- [Narrator] How to form an LLC in North Carolina.
If you are interested in an LLC the tar heel state,
you have good reason.
North Carolina provides great ease of doing business
and has some of the lowest business costs
and corporate taxes in the country.
Follow along closely to learn the required steps
for creating your own limited liability company
in the state of North Carolina.
(pleasant music)
There are two ways to form an LLC in North Carolina.
You can form one yourself
or you can hire a service to do it for you.
Let's start by looking at the five basic requirements
to form an LLC in North Carolina on your own.
You can also find these steps in more detail
on our website linked in the description below.
One, name your LLC.
Every state has its own rules
about what kind of names are allowed for LLCs.
In general you will need to observe these naming guidelines.
Your name must include the phrase limited liability company
or one of its abbreviation, LLC, or L.L.C.
with a period following each letter.
Restricted words such as bank, attorney,
law office, etc., may require additional paperwork
and may also need a licensed professional
to be part of the LLC.
Your name cannot include words
that could confuse your LLC with a government agency
such as FBI, Treasury, State Department, etc.
You cannot use a name that has already been registered.
To see if your name is available in your state,
you'll need to do a name search.
This free service is available
on your state Secretary of State website.
Check out our free guide
for finding the direct link to your state.
We also recommend that you check
to see if your business name
is available as a web domain.
Even if you don't plan to make a business website today,
you may want to buy the URL
in order to prevent others from acquiring it.
Two, choose a registered agent.
North Carolina requires that you nominate
a registered agent for your LLC
who is your business's point of contact with the state.
The registered agent can be an individual
within the company, including yourself,
or you can hire a professional service
authorized to do business in North Carolina.
They will send and receive legal papers on your behalf.
These documents include official correspondence
like legal summons and document filings
which your registered agent will receive and forward to you.
Your registered agent will help remind you
to file the necessary reports.
Failure to properly maintain your LLC
can result in fines and dissolution
so this assistance is valuable.
Three, file the Articles of Organization.
To register your North Carolina LLC,
you will need to file the Articles of Organization
with the North Carolina Secretary of State.
This can be done online or by mail.
When forming your LLC, it's a good time to consider
whether your LLC will be member-managed or manager-managed.
Member-managed means all members
of the LLC manage the company.
This is good for small organizations
where everyone is involved in the day-to-day operations.
The second option is manager-managed
where individuals are appointed to manage the LLC.
This is appropriate for larger organizations
where not everyone is involved
in the day-to-day affairs of the business.
Four, create an operating agreement.
Although not every state requires it,
you should always create an operating agreement
to establish ownership terms and member roles for your LLC.
This foundational document is the core of your LLC
and will help you maintain your organization
as well as further establish your LLC
as a separate legal entity.
There are six main sections of an operating agreement.
Organization outlines when and where
the company was created, who the members are,
and how the ownership is structured.
Management and voting addresses
how the company is managed
as well as how the members vote.
Capital contributions covers
which member's financially support the LLC
and how more funds will be raised in the future.
Distributions outlines how the company's profits
and losses are shared among members.
Membership changes describes the process
for adding or removing members
as well as if and when members
can transfer their ownership shares.
And dissolution, which explains the circumstances
in which the LLC may be dissolved.
An operating agreement is an internal document.
It does not need to be filed with the state.
However, it should be updated every time
there is a change in membership
or management at the company.
You can download a free sample operating agreement
or create a custom one using
our free operating agreement tool at howtostartanllc.com.
Five, obtain an EIN.
Lastly you'll need to get an employer identification number
or EIN from the IRS.
Also known as a federal tax identification number,
your EIN is like a social security number for your LLC
and is how the IRS tracks your business for tax purposes.
An EIN is also necessary to open a business banking account
and legally hire employees.
EINs are free of charge
and can be obtained from the IRS online or through the mail.
And with that, you have formed
a North Carolina LLC on your own.
Option two, hire a professional service.
The second way to create a North Carolina LLC
is to hire a professional service
to create your LLC for you.
Hiring a professional service to file your forms
and act as your registered agent for the LLC
will cost you an additional $50 to $150.
However, there are several benefits to working with a pro.
A hired registered agent helps with getting
your reports filed on time,
helps you stay organized
by keeping your business mail separate,
and is available at all regular business hours
to accept official mail
and legal papers on your LLC's behalf.
A final and important additional benefit
of using a service is privacy.
A professional service will provide
a level of privacy by withholding your personal name
and home address from the LLC's contact information.
There are many reasons why you might not
want your personal information easily accessible
and associated with your business.
Hiring a professional LLC formation service
is an easy way to accomplish this.
Now that you have seen the different requirements
and ways you can form an LLC in North Carolina,
visit our site and take some time
to research your options and establish a solid foundation
for your business activities.
Click on the links in the description below
to research the top five professional formation services
or get more information on how to form
a North Carolina LLC on your own.
Now you know all the steps
to form an LLC in your state.
For a more detailed guide, go to howtostartanllc.com.
You can also create an operating agreement
and use our business plan tool free of charge.
Give the video a like if you found it useful
and subscribe if you'd like to see more.
If you have questions
or encounter any roadblocks,
leave a comment below.
Good luck in starting your small business.
(pleasant music)