Thursday, August 4, 2022

How to Start an LLC in North Carolina

Want to get started right now? Click here to sign up for ZenBusiness and start your LLC today. 

New entrepreneurs with limited time and budget find it challenging to form an LLC.

However, various online LLC services provide reliable, cost-effective, and fast services to help you start your business without hassle.

LLC services can save you from the lengthy process of creating a company and provide solutions that help you start an LLC quickly. 

Let’s look at the factors and considerations for creating an LLC in North Carolina. 

Top-Rated LLC Services to Create an LLC

If you want to create an LLC quickly and without any hassle, you’d have to avail the services of a reliable LLC service provider. To achieve this objective, we recommend comparing the plans, pricing, and other benefits offered by each service so you can choose the one that best suits your needs. Here are some of the best options:

You can read our full reviews of each of these LLC services here.

7 Steps to Start an LLC in North Carolina

Creating an LLC, even with the help of a reliable LLC service, requires you to follow certain steps. Each state in the US has slightly different laws and regulations regarding creating an LLC, so the steps can differ slightly based on where you are.

Here’s the process you must follow to start an LLC in North Carolina:

  1. Decide a name for your North Carolina LLC
  2. Provide an official business address for your LLC
  3. Take the services of a registered agent for your LLC
  4. File articles of organization
  5. Draft an operating agreement for your North Carolina LLC
  6. Get an employer identification number (EIN) and follow tax-related and other regulatory requirements
  7. File yearly reports with the North Carolina Secretary of State

The Easy Parts of Starting an LLC

Other than in a few select states, people of any age can start a business.

Plenty of online resources are available to answer all of your LLC-related questions and you don’t have to consult an attorney or accountant to file articles of organization and other important documents for you.

North Carolina is one of the easiest places in the US to start a business. It has relaxed laws and regulations regarding LLCs and offers plenty of benefits and support to people forming an LLC.

Some people believe that forming an LLC would involve tons of official documents, visits to different offices, and other hassles. However, various LLC services available online allow you to form a company within a day.

ZenBusiness page to create your LLC in minutes

ZenBusiness is a relatively new LLC service provider in the industry. However, it has proved itself in a limited time. The website has a modern, clean, simple, and easy-to-use interface. It smoothly walks you through the entire process of forming an LLC. Different plans and prices offered by ZenBusiness include:

  • Starter: $49 a year
  • Pro: $129 a year
  • Premium: $299 a year

Each plan is designed to help you prepare and file all LLC documentation, assist with the name search, and more.

The Difficult Parts of Starting an LLC

All US states have laws and regulations you must follow when forming an LLC. Many people struggle with choosing the right state to create their LLC. We recommend forming an LLC in the state where you plan to run your business.

Another difficulty many entrepreneurs face while creating an LLC is filing issues. Entrepreneurs don’t have enough time to review all the documentation and deal with the red tape and paperwork involved. The right LLC service can help you navigate this process with ease.

Naming your LLC is a crucial step in the process. One mistake can limit the growth of your business at a later stage, give it a bad reputation or confuse the customers to a point where they simply stop using your service. For example, Emily Lipstick LLC has lower chances of growth compared to Emily Cosmetics LLC. Therefore, choosing a scalable name for your company can also prove to be challenging.   

Step 1: Decide a Name For Your North Carolina LLC

Selecting a name for your company is the first step to creating an LLC in North Carolina. It requires you to carefully analyze and select a name that follows North Carolina’s LLC naming conventions. Potential clients can easily search the guidelines online.

Follow North Carolina’s Naming Guidelines

Some of the rules you must follow for naming an LLC in North Carolina are:

  • The name of your LLC must include the phrase “Limited Liability Company” or its abbreviation “LLC.”
  • Do not include confusing words in your LLC name that may link it to or resemble that of a government agency, like the FBI or State Department.
  • If you want to use a restricted word like bank or university, it will require more paperwork and a licensed professional individual to be a part of your LLC.
  • The name of your LLC must not be the same as any other North Carolina LLC, corporation, limited partnership, or limited liability partnership.
  • The name must be available for use

You can easily look up the name database of businesses on North Carolina State’s website. A quick search can help you figure out that the name you have chosen for your LLC isn’t already taken. You can reserve a name by applying with the North Carolina Secretary of State. The application costs $30, is sent by mail and allows you to reserve a name for 120 days.

Make Sure the URL is Available

Before officially selecting a name for your LLC, make sure the URL for your business name is available. Even if you are not creating a website today, you’ll likely want one in the future. Therefore, it is better to buy a URL before someone else acquires it.

Using an Assumed Business Name

You don’t have to use your LLC’s legal name while doing business. You can use an assumed, fictitious, or trade name for informal purposes. You can register an assumed name with the North Carolina county where your LLC does business. One application is enough for an LLC doing business in multiple counties and costs $26.

Once you select and verify the name of your LLC and secure a URL, the next step is to select a professional LLC service to complete the process on your behalf. We recommend using ZenBusiness, which helps you get started within minutes.

Step 2: Provide an Official Business Address for your LLC

Every LLC created in North Carolina has a street address. It can be the location of your home, office, or any other physical place. The address can even be outside of the state of North Carolina. However, it must not be a PO box address.   

If you find it challenging to secure a physical location for your LLC, you can use a virtual mailbox. You can also register with an LLC service provider who will receive your mail for you and provide you with an address. It can be especially beneficial for people who run their business from home but don’t want their private addresses to be published everywhere.

Step 3: Nominate a Registered Agent For Your LLC

It is mandatory to nominate an agent who will assist you in the process of creating an LLC in the state of North Carolina. LLC creation services can be provided by individuals or companies. Your chosen LLC agent or service agrees to accept and resolve any legal problems that the LLC may encounter. For example, if someone sues the company, the LLC agent or service would take responsibility and resolve the issue.

Moreover, the registered agent or service acts as a point of contact for your business, and any official correspondence, tax forms, and legal notices will be sent to them.

Your chosen LLC agent must be a resident of North Carolina and must have a North Carolina address. If you are utilizing the services of an agency, it must be an authorized company allowed to do business in North Carolina.

Step 4: File Articles of Organization

The next step is to file articles of organization with the North Carolina Secretary of State to create an LLC in North Carolina. You must file the article of organization with the Business Registration Division. The articles should include:

  • The name of your LLC
  • The name and address of the registered agent of the LLC
  • The names and addresses of all the people signing the articles
  • The address and phone number of the main office of the LLC
  • The email address of the LLC
  • The date of the articles from when they become effective
  • The signature of the organizer, a member, or representative

You can conveniently file articles online or by mail, and it will cost you around $125.  

Step 5: Draft an Operating Agreement For Your North Carolina LLC

It is not mandatory to have an LLC operating agreement in North Carolina. However, we still recommend you have one.

An operating agreement helps clarify crucial company tasks like how profits and losses will be shared, which members are authorized to conduct business, and more. If you don’t draft an operating agreement for your LLC, the state laws will have more control over the rules governing the management of your company.

An operating agreement is the main document that highlights the powers, duties, rights, obligations, and liabilities of the members of the LLC. You are not obligated to file this document with the North Carolina Secretary of State. The operating agreement is purely an internal document.

If you are a newly formed LLC without an operating agreement, then the articles of organization, limited liability company agreement, and bylaws would automatically become the operating agreement of the LLC.

One thing that your operating agreement must specify is whether your LLC would be managed by a member or a manager.

Manager-Managed LLC

In manager-managed LLCs, chosen members or non-members run the business’s operations, whereas some members-only act as passive investors and don’t engage in the business operations.   

Member-Managed LLC

Member-managed LLCs are managed by all of the owners or members of the LLC. They are all collectively engaged in the operations of the company.

Step 6: Get an Employer Identification Number (EIN) and Follow Tax-Related and Other regulatory requirements

After setting up an LLC, you need to comply with all tax and regulatory requirements that apply. Some of these additional requirements include:

Employer Identification Number

If you create an LLC with only one member and hire no employees, your LLC still needs to obtain its employee identification number from the internal revenue service. You can simply get an EIN for free by filling out an online application.

If you create a one-member LLC and elect it to be taxed as a corporation instead of a sole proprietorship, obtaining an EIN is necessary.

Business Licenses

You may be required to obtain local and state business permits or licenses for your LLC based on the type of business you do or the location of your business.

You can easily find information online for state licensing. However, you need to check with the clerks of the city where your LLC is located to obtain local licenses.

Department of Revenue

You may have to register with the North Carolina Department of Revenue based on the type of business you operate. For example, if you plan to sell goods, hire employees, and collect sales tax, you must register with the DOR. The Department of Revenue has a convenient and straightforward online application process.

Step 7: File Yearly Reports with the North Carolina Secretary of State

All the LLCs in North Carolina are mandated to file annual reports with the North Carolina Secretary of State. All LLC reports are due for the year in which they are filed.

An Annual LLC report specifies the activities of your business throughout the year, indicates the financial position of your company, and highlights the strategy for growth in the future. Moreover, it is necessary to file a yearly report for your business to maintain an active status.

Therefore, if you register an LLC on the 15th of April, you must file your annual report by the end of the year. However, if you create your LLC after the 15th of April, you would have to file a report on the 15th of April of the next year.

You can file your yearly report online at the online annual report editor of the secretary of state or send it by mail. The annual report filing process can cost $200 to $202.

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