you need?

Here is the documentation you will need to open a business banking account in North Carolina:

• EIN
• Stamped and approved North Carolina LLC Articles of Organization
• Two forms of identification, such as a state driver’s license and a passport

Note that if you are part of a multi-member LLC, all members need to be present when opening a business bank account. Also, you will need to contact the bank for guidance if you need to add or remove an LLC member at a later date.

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