How much does it cost to form a North Carolina LLC or Corporation?

North Carolina LLC or Corporation

Limited-liability companies and business corporations are the two most popular entity structures. This is because both business structures offer flexibility and several other benefits to their owners, members, and directors among others. The cost to form a North Carolina Corporation or LLC is also lower as compared to several other states such as New York, South Carolina, Texas, and Massachusetts among others.

Which business entity should I choose for my North Carolina business?

North Carolina has one of the best locations, transportation advantages, robust infrastructure, educational institutions, and an exceptional workforce among others. These factors play a key role in determining the growth of a new business just as much as the cost to form a North Carolina LLC or a corporation does. When choosing an entity structure, it is important to take into consideration the fact that each entity structure has advantages and disadvantages. Some of these benefits and drawbacks can have a significant impact on the annual maintenance cost of a North Carolina Corporation or even impact other aspects of the business like ownership control and legal liability. Let’s look at some of the decisive elements of a business structure:

• Taxation – One of the decisive factors in choosing a certain business structure is how the company will be taxed. If you look at the LLC vs Corporation in NC for a comparative analysis then you will find that the tax treatment is different for either entity structure. An LLC is considered a pass-through entity and hence the company doesn’t pay taxes on the business income. Corporations are subject to double taxation which includes Federal and state corporate income taxes as well as taxes on personal income like dividends and gains earned by shareholders.
• Funding – The cost to form a North Carolina Corporation is a small part of the total finances required by a new business to reach a sustainable stage. Every small business, startup, or medium enterprise requires funds to move from the initial formation stage to the brand-building and customer delivery phase. It is easier for corporations to get capital investment from VCs and other private funding sources vis-à-vis LLCs and other business structures.
• Limited Liability Protection – One of the most important aspects to consider when comparing an LLC vs a Corporation in NC, is limited liability protection. Liability protection helps with keeping the personal assets of owners and investors safe, thus avoiding any personal liability towards the debts of the said company.
• Complexity – There are several types of business structures that you can choose to form. For some, the formation and operational process is simple, and for others, it can be a complex process.

Pros and Cons of Forming an LLC or Corporation in North Carolina

The overall cost to form a North Carolina LLC or a corporation is dependent on several factors. These can be considered advantages for particular entity structures. If you are unable to choose between an LLC and a corporation, then the pros and cons of each structure may help you make the right decision. It is recommended to always recognize the various assets and liabilities of any given structure. Let’s look at a comparative analysis with a focus on a North Carolina LLC’s cost per year versus that of a corporation.

Pros of an LLC or Corporation

• Limited liability is applicable for all employees, members, directors, shareholders, and officers in either structure
• If you incorporate in North Carolina then you can benefit from an unlimited amount of shareholders
• The overall cost to form a North Carolina LLC is lower than a corporation as there are fewer regulations and less paperwork
• Both LLCs and C-Corporations can elect S-corporation tax status
• A Limited Liability Company does not have a rigid management structure
• A business corporation enjoys perpetual life
• The forming cost for a NC Corporation is lower than that of an LLC when it comes to filing annual reports.

Cons of an LLC or Corporation

• The cost to form a North Carolina Corporation is higher than that of an LLC
• When it comes to taxes, the annual maintenance cost of a North Carolina Corporation is higher as it undergoes double taxation
• In North Carolina, an LLC will be subjected to a self-employment tax
• In a corporation, shareholders will not be able to write off any business losses on their personal income statement
• The forming cost for a NC Corporation is higher as there is more paperwork involved and complex processes to make the company operational.

North Carolina LLC Cost

A limited liability company is considered one of the best structures for first-time business owners. There are different types of LLCs that you can form in the state including single-member or multi-member LLCs. It is a flexible business structure and the cost to form a North Carolina LLC is also quite low. There are many benefits to forming an LLC, so if you have decided to form one then let’s take a look at the annual registration and various operational costs for this entity.

Cost for forming a North Carolina LLC

The North Carolina LLC cost per year can be categorized under one-time costs and variable costs. The initial formation or new LLC registration costs are considered one-time costs. Let’s look at the processes that are considered to be an essential part of the cost to form a North Carolina LLC.

• One of the important initial costs to form a North Carolina LLC is the name reservation. You will need to file the Application to Reserve a Business Entity Name with the office of the Secretary of State. You can file online or offline and the fee is $30.
• To register your LLC in North Carolina, you will have to file the Articles of Organization with the Secretary of State. The filing fee is $125. This is a one-time registration and there will be no extra fee unless you make an amendment. The fee for an amendment of the Articles of Organization is $50. The North Carolina LLC cost per year for the registration of foreign entities (Certificate of Authority) is $450.

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Annual maintenance cost for North a Carolina LLC

Annual maintenance is an important state compliance objective that every new business must meet. Once a limited-liability company has registered with the state, it must ensure all requirements are fulfilled. Fulfilling these requirements will also help an entity to enjoy an active status in the state. The annual maintenance costs are different from the cost to form a North Carolina LLC. The cost includes:

• Business Licenses – Once you’ve registered your LLC with the state and filed your Articles of Organization, you will have to apply for and obtain the necessary business licenses and permits. Licenses are a mandatory requirement in most states including NC and they ensure the operations of an entity are not restricted. Licenses and permits are a key cost component for the North Carolina LLC cost per year. The cost varies according to the type of license, the number of licenses or permits, and the issuing authority or department. An LLC may require additional licenses and permits from the counties that the company operates in. This is a variable as well as a recurring cost as licenses have to be renewed each year.
• Annual Reports – In the state of North Carolina, an annual report is one of the most important components of annual maintenance for a limited liability company. This report is filed annually by April 15th. If you fail to file this report then your company may receive a notice of dissolution. This is a recurring North Carolina LLC cost per year and the filing fee is $203 for filing online and $200 for filing through mail (submit paper form).

North Carolina Corporation Cost

A business corporation is often the first choice for entrepreneurs and startups as this type of structure attracts venture capitalists (VCs) and other sources of funding with ease. If you’ve chosen to incorporate then it is important to identify the cost to form a North Carolina Corporation. There are different kinds of expenses associated with the formation and operation of this type of entity.

The Cost of Forming a Corporation in North Carolina

There are several processes involved with bringing a corporation into existence in the state of North Carolina. Each of these processes has certain costs associated with them. The forming cost for a NC Corporation can be categorized under fixed costs and variable costs. The incorporation fees are a one-time cost that includes:

• When you incorporate in North Carolina, the first step is to identify and reserve a business name. If a chosen name is available then you will be required to file an Application to Reserve a Business Entity Name with the office of the Secretary of State. You can file the name online or offline. The filing fee is $30 and is an integral part of the cost to form a North Carolina Corporation.
• Once you’ve reserved a business name, the next step is to apply for the registration of the entity. This is made possible by an online or offline submission of the Articles of Incorporation. The forming cost for a NC Corporation is $125. This incorporation or business registration cost is a one-time fixed cost. If at any later date, you want to make amendments to the articles then that is possible by filing the Articles of Amendment for Business. The fee for an amendment submission is $50.

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Annual maintenance cost for a North Carolina Corporation

Apart from the initial incorporation cost, there will be certain other costs included in the annual maintenance of the said company. Annual maintenance helps a corporation to be compliant with state laws and enjoy an active status. This is not a part of the initial cost to form a North Carolina Corporation and can be recurring in nature. The annual maintenance cost of a North Carolina Corporation includes:

• Business Licenses – One of the most important documents that can help a corporation or any form of business to transact in the state is a business license. This type of forming cost for a NC Corporation is recurring as you have to renew your license or permits annually. The licensing fee or cost of a permit will vary according to the type of license, issuing authority, and location of the business. You may also be required to apply for zonal permits and occupational licenses.
• Annual Report – Once you’ve registered a corporation in the state of NC, you will need to fulfill annual compliances under state business laws. One such compliance is filing an annual report. This is a recurring but fixed annual maintenance cost of North Carolina Corporation. If you file online then the fee is $21 and if filed through the mail, (paper form) then the fee is $25.

Need any Assistance in Forming Your North Carolina LLC or Corporation?

If you’ve decided to form a limited liability company or a corporation in North Carolina, then you can rest assured that your chosen destination is one of the best in terms of the business climate. Of course, there is a cost to form a North Carolina LLC or Corporation depending on the processes involved. We at IncParadise, have an understanding of all the necessary processes and can provide valuable assistance by helping you to incorporate in North Carolina or form an LLC quickly and efficiently.