Starting a Corporation in North Carolina | What You Need to Know

Start a Corporation in North Carolina

In North Carolina, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in North Carolina, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in North Carolina.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in North Carolina?

A corporation in North Carolina is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in North Carolina are required to have at least One directors. One of the main advantages of a corporation in North Carolina is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in North Carolina is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

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How to Start a Corporation in North Carolina

To start a corporation in North Carolina, you must follow the below steps that, include choosing a corporate name, hiring a Registered Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with North Carolina naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in North Carolina-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the North Carolina Secretary of State‘s business name database and Business Name Search in North Carolina. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $30 and mail name reservation fee of $30. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, by mail and in person., which costs around $26. In addition, the DBA’s validity in North Carolina is Indefinite, which you can file in North Carolina Secretary of State.

You can check out How to File a DBA in North Carolina for clearer understanding.

Step 2: Hire a Registered Agent

Hiring a Registered Agent is essential in starting a corporation. Registered Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are North Carolina Registered Agent Services to check in forming North Carolina Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in North Carolina are required to have at least One directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In North Carolina, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your North Carolina corporation, the next step is to write and file a Articles of Incorporation. In writing, the North Carolina Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Registered Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your North Carolina corporation, you must prepare and file Articles of Incorporation with the North Carolina Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the North Carolina Secretary of State’s office, along with the required filing fee. Fees vary by state, but in North Carolina, the Articles of Incorporation filing fee costs around $125 for filing online, or by mail.. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create a wizard on the SOS site, fill out the online form and submit online. Or download the PDF form, fill it up offline and upload it back to the SOS site.
  • Offline filing: Send the form by mail or drop it off in person at The Secretary of State, Business Registration Division, P.O. Box 29622, Raleigh, NC 27626.

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in North Carolina, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing North Carolina corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your North Carolina corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in North Carolina are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • North Carolina Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required North Carolina licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your North Carolina corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in North Carolina for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your North Carolina corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in North Carolina can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or North Carolina Department of Revenue for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your North Carolina corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the North Carolina Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in North Carolina

Even if you have established your corporation in North Carolina, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in North Carolina has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in North Carolina are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in North Carolina

In forming a corporation in North Carolina, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in North Carolina, it costs $125 for filing online, or by mail.. The corporation in North Carolina also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is a corporation in North Carolina?
A corporation in North Carolina is a legal entity created by individuals or by law to conduct business and limit the liability of owners.
How do you start a corporation in North Carolina?
To start a corporation in North Carolina, you must file articles of incorporation with the Secretary of State.
What are the requirements for forming a corporation in North Carolina?
To form a corporation in North Carolina, you must file articles of incorporation, appoint initial directors, obtain necessary licenses, and satisfy any other state requirements.
What is the process of filing articles of incorporation in North Carolina?
To file articles of incorporation in North Carolina, you need to provide basic information about your corporation’s name, location, business purpose, and shares of stock.
How much does it cost to form a corporation in North Carolina?
The fee to form a corporation in North Carolina is $125.
How long does it take to form a corporation in North Carolina?
It takes about 2-3 weeks to form a corporation in North Carolina.
Can I form a corporation in North Carolina if I’m not a resident?
Yes, anyone may form a corporation in North Carolina, regardless of residency.
Do I need a North Carolina address to form a corporation?
Yes, you need a North Carolina address to form a corporation and use it as a principal place of business.
Is a registered agent required to form a corporation in North Carolina?
Yes, you must appoint a registered agent in North Carolina to receive service of process on behalf of the corporation.
What is a registered agent in a North Carolina corporation?
A registered agent in a North Carolina corporation is a person or entity that serves as the official representative of the corporation in legal matters.
Can I be my own registered agent in North Carolina?
Yes, you can be your own registered agent in North Carolina if you live in the state and provide a physical address where you can receive legal notices.
Are there different types of corporations in North Carolina?
Yes, there are different types of corporations in North Carolina, such as C corporations, S corporations, and nonprofit corporations.
What is a C corporation in North Carolina?
A C corporation in North Carolina is a traditional corporate structure that is taxed separately from its owners and has no limit on the number of shareholders.
What is an S corporation in North Carolina?
An S corporation in North Carolina is a hybrid entity that enjoys tax benefits similar to a partnership while operating like a corporation.
What is a nonprofit corporation in North Carolina?
A nonprofit corporation in North Carolina is a corporation organized for charitable, educational, or other non-business purposes.
Can I convert my existing business to a corporation in North Carolina?
Yes, you can convert your existing business to a corporation in North Carolina by filing articles of conversion with the Secretary of State.
What if someone else in North Carolina has the same name as my corporation?
If someone else in North Carolina has the same name as your corporation, you may need to choose a different name or work out an agreement with the other party.
Can I reserve a corporation name in North Carolina?
Yes, you can reserve a corporation name in North Carolina by filing a name reservation application and paying a fee.
What is a corporate bylaws in North Carolina?
A corporate bylaws in North Carolina is a legal document that sets out the rules and procedures for the corporation’s operation and governance.
Do I need to adopt corporate bylaws in North Carolina?
Yes, you should adopt corporate bylaws in North Carolina to establish clear guidelines for the corporation’s management.
Do I need to file corporate bylaws with the state in North Carolina?
No, you do not need to file corporate bylaws with the state in North Carolina, but you need to keep them in the corporation’s records.
Can I amend corporate bylaws in North Carolina?
Yes, you can amend corporate bylaws in North Carolina, but you must follow the process set forth in the bylaws and any state laws.
What is an EIN number in North Carolina?
An EIN number in North Carolina is an Employer Identification Number issued by the IRS to identify your business for tax purposes.
Do I need to apply for an EIN number for my North Carolina corporation?
Yes, you should apply for an EIN number for your North Carolina corporation before hiring employees, opening a bank account, or filing tax returns.
Can I apply for an EIN number online for my North Carolina corporation?
Yes, you can apply for an EIN number online for your North Carolina corporation using the IRS website.
Do I need to register my North Carolina corporation with the state tax department?
Yes, you should register your North Carolina corporation with the state tax department to obtain necessary tax permits and comply with state tax laws.
Does a North Carolina corporation need to have a business license?
Some North Carolina municipalities require a business license for corporations operating within their jurisdiction.
Are there annual requirements for a North Carolina corporation?
Yes, a North Carolina corporation must file an annual report and pay an annual fee to maintain active status with the Secretary of State.
Can I dissolve my North Carolina corporation?
Yes, you can dissolve your North Carolina corporation by filing articles of dissolution with the Secretary of State and obtaining other required approvals and certifications.
How do I start a corporation in North Carolina?
To start a corporation in North Carolina, you need to file documents with the North Carolina Secretary of State.
How much does it cost to start a corporation in North Carolina?
It costs $125 to file Articles of Incorporation in North Carolina.
How long does it take to start a corporation in North Carolina?
It takes approximately five to seven business days to process the Articles of Incorporation in North Carolina.
Can I register an out-of-state corporation in North Carolina?
Yes, you can register a corporation from another state to do business in North Carolina.
What taxes does a North Carolina corporation have to pay?
A North Carolina corporation has to pay state income tax, franchise tax, and sales and use tax.
Is there a minimum number of shareholders required to start a corporation in North Carolina?
No, North Carolina does not have a minimum number of shareholders requirement to start a corporation.
Are articles of incorporation the only documents needed to start a corporation in North Carolina?
No, corporations need to file several other documents with North Carolina Secretary of State, such as initial lists, annual reports, and changes of registered agent.
Does North Carolina require corporations to have a registered agent?
Yes, North Carolina requires corporations to have a registered agent who can accept legal notices and other official communications.
Can a corporation voluntarily dissolve in North Carolina?
Yes, a corporation can voluntarily dissolve by filing a Certificate of Dissolution with the North Carolina Secretary of State.
Is it possible to reinstate a dissolved corporation in North Carolina?
Yes, a corporation may be reinstated in North Carolina by filing an application and paying fees.
Are there any post-registration filings and fees to be paid in North Carolina?
Yes, corporations are required to file annual reports with the North Carolina Secretary of State and pay annual fees.
Can a corporation change its name in North Carolina?
Yes, corporations may amend their Articles of Incorporation to change their name in North Carolina.
Is North Carolina a good state for incorporating a business?
North Carolina has relaxed regulations and tax policies that make it conducive for incorporating a business in the state.
Can I get assistance with filing incorporation documents in North Carolina?
Yes, you can opt for the assistance of an incorporation service in North Carolina, either online or through a legal specialist.
Does North Carolina have venture capital firms?
Yes, North Carolina has several venture capital firms like The Aurora Funds, Harbert Venture Partners, and others.
Can non-residents form a corporation in North Carolina?
Yes, non-residents can form a corporation in North Carolina.
Can corporations be exempt from North Carolina State or Intra-State taxes?
No, corporations are not exempt from North Carolina state or intrastate taxes.
What kind of documents are needed to incorporate a corporation in North Carolina?
You need the Articles of Incorporation, a registered agent for service of process and a Board of Director for filing a corporation in North Carolina.
Can business registration be done online in North Carolina?
The North Carolina Secretary of State enables businesses to form most business entities online via the North Carolina Business Registration Portal.
What must be included in the Articles of Incorporation?
The Articles of Incorporation must include the corporate name, state of incorporation, a registered agent, the number of persons authorized to form the corporation, and various institutional purposes relating to legal performance issues.
Do I have an obligation for annual report filing for my Corporation in North Carolina?
Yes, you have an obligation for annual report filing for your corporation in North Carolina.
Does North Carolina require businesses using a fictitious name to register?
Yes, businesses using a fictitious name have to register their business name before starting the business.
What should I display outside my North Carolina corporation offices?
All North Carolina entities are required to keep up with the present registered agent, office location and state of business notices.
Are North Carolina corporations required to get a general business license?
North Carolina generally doesn’t issue state business licenses, but many localisms appreciate regulation which can affect your business.
What standard documents come in the process of incorporating a Corporation in North Carolina?
You will need the Articles of Incorporation document for the process of incorporating a corporation in North Carolina.
Can a foreign corporation name its parent as its registered agent in North Carolina?
No, it’s necessary for a registered agent to be enlisted in North Carolina, so long as the organization has a tractable North Carolina workplace.
What kind of licenses and permits are required to start a corporation in North Carolina?
The kind of license or permit required to start a corporation in North Carolina varies much by the locality in which the business is running.

Also Read

How to Save Money While Forming Your North Carolina Corporation

One of the most important things to consider when looking to save money while forming your North Carolina corporation is choosing the right business structure. Depending on the size and scope of your business, you may have the option to form a limited liability company (LLC) instead of a traditional corporation. LLCs tend to have lower start-up costs and ongoing fees, making them a more affordable option for small businesses.

Another way to save money while forming your North Carolina corporation is to do as much of the paperwork and legwork yourself as possible. While it may be tempting to hire a lawyer or business formation service to handle the process for you, taking the time to research and complete the necessary forms on your own can save you a significant amount of money. There are many resources available online that can guide you through the process of forming a corporation in North Carolina, including step-by-step instructions and sample documents.

When it comes to registering your corporation with the state of North Carolina, it’s important to shop around to find the most competitive prices. While the state does charge a fee for registration, these fees can vary depending on the type of corporation you are forming and the specific services you require. By comparing prices and researching your options, you can ensure that you are getting the best deal possible on your registration fees.

Finally, don’t forget to take advantage of any tax breaks or incentives that may be available to you when forming your North Carolina corporation. The state offers a variety of programs and incentives for new businesses, including tax credits, grants, and other financial assistance. By researching these options and making sure you take advantage of any benefits you qualify for, you can further reduce the cost of forming your corporation.

In conclusion, while forming a corporation in North Carolina may require some upfront investment, there are several strategies you can use to save money along the way. By choosing the right business structure, completing as much of the paperwork yourself as possible, shopping around for the best prices on registration fees, and taking advantage of available tax breaks and incentives, you can keep your costs low and get your new business off to a successful start.

Conclusion

Starting a corporation in North Carolina involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your North Carolina corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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