A limited liability company (LLC) is a business structure that is usually chosen because it is simple and flexible in comparison to other business structures. This is because it incorporates some features of partnerships and some features of corporations. The favorable corporate characteristic is limited liability for the LLC’s owners, who are known as members, meaning that they are not personally liable for the LLC. Any company structured as an LLC has the freedom to enjoy pass-through taxation and a lack of corporate formalities and paperwork, which are key characteristics of partnerships. Like many other types of businesses, an LLC is a separate legal entity that needs to be registered with the North Carolina Secretary of State.
A company must meet several requirements in order to qualify as an LLC in North Carolina. An LLC needs to include “Limited Liability Company,” “LLC”, L.L.C.”, “Ltd. Liability Company,” or ”Ltd. Liability Co.” in its name. Additionally, the name must be different from other existing business entity names already on file in North Carolina. Your LLC must also designate an agent for service of process who can either be a North Carolina resident over the age of 18 or a business entity already authorized to do business in the state. The agent must agree to accept legal papers on behalf of the LLC.
Foreign LLCs, which are LLCs organized outside of the state choosing to do business in North Carolina, are required to register with the North Carolina Secretary of State Failing to register before conducting business in the state will subject a foreign LLC to a civil penalty of $10.00 per day, up to as much as $1000 per year, for every day that the LLC operates in North Carolina without registering.
In North Carolina, you cannot form an LLC without first filing the appropriate paperwork with the North Carolina Secretary of State, which must be sent in via mail. A domestic LLC, which is an LLC formed in North Carolina, must file Articles of Organization. In order to complete the form, you will need to provide the following:
- Name of the LLC
- Address of the LLC’s principal office if the LLC has one or confirmation that the LLC does not have a principal office
- Name and street address of the LLC’s registered agent, as well as the agent’s mailing address if it varies from the street address
- Name, address, and capacity, such as a member or an organizer, of each person executing the Articles of Organization
- Any other information that the LLC wishes to include, such as a list of the company officials or the purpose of the LLC
A foreign LLC must file an Application for a Certificate of Authority For Limited Liability Company. This form requires you to provide the following:
- Name of the LLC and the name that it plans to use in North Carolina if the original name cannot be used in the state
- The place where the LLC was originally created
- Either the address of the LLC’s principal office or a confirmation that there is no principal office for the LLC
- The registered agent’s street address, as well as the agent’s mailing address if there is a difference between the two
- A list of the LLC’s officials, including their names, titles, and business addresses
The foreign LLC will also need to submit a Certificate of Existence from their state or country of origin that is no more than 6 months old.
North Carolina has several advantages for LLCs. For example, North Carolina does not require the majority of LLCs to pay a franchise tax. Unlike other states that require an operating agreement to be either written or oral, North Carolina allows for an LLC’s operating agreement to be implied, either in its entirety or in combination with written and/or oral portions.
LLCs registered in North Carolina are required to file annual reports with the North Carolina Secretary of State, and these reports are due by April 15. The annual report must be accompanied by a $200 filing fee. Also, if you are a member of an LLC that is being taxed as a C Corporation and you have other economic activities inside the state beyond the LLC, then you required to file both a franchise tax return and a corporate income tax return.
The process of forming a company in North Carolina can be complicated, and the decision of which business structure is right for you is an important one. Speaking with a North Carolina business lawyer will help you determine the risks, benefits, and process associated with forming an LLC in North Carolina.