If you are planning to establish a North Carolina corporation, you’ll be in good company. The state is home to big businesses, including Bank of America, Lowe’s, and LabCorp, all of which have their headquarters here — and for a good reason. North Carolina is known for its attractive business climate, with a skilled workforce, tax credit programs, and other initiatives that make it a smart choice for your corporation foundation.
How do I form a corporation in North Carolina?
Steps to form your North Carolina Corporation
- Name Your Corporation
- Appoint Directors
- Choose an North Carolina registered agent
- File the North Carolina Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit Your Corporation’s First Report
To start a corporation in North Carolina, you must file the Articles of Incorporation with the Secretary of State office. However, before you can do this, you must take some other steps, from selecting a legally permissible business name to appointing your corporation’s directors and choosing a registered agent.
When you see the list of requirements needed to form your North Carolina corporation, you may feel intimidated. There’s no need to stress: Incorporating your business is perfectly manageable if you take a step-by-step approach. Our guide breaks down how to start a corporation in North Carolina.
Here’s what it will take in 10 steps:
Step 1: Name Your Corporation
Naming your North Carolina LLC requires more than simply choosing a catchy moniker. There are practical and legal considerations to take into account. Practically, you want to select a name that is unique and not shared by any other business. This will ensure you stand out from the crowd.
Choosing a one-of-a-kind name will also make it easier to obtain a domain for your website. Your online presence is a valuable means of attracting potential customers — for example, you can use social media to direct people to your website. You can check a domain’s availability online. Even if you don’t have a website yet, reserve the domain name to ensure nobody else snaps it up.
A unique business name isn’t just a practical consideration; it’s also a legal requirement. The state demands that your name be readily distinguishable from any other business entity name that is registered or reserved in North Carolina. You can check your desired name’s availability using the Secretary of State’s business entity search.
There are a few other legal requirements when naming your North Carolina corporation:
- You must include the words “Corporation,” “Incorporated,” “Company,” or “Limited.” It’s also permissible to use the abbreviations “Corp.,” “Inc.,” “Co.,” or “Ltd.” These corporate designators are not required for nonprofit corporations.
- The name can’t include language suggesting the business is serving any unlawful purpose or any purpose that deviates from what is set out in the Articles of Incorporation. For example, you can only include words like “Banking” or “Engineering” if you are legally qualified to provide those services and have indicated this when filing your formation documents.
- The name can’t contain words deemed “offensive to accepted standards of decency,” such as racial slurs.
Once you have the perfect name chosen and have ensured it meets the above requirements, you have the option of reserving it. Complete the Application to Reserve a Business Entity Name and pay the $30 filing fee. The name will be reserved for a nonrenewable period of 120 days. This allows you plenty of time to take care of the other steps needed to file your Articles of Incorporation, without worrying that someone will take the name you want.
Additionally, if you want to do business under a name other than the official name, you can request an assumed business name. This is also referred to as a “doing business as” (DBA) name. Once registered, you can use your DBA name for official business purposes — for example, customers can make payments to the DBA name. Simply fill out the Assumed Business Name Certificate and submit it to your county Register of Deeds office with the filing fee ($26).
You may additionally consider trademarking your business name, or at least checking to make sure your name isn’t already trademarked. Check availability via the North Carolina trademark database. To apply, you must send a completed trademark application form to the Trademark Section of the Secretary of State, pay the $75 filing fee, and submit three original examples of the trademark being used for advertising or selling your product or service.
To trademark your corporation name federally, you must check its availability with the United States Patent and Trademark Office (USPTO) and apply through the Trademark Electronic Application System (TEAS). This will give you exclusive rights to use that combination of words connected with your goods or services throughout the country.
Step 2: Appoint Directors
The next step in forming your North Carolina corporation is to name your directors. These are the people who will oversee the corporation’s day-to-day management. Directors are legally obligated to work in a way that prioritizes the interests of the corporation and its shareholders. They may additionally be owners of the corporation — but this isn’t required.
North Carolina law demands any corporation have at least one director. Directors must be natural persons (not business entities) who are at least 18 years of age. The directors should be designated at an organizational meeting before filing your Articles of Incorporation.
Step 3: Choose a North Carolina Registered Agent
Every corporation in North Carolina must have a registered agent, a person to whom the state can direct all business correspondence. The registered agent will also receive official mail, like legal notices. The registered agent must share the same business office address as the corporation’s registered office.
The registered agent may be a North Carolina resident or a corporation or limited liability company (with a business office that is the same as the corporation’s registered office). A person must be on hand at this registered office during regular business hours. You cannot use a P.O. box.
You are technically permitted to use the corporation’s office address as your registered agent office. However, this is not advisable. For example, imagine you have a lawsuit delivered to your business location, and clients witness the moment — this won’t reflect well on your business.
Protect your professional reputation by using a registered agent service. ZenBusiness can connect you with registered agent services in North Carolina, starting at a low annual price.
Step 4: File the North Carolina Articles of Incorporation
The Articles of Incorporation are the official documents you must file with the North Carolina Secretary of State to formally establish your corporate entity. In some states, this paperwork is referred to as the Certificate of Incorporation. The North Carolina Business Corporation Act requires that corporations file this paperwork before conducting any business.
To establish a North Carolina business corporation (not a nonprofit), complete form B-01. You will have to provide the following information:
- Corporation’s name
- Number of shares the corporation is authorized to issue (authorized stock)
- Whether these shares are of one class, designated as common stock, or divided into classes or series (for example, you could have preferred versus common stock, in which preferred stockholders are promised a certain amount of dividends, or payout, every year, while common stockholders are not)
- Registered agent name
- Registered office address
- Mailing address, if different from the registered office
- Principal office address, if applicable (where the corporation will actually operate)
- The name and address of each incorporator
The document must be filed with the Secretary of State (the relevant address is on the form) and accompanied by a $125 filing fee.
To establish a North Carolina nonprofit corporation, complete form N-01. You will have to provide the following information:
- Nonprofit corporation’s name
- Whether the nonprofit is a charitable or religious corporation, in line with NCGS§55A-1-40(4)
- Registered agent name
- Registered office address
- Mailing address, if different from the above
- Principal office address (where the nonprofit will actually operate)
- Name and address of each incorporator
- Whether the corporation will have members
- You must also attach provisions regarding what will happen to the nonprofit’s assets if the corporation is dissolved
The document must be filed with the Secretary of State (the relevant address is on the form) and accompanied by a $60 filing fee.
You can also submit your paperwork to incorporate your business or nonprofit online. You must first register an account with your business name, personal name and address, and contact email and phone number. You can use this account for other important paperwork, like filing your corporation’s annual report.
Step 5: Create Corporate Bylaws
Bylaws detail how your North Carolina corporation will be managed and its legal operating principles. You aren’t obligated to file them with your Articles of Incorporation; however, North Carolina requires that every corporation keep a copy of its bylaws on hand at its main executive office. This documentation is essential because it clarifies how the business is run, streamlining daily operations and preventing conflicts.
It’s advisable to draft your bylaws in an initial organizational meeting when you also designate your board of directors. The board is responsible for adopting, amending, and repealing bylaws unless otherwise specified.
Here are some common points addressed in bylaws:
- The corporation’s business purpose
- The corporation’s owners (also called shareholders) and their rights and duties
- The corporation’s directors, their duties, and how long each director’s tenure is
- Procedures for replacing and removing directors
- Rules for amending the bylaws
- Details regarding the management structure
- How often and when the directors meet
- How often and when shareholders meet
- Voting procedures, for example, in the case of a conflict of interest
- How ownership changes are to be handled
- How stock is issued
- How and when shareholder financial reporting is conducted
Corporate bylaws can serve as a point of reference in legal issues, such as shareholder disputes, so it’s important that the document is comprehensive and its language clearly formulated. While you can download ready-made bylaws templates online through ZenBusiness, you may want professional assistance when formulating this document.
Step 6: Draft a Shareholder Agreement
The next step to ensuring your corporation is operating efficiently is to draft a shareholder agreement. This details the rights and duties of all shareholders. Details commonly included in shareholder agreements are:
- Names and contact details for all shareholders
- Shareholder responsibilities (time commitment and financial obligations) and limitations (what actions a shareholder can versus can’t take on behalf of the business)
- Shareholder voting rights and details on how votes are executed (for example, is a simple majority vote required or a certain percentage of majority votes?)
- The process for making changes to the shareholder agreement
- How dividends are to be distributed
- How stock can be sold or transferred
- What will happen to business assets if the corporation winds down
Just as with corporate bylaws, a shareholder agreement can serve as a point of reference in informal disputes and formal legal battles. While it’s possible to find shareholder agreement templates online, it’s best to consult a professional to help you draft a shareholder agreement that reflects your corporation’s unique needs.
Step 7: Issue Shares of Stock
A corporation is required to issue stock. When you filed your Articles of Incorporation, you were asked to detail the number of authorized stock shares. You should never issue more than the number specified in this document. You can only issue each share once. Once issued, the share can be traded and sold. The corporation must keep track of all issued stocks.
Your corporation’s starting capital — the funds needed to get it off the ground — will help determine the value of your shares. Simply divide the required capital by the number of authorized stock shares. When starting a business, some shareholders may be given shares in exchange for their assistance in getting operations off the ground (instead of monetary capital). The corporation’s annual report should track all issued shares.
A corporation can opt to issue stock publicly or privately. Privately issued shares usually go to people directly related to the company’s operations, like the founders, backing investors, or early-stage employees. Once a corporation goes public, stock can be bought by the general public.
If you are going to offer corporate stock through your North Carolina business, you must register with the Securities Division of the Department of the Secretary of State. Some companies may be exempt from this requirement, for example, smaller businesses. Additionally, you must file quarterly reports on how many shares are issued and to whom with the U.S. Securities and Exchange Commission (SEC).
Step 8: Apply for Necessary Business Permits or Licenses
Depending on the nature of your business, you will have to apply for additional business licenses or permits. For example, if you run a day care, you need a child day care license. North Carolina does not have a single blanket business license you need to operate in the state. That said, there are over 700 industry-specific licenses and permits possible.
Business Link North Carolina (BLNC) has partnered with the state’s Department of Commerce to provide a directory of licenses and permits. However, this isn’t all-inclusive. You should additionally check with your area city or county regarding local licensing requirements, such as zoning or signage.
Step 9: File for an EIN and Review Tax Requirements
Your corporation needs an Employer Identification Number (EIN). This is a unique identifier used on important financial paperwork, like tax returns. The IRS will issue your North Carolina EIN at no cost. It takes only a few minutes to apply online. You must also register with the North Carolina Department of Revenue and get a state tax ID number.
Corporations are obligated to file taxes at the state and federal levels. This obligation is completely separate from any obligation that shareholders have to pay on their earnings. North Carolina also requires an annual franchise tax. The precise amount is calculated depending on factors like capital stock and investment in property in the state.
Step 10: Submit Your Corporation’s First Report
State law requires all North Carolina corporations to submit an annual report. This must be filed with the Business Registration Division of the North Carolina Secretary of State before the 15th day of the fourth month following the corporation’s fiscal year-end. You can file electronically or via postal mail. The fee is $20 for an online filing and $25 for paper. This video takes you through the process
How much does it cost to start a corporation in North Carolina?
When you file the Articles of Incorporation, you must pay a filing fee of $125. You can file via mail or online (the filing fee remains the same). For a nonprofit corporation, the filing fee is only $60. You can opt for a 24-hour turnaround for an extra $100 or same-day filing for an additional $200.
You may also choose to reserve the business name for $30. If you choose to obtain a DBA name, you will need to pay a $26 filing fee. If you choose to reserve a domain name, you will also have to pay for this (the price will vary depending on the provider and domain).
In addition to the cost to form a corporation in North Carolina, there are ongoing maintenance expenses. The annual report requires a filing fee of $20 for an online filing and $25 for paper. You may also have to pay to keep business licenses and permits current.
For a low annual fee, ZenBusiness can help you establish your corporation, assisting with everything from web domain registration to providing registered agent services..
What are the benefits of a corporation in North Carolina?
Forming a corporation establishes your company as an official, legally recognized business entity — independent from you or any other incorporators, directors, or shareholders. This protects you legally and financially by differentiating your assets from those of your business. For example, if the company is sued, your personal finances should not be affected. Your corporation can also issue stocks and will be recognized internationally.
There are additional benefits of a corporation in North Carolina, including:
- Tax credits: If you register a C or S corporation in North Carolina, you benefit from a tax credit program. This offers eligible businesses credits on the required corporate or franchise taxes and bonuses like tax exemptions on business properties.
- North Carolina opportunity zones: The state has specified certain census areas, such as low-income tracts, as opportunity zones. Establishing a business here can allow for temporary tax deferral on capital gains that you reinvest into a so-called “opportunity fund.”
- A skilled workforce: North Carolina offers a skilled, educated workforce. The state is home to top-tier universities (UNC, NCSU, Duke) and a 58-campus community college system. Your corporation can tap into this skilled pipeline of workers.
All that said, a corporation is a complex business structure that poses potential disadvantages. You could face double taxation. Failing to meet reporting requirements, such as those of the SEC, can result in criminal penalties and fines. While a corporation offers benefits, it’s imperative that you do your research and consult professionals (such as tax experts) to ensure you are operating in line with the law.
How is a North Carolina corporation taxed?
There are different North Carolina corporations: a C corporation, S corporation, or nonprofit corporation. A C corporation is taxed separately from any shareholders. Shareholders must also declare any earnings they receive from the business and pay taxes on these.
An S corporation splits its earnings among shareholders. These earnings are taxed, but the business entity itself is not. Finally, a nonprofit corporation can apply to be tax-exempt as an entity (although employees will still be taxed on their wages). However, this type of corporation is more complex in terms of the paperwork required and regulations it must adhere to.
Your corporation must file both state and federal taxes (with the IRS). If your corporation has employees, there are also payroll taxes to take into account. Depending on the nature of your business, you may also have to pay sales tax.
North Carolina Corporation FAQs
- Does running a corporation in North Carolina involve more paperwork than running other types of businesses?
The reporting requirements for corporations are more stringent and complicated than those of other business models, like a limited liability company (LLC). With an LLC, you don’t need to draft corporate bylaws or a shareholder agreement, for example.
- What is the difference between an LLC and a corporation in North Carolina?
A limited liability company is an officially recognized business entity that helps differentiate its members (owners) from the business, thus offering personal asset protection. An LLC is not allowed to issue shares, however.
- How do I change my corporation’s name in North Carolina?
You can file to change a business name with the North Carolina Secretary of State.
- How many people are needed to form a corporation in North Carolina?
You need to have at least one person on the board of directors.
- Can I form my North Carolina corporation online?
Yes, you can file the Articles of Incorporation online.
- How do I dissolve my North Carolina corporation?
You will have to file the Articles of Dissolution by Board of Directors and Shareholders (form B-06) and pay a filing fee of $30. Note that there is a separate form for dissolution if you are dissolving your corporation prior to issuing shares.
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