Form an LLC in North Carolina.

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Your LLC’s Name

Your new LLC’s name must not be confusingly similar to any other North Carolina business name, registered or reserved, on file with the North Carolina Secretary of State. This applies to companies that were formed in North Carolina, as well as those originally formed started outside the state but currently authorized to do business in the Tarheel State.

Your new LLC’s name must include the phrase “Limited Liability Company” or one of its abbreviated forms: “LLC” or “L.L.C.”

The name is not allowed to include the words “corporation,” “incorporated,” “limited partnership,” “limited liability partnership,” or any abbreviation of these words and phrases. It also may not have a word or phrase that states or implies that it is organized for a purpose that is not a legal business purpose.

You can reserve an available LLC name for up to 120 days for $30 before you actually file for organization.

Articles of Organization

The formation of a North Carolina LLC means that you have to file articles of organization with the North Carolina Secretary of State. Your new LLC’s articles of organization must include:

  • The LLC’s name
  • The name, address, and title (organizer or member) of each person executing the articles
  • The initial LLC registered office’s address (including county)
  • The name of the LLC’s initial registered agent at that address
  • The address of the LLC’s principal office

It must also specify whether the LLC will be manager- or member-managed, as well as whether the LLC is perpetual or of limited duration. If it has a set or “latest” date for dissolution, the period of the LLC’s duration must be stated.

It can also list other items that are included in the operating agreement if the members so desire, so long as they don’t conflict with state law. The filing fee is $125.

Your new LLC is officially deemed as “organized” after one original and one copy of the LLC’s articles of organization are delivered to the North Carolina Secretary of State’s officewith the filing fee, and that office then verifies that the articles are in compliance with state law. The articles must be signed by at least two organizers.

An organizer is allowed to be any natural person, or it may be a legal or commercial entity. The organizer is not required to be a member of the LLC, but there must be at least one organizer of some type.

The organizer who signs the articles must also list his or her name and title (the office by holding which he or she is entitled to sign it, such as organizer, manager, etc.). The North Carolina Secretary of State will certify both copies, but will then retain the original and return a signed copy to the LLC or its authorized representative. The articles of organization are effective as of the time and date they are filed, unless otherwise indicated

Registered Agent and Office

Registered Agent and Office

A North Carolina LLC must have a registered agent in the state-someone to receive official state legal and administrative correspondence on behalf of the LLC. An LLC registered agent may be an individual who resides in North Carolina or a corporation (whether originally formed in North Carolina or not) that is registered to conduct business in the state. The registered office may be a place of business for the LLC, but a post office box or mail drop is not allowed to be used as the agent’s address.

Operating Agreement

The LLC’s second most important document is its operating agreement, which can be changed by the members as set forth by the agreement itself or applicable state law. Having an operating agreement is not legally required by the state, but it’s a vitally important internal document that sets forth how the LLC will run.

The operating agreement needs to list the LLC’s members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting.

The operating agreement may also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn’t have to. Usually, though, it does include operating constraints and allowances already contained in state law and policy. It also may contain constraints on the members’ authority to change or repeal the operating agreement or a provision thereof. If there is more than one member, the operating agreement must initially be unanimously approved in writing.

Membership in the LLC

Membership in the LLC

LLCs in North Carolina must have one or more members, and each member must be a natural person or a recognized business entity. A member can acquire an interest in the LLC when it is formed, or by a method specified in the operating agreement. Becoming a member usually requires a contribution of cash or property to the LLC, or it may take to form of services rendered to the LLC. However, a person may be admitted as a member of the LLC without acquiring a membership interest if the articles of organization or operating agreement allow it, or if all the members agree and the new member’s admission is recorded in the LLC’s records.

An LLC member can only resign as permitted in the articles of organization or operating agreement, which usually specify a minimum amount of time before a member is allowed to resign. LLCs have the right to pursue remedies for damages suffered by the LLC that are the result if a member’s resignation.

Ongoing Requirements

LLCs in North Carolina must have one or more members, and each member must be a natural person or a recognized business entity. A member can acquire an interest in the LLC when it is formed, or by a method specified in the operating agreement. Becoming a member usually requires a contribution of cash or property to the LLC, or it may take to form of services rendered to the LLC. However, a person may be admitted as a member of the LLC without acquiring a membership interest if the articles of organization or operating agreement allow it, or if all the members agree and the new member’s admission is recorded in the LLC’s records.

An LLC member can only resign as permitted in the articles of organization or operating agreement, which usually specify a minimum amount of time before a member is allowed to resign. LLCs have the right to pursue remedies for damages suffered by the LLC that are the result if a member’s resignation.

Dissolution

Dissolution

An LLC is dissolved when any one of the following events occurs:

  • Event(s) or a time specified in the articles of organization or operating agreement
  • Written agreement to dissolve by all the members
  • Event that makes it illegal for the LLC to continue
  • If the LLC no longer has any members
  • Judicial decree ordering dissolution, or the filing of a certificate of dissolution by the state Secretary of State

Unless otherwise specified in the articles of organization or the operating agreement, the approval of all members is required to sell all the LLC’s assets, or to voluntarily dissolve the LLC.

Taxes

Taxes

An LLC by its nature does offer some tax advantages over a corporation structure, including access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, it is considered a “pass-through entity” for tax purposes, meaning LLC owners report business profits and losses on their individual tax returns.

Unless you decide that your LLC should be taxed in the same way as a corporation, the IRS looks at single-member LLCs as sole proprietorships. This means that the LLC itself does not pay taxes as such and does not have to file a tax return. The IRS treats multi-owned LLCs as partnerships for tax purposes. Therefore, LLC owners each pay taxes on their lawful share of the profits on their personal income tax returns, not the LLC itself.

The tax rate for North Carolina LLCs varies, based on the amount of North Carolina taxable net income per reporting period.

Learn more about forming an LLC in North Carolina

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silver

$49

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The Basics To Get You Started Preliminary company name clearance and filing of Articles of Organization.

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EIN / Tax ID Number Providing an EIN is required to open a
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Personalized Operating Agreement Includes most common provisions to protect members from liability

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Commonly Asked Questions For Starting a North Carolina LLC

How is an LLC Taxed?
For federal income tax purposes the profits of an LLC (Limited Liability Company) "pass through" to the personal income of the members/owners. In the case of a single member LLC it is taxed the same as a sole proprietorship (i.e. typically filed on the schedule C of the owner's personal income tax filing). In the case of a multi member member it is taxed the same as a partnership (i.e. a 1065 partnership return is filed with the IRS, with a schedule K-1 being supplied to each partner/member showing the proportional profit/loss allocated to them, with this being filed on the schedule C or E).
NOTE: These are general tax explanations and may not apply to everyone. You should confer with the appropriate accounting/tax specialists to make sure you understand your personal tax liability.
What is the Management Structure of an LLC?
An LLC is typically managed by its members/owners (referred to as member-managed). In that respect an LLC is unlike a corporation, which has a much more rigid and defined management structure, including directors and officers. All owners of the LLC are typically referred to as members, and they can have control and voting interest proportional to their ownership interest, or in proportions different from their ownership interest; however the members agree.
Are Non-US Residents allowed to own a Corporation of LLC?
There are no citizenship or residence requirements for ownership of a C Corporation or an LLC. The S Corporation however does not allow nonresident aliens to be shareholders (owner), but any US citizen or resident alien may be a shareholder (owner). You would, of course, require an in state street address for the state to forward official legal and tax correspondence including service of process, known as the registered agent address, but neither residency nor citizenship is required for ownership of a C Corporation or an LLC.
Can I form an LLC with just one member?
There was a time when almost every state required the LLC to have two or more members, but that is no longer the case. This important change came in response to revised IRS regulations that clearly permitted single-member LLCs. As a result, in most states, if you plan to be the sole owner of a business and you wish to limit your personal liability, you can choose between forming a corporation or an LLC.
What is an Operating Agreement?
The operating agreement is akin to a partnership agreement for a General Partnership or Limited Liability Partnership (LLP). It is an internal contract amongst the members/owners of the LLC, and it lays out such things as ownership interest, member responsibilities, accounting method, adding or removing members, terms for concluding the LLC, etc. It is generally not required by a given state for forming an LLC (with the exception of New York), although it is certainly recommended. When dealing with private companies for financing issues (loans, mortgages, etc.) it may be required by that company. A customizable operating agreement is included with the LLC/Corp Kit.
Can another business entity be a member of an LLC?

In the majority of states, The members of an LLC can be individuals, corporations, or other LLCs. These members of the LLC can be out of state residents or even foreign nationals. Furthermore there is no limit to the amount of members that an LLC can have.

The flexibility of an LLC in contrast to an S Corporation is stark considering the S corporations are limited to 75 shareholders who must either be United States citizens or Lawful Permanent Residents.

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