North Carolina LLC Operating Agreement: Everything You Need to Know
The North Carolina LLC operating agreement guides the members of an LLC in outlining and establishing the procedures, policies, member roles, and other aspects of day to day business operations.3 min read
The North Carolina LLC operating agreement guides the members of an LLC in outlining and establishing the procedures, policies, member roles, and other aspects of day to day business operations.
The New Act made changes to several areas of the operating agreement. Under the New Act, the operating agreement is defined as an agreement concerning the limited liability company or the ownership interest of each member of the LLC. It is in place to help distinguish between the different types of ownership interests available to limited liability companies, which includes its members and economic interest owners.
Information About the North Carolina LLC Operating Agreement
- Creating an operating agreement is the first step in building a foundation for an LLC.
- Although an operating agreement is not a requirement in North Carolina, it is recommended that the document be completed.
- If members expect to be protected from liability in the event legal action is brought against the LLC, an operating agreement must be in place.
- Any person acquiring an interest in the LLC is bound by the rules established and agreed upon by all members.
- Amendments to the operating agreement are possible as long as they are in writing.
- Once the operating agreement has been completed, it is filed with the Secretary of State. The report is filed annually until the LLC is dissolved.
- The New Act allows economic interest owners to be parties to the operating agreement along with its members.
- All documents filed by the LLC with the Secretary of State, including the Articles of Organization, are deemed to be part of the operating agreement. This provides protection to any party who is not part of the operating agreement who relies on the documents on file with the Secretary of State for the LLC.
- If the limited liability company has one interest owner and has not created an operating agreement that involves another party, any document serving as the operating agreement is considered to be the operating agreement.
Steps for Writing an Operating Agreement
- Fill out the operating agreement form beginning with the LLC name.
- If filing as a single member, include the name of the company, the state it's in, and the name and address of the owner. For a multi-member LLC, include the name and address of each member.
- Add the registered name of the business and its physical address, including the city.
- Review the areas for formation, which includes the date the LLC was formed.
- Include member monetary contributions, if applicable.
- Complete information regarding distributions, books, records, bank accounts, management, tax returns, and any remaining sections that apply to your LLC.
- Provide the date the operating agreement will be executed.
- A signature is required of a selected company representative and all members.
- Each member must receive a copy of the operating agreement once it is completed for their own records.
Steps for Forming a North Carolina LLC
- A unique business name must be filed with the North Carolina Secretary of State when forming a new LLC. The name must be dissimilar to businesses already registered with the state.
- Use the state's website to search for your proposed business name. You must include LLC, L.L.C., or Limited Liability Company in the LLC name. The name cannot include words such as FBI, Secret Service, etc.
- Appoint a registered agent to act as the recipient to receive legal filings and notices on behalf of the LLC. The registered agent can be a North Carolina resident or a business that has received authorization to do business in the state.
- Determine what type of business your LLC will be - domestic or foreign limited liability company. A domestic LLC is a new business formation in North Carolina. A foreign LLC is a preexisting business that wants to expand the business into North Carolina from an outside jurisdiction.
- Complete the application form. For a domestic LLC fill out the Articles of Organization form. For a foreign LLC, fill out the Certificate of Authority to accompany the application.
- File the forms and include the filing fee. A domestic LLC is $125, and a foreign LLC is $250.
- Create an operating agreement.
- Apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS).
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