How Much Does an LLC Cost in North Carolina?

Header North Carolina LLC Costs

If you’re considering starting an LLC in North Carolina, you’ve probably already heard about the advantages. Having an LLC may help protect you from personal liability if your business gets sued, and it can enhance your branding, making your small business seem more polished, professional, and established. 

Many people, even knowing the advantages, may hesitate to set up an LLC because they think it will be difficult and expensive to get started. But it’s not that hard if you know what to do! Even better, you can use an LLC formation service like the one we offer here at Tailor Brands and let someone else do the heavy lifting and take care of the details.

As for the cost, that varies a lot from one state to another. If you want to set up your LLC in North Carolina, you’re in luck. The LLC North Carolina cost is reasonable. 

So how much does an LLC cost in North Carolina? Let’s go through a quick overview of the steps you’ll need to take to form a North Carolina LLC and see how much you’ll pay. 

General Steps and Costs When Forming a North Carolina LLC

Forming a North Carolina LLC

Naming your North Carolina LLC

One of the first things you’ll need to do to form your LLC is select a name for your business. The name must contain “limited liability company,” “LLC,” “L.L.C.,” “Ltd. Liability Company,” or “Limited Liability Co.” It’s free to do a name search through your county’s register of deeds to see if your chosen name is available.

If you want to reserve your business name, you can file an application with the North Carolina Secretary of State and pay a filing fee of $10.

The name you choose when you form your LLC will be the official legal name of your LLC. You’ll use it when paying taxes and for other official matters. 

You might want to have one or more other names that you can use for your business. This is totally optional, but for some businesses, it might be a good thing to have a different name or names to enhance the branding of your business.

You can’t just make up a name and use it, though. You have to register this alternative name (or names) with the state as a “doing business as” (DBA) name, or, as it’s usually called in North Carolina, an assumed business name. 

To register a DBA, first do a search in the State’s assumed business name database to see if your desired name is already being used. This search is free.

Next, fill out an assumed business name certificate form and file it in person or by mail at the Register of Deeds for the county that is the principal place of business for your LLC. You can request up to 5 names at a time for a filing fee of $26.

Filing articles of organization

To form your LLC, you file a form called the “Articles of Organization” with the North Carolina Secretary of State. You can fill out the form online or download it from the State’s business registration forms page. Include the filing fee, which is $125.

Appointing a registered agent

North Carolina requires you to appoint a registered agent. This is a person or business that will receive legal, tax, and other documents for your LLC. The registered agent must be:

  1.  An individual residing in North Carolina, or
  2. A domestic corporation, nonprofit corporation, or LLC with a business office identical to the registered office, or
  3. A foreign corporation, nonprofit corporation, or LLC authorized to do business in North Carolina and has a business office identical to the registered office.

You can choose to be your own registered agent. If you go that route, it won’t cost you anything. But you may find it more convenient to use a registered agent service, like the one we provide here at Tailor Brands for our LLC customers, to save time and ensure that your important documents are handled promptly.

Annual fees for registered agent services can run up to about $400. The fee for using Tailor Brand’s service is $199.

Creating an operating agreement

North Carolina does not require that your LLC have an operating agreement, but we recommend that you do. An operating agreement puts in writing all the important information about how your LLC will be run, including items such as policies for how profits and losses will be distributed, procedures for admitting new members, and the responsibilities, powers, and rights of members. If you have more than one member in your LLC, the operating agreement forms a binding contract between all the members.

An operating agreement helps prevent and resolve disputes in multi-member LLCs and gives added credibility to LLCs, especially those that have only one member. This extra credibility may help distinguish your LLC from a sole proprietorship or partnership and help strengthen your protection from personal liability.

Also, when you have an operating agreement, you get to choose the rules for running your business. Without one, you’ll have to use the default rules for the state, which may not suit your purposes as well.

If you feel comfortable writing your own operating agreement, then you can do that at no cost. Or, you could hire a lawyer to write it, which would cost up to around $1,000. 

A third option is to use Tailor Brands to form your LLC. We include an operating agreement as part of our LLC packages.

Other Annual and Additional North Carolina LLC Costs

Annual and Additional North Carolina LLC Costs

Franchise tax

The annual franchise tax is a tax that North Carolina collects from corporations that are doing business within the state.

If the IRS treats your LLC as a corporation for federal tax purposes, you may need to file a North Carolina corporate income and franchise tax return. You should check with a tax or legal advisor, but most LLCs probably won’t fall into this category and won’t have to pay a franchise tax.

For LLCs that pay federal taxes as C corporations, the annual franchise tax rate is $1.50 per $1,000 of taxable assets, with a minimum franchise tax of $200 per year. For LLCs that pay federal taxes as S corporations, the rate starts at $200 for the first million dollars of the business’s tax base and goes up from there.

Business licenses & permits

A business license gives your LLC the right to conduct business in a certain area. In North Carolina, the state doesn’t require a general statewide business license, but you may have to get a business license that allows you to operate in your county, city, or town. With some exceptions, there is no charge for a local business license.

You may also need state and/or local licenses or permits to conduct certain types of businesses or certain types of business activities. Depending on what kind of business your LLC engages in, you could end up needing several licenses and/or permits–or you might end up needing none.

North Carolina has nearly 950 licenses and permits that it issues at the state level. That’s in addition to local licenses and permits from counties, cities, and towns. This may sound overwhelming, but free help is available from business advisors, or you can search a database of state licenses, also for free.

The cost of licenses and permits in North Carolina varies widely. Some don’t have any fees at all, while others cost hundreds of dollars. Here are a few examples:

Starting in 2015, the fee for most local privilege licenses (general business licenses) was eliminated. There are still local license fees for operating cabs and limos and for selling beer and wine.

You’ll probably need to file a Certificate of Registration with the North Carolina Department of Revenue to get a sales and use tax number, sometimes called a seller’s permit, but there is no charge for this.

Aside from the seller’s permit, the most common permits in North Carolina include building permits, zoning permits, and environmental permits. The most common licenses include local business licenses, professional and occupational licenses, licenses to sell alcohol, and licenses for specific types of businesses.

Annual report

Every North Carolina LLC must file an annual report and pay a fee every year on April 15th, starting the year after you formed the LLC. You can fill out the form and file it online or download a PDF, fill it out, and mail it or bring it to the Secretary of State’s office in person. The fee is $200 if you file on paper, and $203 if you file online. If you’re curious about the difference, the $3 extra is for an electronic filing fee.

What Expenses You Can Write Off

Write Off LLC Costs in North Carolina

The good news is that you can deduct most of your LLC formation costs from your federal taxes. Items you can deduct may include:

Still other fees and costs might qualify as write-offs. A tax professional can help you evaluate other expenses to see whether they meet the requirements for a business deduction.

North Carolina LLC Costs – Summary

LLC filing fee

$125

Business license

Costs vary. For example, a state license to sell seeds is free, a state license to give manicures is $20 per year, and a permit to sell beer is $400 per year for the state and possibly an additional fee for the city or town.

Registered agent (optional)

$199 to $400

Reserve a business name (optional)

$10

File a DBA (optional)

$26

Operating agreement (optional)

$0 to $1,000

Annual franchise tax (only applies to some LLCs that pay federal taxes as corporations)

Depends on taxable assets or tax base. Minimum of $200 per year.

Annual report

$200 or $203

Conclusion

Many small and micro businesses in North Carolina choose to operate as LLCs. These business owners find the North Carolina LLC costs affordable and worth paying for the advantages that come with having an LLC.

The information on this page may seem like a lot to absorb all at once. But take your time, and approach the process of forming an LLC step by step, and you’ll get there.

Even better, an LLC formation service like the one we offer makes the whole process less stressful, easier, and more pleasant–and dare we say more fun? We do a lot of these, so we know all the details that need attention. We’ll guide you through the process every step of the way.

You may even be able to write off the cost of our service on your taxes. That’s one of the many awesome perks of being a business owner. 

Less stress and more write-offs. We can get behind that!

This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.

The post How Much Does an LLC Cost in North Carolina? appeared first on Tailor Brands.