There are just a few requirements for starting an LLC in North Carolina, including having a unique name, a registered agent and organizational documents.

Unique name

Businesses registered as LLCs must have unique names that meet state LLC-naming requirements. Founders register this name with the North Carolina Secretary of State. The name must be unique to protect the LLC from lawsuits with existing companies with similar names. The name can’t deceive consumers about what the LLC is.

Requirements for an LLC name in North Carolina include:

• Entity designator: Your company name must include the words or abbreviation “Limited Liability Corporation”, “LLC”, or some acceptable variant to designate the type of business entity.
• Distinct: The name must be distinct from other businesses in North Carolina and not easily confused by consumers. The name can’t misrepresent a form of connection with another established business.
• Alignment with formation documents: The business name may not indicate organization for something other than the formation documents — such as calling an LLC “incorporated” in the name.
• Lawful and decent: Names may not indicate any association with unlawful business endeavors and shouldn’t have any offensive language or wording.
• Free of word prohibitions: You can check the Secretary of State’s list of word prohibitions to make sure your business name doesn’t include possibly restricted words such as:
  • Bank, banker and banking
  • Mutual
  • Trust
  • Realtor
  • Insurance
  • Pharmacy, prescription drug, drug, prescription, Rx, apothecary

Please note that some of the words on the restricted list may be usable with the permission of the proper authority, such as “Realtor” with permission from the NC Real Estate Commission.

Registered agent

Starting an LLC requires the use of a registered agent who serves as a contact point for your LLC to receive and deliver legal documents.

They can be an individual with a physical address in North Carolina where they are generally present during business hours or a business (corporation, nonprofit or LLC) authorized to operate in the state with an address that matches your LLC’s registered office address. You may serve as your own registered agent, tap a fellow businessperson or personal lawyer for the role, or hire a professional service.

Professional registered agent services may be ideal for those LLC owners who don’t have a full-time presence in North Carolina. Using a service can also help protect an LLC member’s privacy by not disclosing their personal information.

Organizational documents

Articles of organization are documents filed with the state to recognize your business as a legal entity. Articles of organization typically require a form and a fee. Once you receive confirmation that the state has received your articles of organization and accepted them, your business is official. Filing your articles of organization also formalizes your LLC name in North Carolina.

Steps to starting an LLC in North Carolina

Now that we’ve covered the requirements, let’s go over the actual steps to starting your LLC.

Step 1: Name your North Carolina LLC

Keeping in mind that your North Carolina LLC name must be unique, begin the process of starting your business by choosing an appropriate name.

Once you’ve chosen a name, you can take the following steps to make sure you can actually use the name:

• Check the Register of Deeds for any similar names in your county for existing businesses, as well as local business directories, city directories, chamber of commerce lists and all other available business lists in your location.
• Do an online search on the North Carolina Secretary of State site to see if your name is in use.
• Hire an attorney to verify your name is not registered with the U.S. Patent and Trademark Office.
• Contact the North Carolina Department of the Secretary of State’s Trademark Registration to see if the name is already in use.

Once you’ve verified that your name is available, you may reserve your name for up to 120 days in North Carolina by filing the Application to Reserve a Business Entity Name form and paying a $30 fee.

At this time, you may also wish to register a doing business as (dba)/assumed name for your LLC. You may do so by filing an Assumed Business Name Certificate with your local county register of deeds and paying a $26 fee.

Step 2: Designate or hire a registered agent

Whether you choose a personal acquaintance or a professional registered agent service, verify that they have a physical address and will be present during common business hours. They must have the ability to forward any legal communication to you promptly. You’ll need to include your registered agent’s information in your articles of organization documents.

There are several types of people you can use as a registered agent, including:

• Yourself: If you have a physical address where you are generally present during business hours and can accept mail, you can serve as the registered agent for your LLC.
• A fellow businessperson or personal lawyer: You may ask someone you know, such as another business owner or your lawyer, to serve as your registered agent. As long as they meet the requirements of a registered agent, you may name such acquaintances.
• A professional registered agent service: If you don’t have someone in your life who meets the requirements to be a registered agent, you may employ a professional registered agent service. This may cost a few hundred dollars annually.

Step 3: File North Carolina articles of organization forms

Once you’ve named your business and designated a registered agent, it’s time to formalize your business with the state of North Carolina. You may do so by filing the articles of organization with the Secretary of State and paying a fee of $125. You can also make an account on the North Carolina Secretary of State website to use the business creation wizard.

Have the following information ready for your articles of organization forms:

• Complete company name
• Name and address of each person who executes the articles of organization
• Name and address of each LLC member
• Name, physical address and mailing address of the registered agent
• Location and phone number of the LLC’s principal office, if applicable

Step 4: Compose a North Carolina operating agreement (optional)

Although not officially required by the state, operating agreements provide structure to your business as well as clear separation between your personal and business liability. It’s important to think broadly while composing an operating agreement to include as much important information as possible.

The important points of your operating agreement may include:

• Rules about voting
• Allocation of profits and losses
• Management responsibilities
• Dissolution terms
• Tax status (LLCs generally operate as pass-through entities — meaning taxes are paid via the owner’s personal income tax return — but can elect to be taxed as corporations)

Operating agreements can also be an important reference during internal conflict. Members should refer to the founding stipulations outlined in the operating agreement to solve problems.

Step 5: Get an EIN

To be ready for tax season, your LLC may need an employer identification number (EIN). This number acts like a Social Security number for businesses when submitting federal taxes. Any LLC can use an EIN, but single-member LLCs may simply opt to use the member’s personal Social Security number to file taxes. LLCs with employees or those that have an excise tax liability will need an EIN.

To apply for an EIN, fill out and submit Form SS-4, Application for Employer Identification Number to the IRS. Once you receive the EIN, you’ll use this number when submitting any owed federal taxes.

Understanding federal and state taxes for North Carolina LLCs

Like all businesses, North Carolina LLCs face taxes at both the federal and state levels, and possibly at a local level. Understanding your tax responsibilities when starting an LLC in North Carolina can smooth out your financial management and make tax season routine.

North Carolina sales tax

North Carolina does collect sales tax at a state rate of 4.75%. Each county may add to this state rate; some North Carolina counties have rates up to 7%, or 7.5% with an additional 0.50% transit county sales and use tax. It’s up to LLC members to verify their local sales tax and remit both state and local taxes as required.

LLCs registered in North Carolina providing a taxable product or service must apply for a certificate of registration for sales and use tax in North Carolina. There is no fee for applying. Businesses may do so by filling out the Business Registration Application for Income Tax Withholding, Sales and Use Tax and Other Taxes and Service Charge form and submitting it to the North Carolina Department of Revenue.

North Carolina corporate income tax

North Carolina corporations pay just 2.5% in corporate income tax, which is the lowest rate in the country. If an LLC chooses a C corp tax status, this low state corporate income tax may be an attractive reason to remain in North Carolina.

If you have an LLC that is taxed as a corporation, you’ll also need to pay the franchise tax. This tax starts at $1.50 per $1,000 for C corps and $200 for the first $1 million for S corps, then $1.50 per $1,000.

Employment taxes in North Carolina

Members of an LLC are subject to a federal 15.3% self-employment tax. This covers 12.4% to Social Security and 2.9% to Medicare. This is a bit higher than working as a W-2 employee for a corporation, as the company typically pays 50% of this responsibility.

LLCs can avoid having their members get hit with the self-employment tax by choosing S corp status. This business structure permits the pass-through tax structure of a typical LLC but reduces the employment taxes paid.

Operators of LLCs must also make plans to pay unemployment insurance taxes on behalf of the members. The federal unemployment tax rate is 6% on the first $7,000 paid as wages. North Carolina also requires employers with a payroll of at least $1,500 per quarter and at least one worker in 20 different weeks of the calendar year to remit unemployment insurance. Tax rates range from 0.06% to 5.76%, and LLCs may remit this amount online with the North Carolina Division of Employment Security or by mailing a check.