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Starting A Single Member North Carolina LLC
Filing for an LLC in North Carolina is one of the easiest processes you'll have to go through when starting your new business. The following article will take you through the process of setting up a North Carolina LLC and list the upcoming steps after that is complete.
Step 1: Download the Articles of Organization Form
The Articles of Organization are the foundation of your LLC. They tell the state, and anyone who works with your LLC what the rules are. At a minimum, they must contain the name of the company, address, names of the members of the LLC, the registered agent of the company, purpose of the company, and whether the LLC is member-managed or manager-managed. These minimal terms are contained in a form available on the North Carolina Department of the Secretary of State's website: www.secretary.state.nc.us. It costs $125 to file the Articles of Organization.
You may add additional terms to your articles, and if you're looking to create a strong business out of this company, you might want to look to legal help to ensure you've covered all your bases in the Articles of Organization. You may always amend the Articles later for an additional fee; however, it is always better to do it right the first time.
Step 1.1: Name
You can search on the North Carolina Department of the Secretary of State's website to ensure your name isn't taken by an existing company. If it isn't, that name is valid unless it violates some other rule. Your name must contain one of the following phrases: "limited liability company," "LLC," "L.L.C.," "ltd. Liability Co." or "ltd. Liability Company." The name also cannot be misleading, suggesting it is organized for any purpose other than what it is organized for. i.e. you cannot name your company Brick's Law Firm, LLC and operate as a bakery, not a law firm. Certain phrases such as "trust" or "insurance" are also off limits.
Step 1.2: Registered Agent
The registered agent must be an individual who resides in North Carolina and whose business address is identical to the registered office or a business whose business address is identical to the registered office. The registered agent can be you, but only as long as you have a physical address where summons can be served. It is also important to note that any time you change address, you'll have to submit a new form to the State along with a new fee. (Just a heads up there).
If you do not have a physical address which can receive your official mailings, process or demands, then you can employ the services of someone you know who is willing, your attorney or a company that offers registered agent services. A simple Google search will reveal many companies willing to forward your mail for large sums of money who would qualify as a registered agent.
Step 1.3: Purpose
This is the area that allows for the most, or the least, creativity. Some recently created LLC's have purposes as short as "engineering," but others have detailed plans that narrow in their focus. The most important thing to remember here is it must be broad enough that it allows you to operate as you need, but specific enough that your articles aren't rejected. I've heard that the State will no longer accept "for all legal purposes" under the purpose section. It must be slightly more narrow than that. If you want investors or partners later on, it might be a good idea to spend a little time focusing on this section because your Articles of Organization are public record and it is one of the first things investors will look at.
Step 1.4: Additional Clauses
If you don't include additional clauses, that is fine. Under the North Carolina laws, you're not required to; however, you will be stuck with default rules in certain areas, and others won't even be addressed. I always recommend putting something in the Articles about the amendment process as well as mentioning how the operating agreement is created and modified, but it all depends on what your LLC is going to be doing. If no one will ever look at your Articles, it may not matter one bit.
Step 2: Mail it.
Once you've completed your Articles of Organization to your satisfaction, you need to mail it in to the North Carolina Department of the Secretary of State. The address you will mail your Articles and $125 check to is: Corporations Division; PO Box 29622; Raleigh, NC 27626-0622. It takes between a couple of days to a few weeks to receive your certificate back from the State.
Step 3: Get an EIN
Now that you've got an LLC, you need to go on the IRS website and apply for an EIN. It takes about 5 minutes to do so, and it is free.Click here, and then click APPLY ONLINE NOW towards the bottom. You'll be able to print off your IRS letter at the end of the process.
Step 4: Do All the Business Stuff
Now, you can go out and do what you need to do as a business. If you need a bank account, they'll need your EIN and certificate from the state. If you want to hire employees, that's another process for a later article.
Since you're a single member LLC, your taxes are reported on your 1040 through Schedule C. If you're good with accounting, you can handle this yourself. If not, you may want to speak to an accountant for help.
If you have a complicated business, are expecting to include other members later, or are expecting to have investors, you will need an Operating Agreement. This is a more detailed rule book for your LLC. It outlines how the business is run, but cannot overrule the Articles of Organization. You don't necessarily need one if no one will examine your business ever, but it is almost like a business plan and is a very wise decision to have one regardless, for organization's sake.
Step 5: Keep up the Formality.
One of the best parts of having an LLC instead of a Corporation is that you have less formalities; however, like a corporation, you're still required to do certain things like submit an annual report each year. It costs $200, but it only requires the bare minimal information. It may also be submitted electronically for your convenience. The first annual report is due on April 15th of the year following the creation year.
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