Are you thinking of forming a North Carolina professional limited liability company (PLLC)? You’ll need to take several steps to form and keep a compliant North Dakota PLLC. This article shows you what those steps are and recommends professional services to help you along the way.
Who can form a North Carolina professional limited liability company?
What is a professional limited liability company (PLLC) in North Carolina? A PLLC is a business entity owned by one or more members, who must be licensed professionals. A PLLC is legally separate from its owners, which provides limited personal liability to owners against the business’s actions. A North Carolina PLLC could be the proper business structure for one or more licensed professionals who plan to provide services in-state. Licensed professionals in North Carolina include:
- Public Accountants
- Medical Doctors
- Registered Nurses
- Practicing Psychologists
- Marriage and Family Therapists
- Occupational Therapists
- Speech and Language Pathologists and Audiologists
- Professional Counselors
- Engineers and Land Surveyors
- Landscape Architects
- Certified Social Workers
- Clinical Social Workers
- Foresters, and
- Soil Scientists.
Although most PLLCs must have all members hold the same professional license, there are some exceptions for closely related professions. For example, PLLCs that provide a combination of architectural, landscape architectural, surveying, geological, and soil science services are allowed as long as at least one PLLC member is licensed to provide each of the services offered. The same is true for many medical practices as well.
Should you form a professional corporation (PC) or a PLLC?
A primary difference between a PC and a PLLC under some state laws is which licensed professionals can form either one. Information about licenses in North Carolina is available on the Secretary of State’s website.
PCs are typically obligated to pay corporate taxes, and ownership is through shares. PLLCs are pass-through tax entities, which can prevent double taxation, which is the term used when profits are taxed at both the business level and individual shareholder level.
North Carolina PLLCs are typically more popular than a PC because of their flexible business structure and ease of formation.
Choose a name for your North Carolina PLLC
When you choose a name for your North Carolina professional limited liability company, there are some legal requirements to keep in mind.
North Carolina has the following restrictions for PLLC names:
- Must contain the word “professional,” “PLLC,” or “P.L.L.C.”
- Must be different from the names of other established businesses in the state
- Cannot contain offensive language
- Should reflect the services that your business provides
Check name availability
It’s a good idea to check to see if your chosen name is available. You can run a search on the state website to see if it is.
Reserve a name and domain
Once you’ve found an available name, you may want to reserve it until you’re ready to file to ensure no one else claims it. You can do so through the state website or by using ZenBusiness’s name reservation service.
You’ll also want a domain name that aligns with your business name. ZenBusiness can also help you with this with our domain registration service.
Select a North Carolina registered agent
North Carolina law requires your PLLC to have an in-state North Carolina registered agent. This agent is needed to accept legal documents and certain official correspondence on behalf of your PLLC. Your registered agent must be at least 18 years old, have a registered physical address, and always be available during regular business hours.
You can be your own registered agent, but doing so ties you to the office all day. ZenBusiness can help you find a professional registered agent for your North Carolina professional limited liability company through our registered agent services.
Complete and file North Carolina Articles of Organization
Filing Articles of Organization in compliance with the North Carolina Limited Liability Company Act is an essential step in forming your North Carolina PLLC. Filing this document with the Secretary of State’s Office involves completing a form with important information about the PLLC, including:
- The complete company name
- The name and address of each executor of the Articles of Organization and whether they’re acting as a member, an organizer, or both.
- The name and complete street address, including county, of the registered agent — and mailing address if different
- The specific personal services offered by the PLLC
- Date of document execution — you may specify a delayed effective date up to and including the 90th day after the day of filing.
- The signature of the executors
You’ll also need to file a certification from the applicable licensing board(s) at the time of filing.
Decide whether the PLLC will be member-managed or manager-managed.
It’s important to decide if your professional LLC will be manager-managed or member-managed. Member-managed occurs when members oversee the day-to-day activities of your PLLC and make decisions on the PLLC’s behalf. Manager-managed occurs when you appoint a member(s) or hire an individual(s) from outside the PLLC with or without a stake in ownership to manage your PLLC.
Create a North Carolina operating agreement for the PLLC
An operating agreement outlines how you will operate and manage your PLLC. While you aren’t required to file this with the state, having an operating agreement is essential for preventing future conflicts among members and giving clear guidance about a host of situations that may arise over the lifetime of your PLLC. Additionally, banks and future partners often need to see this when considering doing business with your PLLC.
An attorney can help you outline your operating agreement, or you can use ZenBusiness’s operating agreement template to get you started.
Handle North Carolina tax obligations
When you form a North Carolina PLLC, you may have federal, state, and local tax requirements.
Most PLLCs — even those without employees — need a federal tax ID number called an Employer Identification Number (EIN). Available from the IRS, you’ll need this number to hire employees, open a business bank account, and for tax purposes. Use ZenBusiness’s EIN service to obtain your number quickly and easily.
To pay state taxes for your business in North Carolina, you must register with the state’s Department of Revenue and receive a tax account ID number. There are many state-level business taxes in North Carolina, like a franchise, withholding, and sales and use tax. Your PLLC’s business activities and how your PLLC elects to be treated for tax purposes will determine which taxes are applicable.
More information is available at the North Carolina Department of Revenue.
The business location of your North Carolina PLLC will determine whether you also need to pay some local taxes. It would be best to contact your PLLC’s city and county authorities to confirm.
Obtain all North Carolina business licenses and permits
Forming a legal North Carolina PLLC requires getting the proper licenses and permits that allow you to operate. It’s your responsibility to research which permits and licenses you’ll need for your North Carolina PLLC. Since there’s no one location you can find all the licenses and permits you need, ZenBusiness can help with our business license report service. Our partners will compile a list of all the licenses and permits your business requires.
North Carolina doesn’t have a general state business license, but there are hundreds of state-issued occupational licenses and permits. You may also need local licenses and permits for your PLLC.
Industry-specific regulatory/professional licenses
Your North Carolina PLLC may require industry-specific licensing, about which your professional licensing board may provide guidance. In association with the North Carolina Department of Commerce, Business Link North Carolina provides a free service to in-state business owners.
Acquire insurance for your North Carolina PLLC
A PLLC offers personal protection from creditors looking to collect unpaid debts owed by the PLLC. However, as a professional service provider, you and your PLLC may need additional protection through business and malpractice insurance.
A licensed insurance professional can help you determine what insurance coverage types apply to your North Carolina PLLC.
General business insurance
Liability claims can be common and often arise during normal business operations. General business insurance can help protect your PLLC in the event of the following situations:
- Property damages and bodily injuries
- Copyright infringement
- Advertising injuries, like the defamation of an individual or company
- Reputational harm to another entity
Professional malpractice insurance
Because your PLLC doesn’t protect you from your own malpractice, you need to have professional liability insurance. Each North Carolina PLLC member is liable for their own malpractice insurance, but no member is accountable for another member’s malpractice.
Workers’ compensation insurance
North Carolina generally requires all PLLCs with three or more employees to obtain workers’ compensation insurance. You can learn more about this insurance through the North Carolina Industrial Commission.
Open a business bank account
As a North Carolina PLLC, it’s essential to conduct your financial matters with transparency. Having separate bank accounts simplifies keeping track of your company income and expenses and filing taxes while keeping your business assets separate from your personal assets.
Ready to start your business?
At ZenBusiness, we’re proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
North Carolina PLLC FAQs
What are the filing fees for a North Carolina PLLC?
The filing fee to form a PLLC in North Carolina is $125.
Do I need a lawyer to form a PLLC in North Carolina?
It’s not necessary to use a lawyer to help you form a North Carolina PLLC.
Does North Carolina have a professional corporation entity?
Yes, professional individuals can form professional corporations (PCs) in North Carolina.
Can professionals from different fields form a North Carolina PLLC together?
Most North Carolina PLLCs can only provide one type of professional service. However, there are along several specific combinations of professional services that the state will allow to form a PLLC together.