How to Register a Corporation in North Carolina?

North Carolina Corporation

North Carolina is a state with very high growth prospects for small and medium enterprises (SMEs). You can form a corporation in North Carolina with ease as the state offers just the right business environment and support in terms of resources and incentives. The state recorded a real Gross Domestic Product (GDP) of $533.09 billion with the annual percent change of the real GDP at 7 percent. The state also offers several programs tailored for startups and businesses that are considered to be some of the top benefits of incorporating in North Carolina.

What is a North Carolina Corporation?

A corporation or a traditional C Corporation is also known as a business corporation and a for-profit corporation. It is a type of legal entity that is separate and distinct from the owners. A corporation normally possesses the same responsibilities and rights as those of individuals and hence, it is also known as a legal person. You can register a corporation in North Carolina with the office of the Secretary of State. The various types of corporations that you can form in the state are:

• Business Corporations (C-Corp)
• Business Corporation (S-Corp)
• Foreign Corporations
• Nonprofit Corporations
• Professional Corporations

What are the benefits of incorporating in North Carolina?

Entrepreneurs prefer to incorporate in North Carolina as this type of business structure has several advantages over other entity structures. Some of the advantages are:

• Limited liability – A limited liability company is considered to be a type of legal structure where-in the personal assets of owners and investors are off-limits when it comes to the debt obligations of the company. This is one of the top benefits of incorporating in North Carolina as it helps with minimizing the economic loss to individual assets that have been invested in the corporation.
• Stock Options – Once you form a corporation in North Carolina, you will be able to offer stock options. This creates shareholders and such individuals will be able to receive dividends from company stock.
• Access to investment – When it comes to the benefits of incorporating in North Carolina, you can rest assured that this type of entity structure is lucrative to investors. Unlike an S Corporation, a C Corporation can have an unlimited number of investors. A corporation can get pooled capital from investors through investment companies, venture capitalists, or even personal investors.

Starting a North Carolina Corporation

North Carolina is home to one of the fastest-growing startup ecosystems in the nation. There are several key factors for this growth including strong infrastructure, business-friendly tax rates, and access to accelerators as well as incubators. So if you want to start a business and are wondering how to form a corporation in NC then there are several important processes to focus on.

1. Name Your North Carolina Corporation

If you are planning to register a corporation in North Carolina then one of the first steps towards this is to identify a name for your company. The business name is one of the most important aspects as it will help customers to associate the product or service with the said name. A company name creates the first impression with your future customers. There are certain state naming guidelines that a corporation has to follow like using words like “corporation”, “incorporated”, or abbreviations like “corp.”, or “inc.”

2. Appoint North Carolina registered agent

If you are wondering how to form a corporation in NC then you should know that the new business formation process in the state will vary according to the entity structure. This process will involve filing incorporation documents, name reservation, obtaining licenses and all the while maintaining compliance with all NC state laws. The incorporation process may seem complex and this is where a reputable North Carolina registered agent like IncParadise can assist you.

3. File Articles of Incorporation with the North Carolina Secretary of State

Once you have reserved your business name, the next step would be to follow the process to form a corporation in North Carolina. You will be required to prepare and submit the Articles of Incorporation (Form B-01) pursuant to NC Gen Stat § 55-2-02 (2020). You can register an NC Corporation online or the articles can be mailed to the office of the Secretary of State. There will be a filing fee of $125.

Are you thinking of starting a North Carolina Corporation?

4. Prepare Bylaws for Your North Carolina Corporation

One of the key requirements for any new corporation is the corporate bylaws. They are also known as company bylaws and are guidelines that highlight the way you will structure and operate your company. Bylaws are a mandatory requirement in most US states although you are not required to submit them to the office of the Secretary of State. The requirement of bylaws is governed by NC Gen Stat § 55-2-06 (2020).

• Corporate information
• Board of directors
• Officers appointed by the directors
• Shareholder information
• Issuance of stock to shareholders
• Rights and responsibilities
• Corporate Meetings
• Conflicts of interest
• Committees
• Indemnification
• Amendment to the Bylaws

5. Appoint initial directors & hold an organizational meeting

If you’ve decided to register a corporation in North Carolina then it would benefit you to know that an integral part of the incorporating process is appointing initial directors. They are considered to be the first directors who would be named in the articles of incorporation. They can be appointed through an organizational meeting or individuals appointed by initial owners or shareholders of the said corporation. The board of initial directors will help you in making decisions relevant to several areas of the company like issuance of shares, strategic growth, and adoption of bylaws among others.

• Distribution of initial shares
• Drafting articles of incorporation
• Election of officers
• Approving corporate bylaws
• Approving the corporate seal
• Voting toward accepting the stock certificates

6. Get an EIN

If you are planning to register a NC Corporation online or offline then there are certain annual requirements that you will need to fulfill. One such requirement is that of filing state, corporate, or business taxes. To file taxes, you will have to apply for and obtain an Employer Identification Number (EIN). This is a unique 9-digit number assigned to trusts, businesses, and nonprofits by the Internal Revenue Service (IRS). It is also known as the Federal Employer Identification Number (FEIN) or Tax Identification Number and is also used for maintaining corporate shields and opening bank accounts.

7. Open a bank account

Now that you have decided to incorporate in North Carolina, it is time to consider the financial side of the business. One of the focal points is transacting, and this is facilitated using a business bank account. This type of bank account is also known as a business checking account and should be kept separate from your personal account. The greatest benefit of a checking account is that it will help with tracking your expenditures as well as your income quite efficiently. A business bank account will also help with improving the overall credit score of the company.

8. Comply with other tax and regulatory requirements

Once you form a corporation in North Carolina you may be required to pay annual taxes to the state. A C Corporation formed in the state is required to file corporate income and franchise tax returns although certain corporations are also exempt from the franchise tax pursuant to G.S. 105-125 and 105-130.11. If your company is selling products to customers in the state then you may have to file Sales and Use Tax. Certain items may be subject to a 7 percent combined general rate while some items may be subject to a miscellaneous rate.

Know more about starting a North Carolina Corporation

You’ve decided to register a corporation in North Carolina but have several unresolved queries. You may have questions concerning the incorporation process, dissolutions, starting costs, and foreign corporations among others. Hence, we have created a special section of “Frequently Asked Questions” for addressing some of the queries that you may have as a new business owner.

How do I form a “C” corporation and an “S” corporation in North Carolina?

There are different types of corporations that you can form in North Carolina like a traditional C Corporation and S Corporation. Let’s try and understand each of these entities.

• C Corporation – If you register a NC Corporation online as a C Corporation then you will be required to file the Articles of Incorporation with the office of the Secretary of State along with a fee of $125 pursuant to NC Gen Stat § 55-2-02 (2020).
• S Corporation – If you are wondering how to form a corporation in NC as an S Corporation then you need to proceed with the registration of a C corporation first. Once you have formed a traditional corporation, and received an EIN, the next step would be to complete and submit Form 2553 to facilitate the S corp., tax election. This form is known as “Election by a Small Business Corporation” an S corp., election is governed by section 1362 of the Internal Revenue Code.

How much does it cost to start a corporation in North Carolina?

If you want to incorporate in North Carolina then the overall cost of starting a corporation will depend on whether it is a domestic or foreign corporation. There are primarily three initial starting costs for any business corporation in the state and they are:

• Business Name – This denotes the cost of reserving a business name.
• Cost of Incorporation – This includes the filing fee for Articles of Incorporation.
• Business Licenses – The third cost is variable and will depend on the business activity, profession, and location of the company. Your company may require single or multiple business licenses and permits.

How do I look up a corporation in North Carolina?

To register a NC Corporation online, you will need to reserve your chosen business name first. You may have chosen a name for your company following the state naming guidelines but it is essential to ensure the name is unique. Another company might be using the same name as the one you have chosen. This is where the name availability search is quite useful. You will be able to search through a detailed state database for businesses.

Do I need a business license for my North Carolina Corporation?

Yes. If you are planning to form a corporation in North Carolina and want to transact in the state then you will need to apply for and obtain proper state licenses and permits. You may be required to apply for county licenses also known as municipal licenses. If you are selling products or services in the state then you will be required to obtain a Sales Tax License also known as a Certificate of Registration.

Can I register a foreign Corporation in North Carolina?

Yes. If you already have an existing business in any other state and want to move your business or expand in North Carolina then you need to apply for foreign qualification. This is a process by which you can register a corporation in North Carolina as a foreign corporation. You will be required to file a Certificate of Authority with the Secretary of State pursuant to NC Gen Stat § 55-15-01 (2020) and NC Gen Stat § 55-15-03 (2020). Whether you register NC Corporation online or through the mail, you will need to submit a certificate of existence or certificate of good standing along with the authority to transact business in the state. The certificate of existence will be issued by your home state or the state where said entity was initially incorporated.

How do I dissolve a corporation in North Carolina?

Once you incorporate in North Carolina, the said entity will come into existence officially. If at any given point in time, you want to close the business then it is possible through the process of dissolution. Dissolution in the state is governed by the 2020 North Carolina General Statutes, Chapter 55 – North Carolina Business Corporation Act, Article 14 – Dissolution. There are three categories of dissolution and they are:

• Dissolution by incorporators or directors
• Administrative Dissolution
• Judicial Dissolution

Ready to Start a North Carolina Corporation?

There are different types of business structures that you can choose to form although the benefits of incorporating in North Carolina are far more as compared to other entity structures. If you are thinking of registering a domestic or foreign entity in the state then IncParadise can assist you with the process of incorporation.