Starting a Corporation in NC: Everything You Need to Know
Starting a corporation in NC comes with the benefit of reducing personal liability for contracts that the business has entered into.3 min read
2. Hire a Registered Agent
3. File Articles of Incorporation
4. Start Keeping a Book of Corporate Records
5. Choose Directors and Hold Your First Meeting
6. Open a Business Bank Account
7. Handle Business Taxes, Licenses, and Permits
Starting a corporation in NC comes with the benefit of reducing personal liability for contracts that the business has entered into. It also protects you from being held liable for employee negligence. Running your business as a corporate entity may also carry tax benefits.
In North Carolina, most corporations are either traditional S corps or C corps, or they are limited liability companies (LLC). S corps are only owned by individuals rather than other corporations, trusts, etc. S corps are “flow-through” entities, i.e., they pay no taxes themselves, but are rather taxed through the corporation's individual shareholders.
LLCs are used by many small businesses. LLCs are also "flow-through" entities — they don't pay taxes on their income, which are passed to the LLC's owners. In contrast to subchapter S corps, LLCs may be owned by trusts, companies, or other corporations. Before deciding to form your business as an LLC or subchapter S corp, you should consult the advice of a lawyer and your accountant.
Since corporations exist as separate entities from their owners, forming as a corporation will protect company owners from debts and liability. Outside investors also tend to find corporations more attractive.
Choose and Secure a Business Name
As a first step, you'll need to secure and register the brand name that you choose for your corporation. This name must be unique and include the word "Company," "Corporation," "Limited," "Incorporated," or an abbreviation of one of these words.
You can do a free business entity search on the North Caroline SOS website. To make sure there aren't any potential trademark issues, check the TESS system through the U.S. Patent and Trademark Office.
If you'd like to reserve the name you've chosen for your corporation, you can do so from a 120-day period with the necessary $30 filing fee.
Hire a Registered Agent
When incorporating in North Carolina, you must designate a registered agent who will be responsible for handling official documents for your business. This agent needs to be an NC resident or business entity registered in NC. The agent needs to have an address when they can be reached during regular business hours.
File Articles of Incorporation
You must file the articles of incorporation with the North Carolina Secretary of State, along with the necessary fee. Articles of incorporation must include:
- The corporation's name
- The address of the corporation's principal location
- The incorporator's names and addresses
- The corporation's stock structure
- The registered office and agent
- Stock structure
Stock structure must list:
- The total number of shares the corporation is allowed to issue.
- A different designation for each separate class if the stock structure has more than one class. This should also describe the limitations, rights, and preferences for different classes.
Start Keeping a Book of Corporate Records
Though this isn't a legal requirement, there should be a hard-copy of all important corporate documents like minutes, bylaws, Articles of Incorporation, stock certificates, etc.
Choose Directors and Hold Your First Meeting
At least one director should be appointed until the shareholders hold their first meeting and vote on new directors. During the first meeting you hold with your director(s), you must:
- Create an "Incorporator Statement" that includes full names and addresses of all directors to keep in your records.
- Appoint or vote on officers and discuss corporate bylaws.
- Pick a bank and approve stock certificates for issuance.
- Choose a corporate seal and adopt an official stock certification form.
- Take meeting minutes and have the directors sign for your records.
- Approve S corp, if applicable.
Open a Business Bank Account
It's essential to keep your personal and business accounts entirely separate when starting your corporation. To do this, you need to open a bank account specifically for your corporation.
Handle Business Taxes, Licenses, and Permits
You need to make sure that you are complying with all federal, state, and local agencies in order for your business to legally operate in North Carolina.
To make sure your business is 100 percent compliant, your best bet is to work with a lawyer. In addition to working with a lawyer, you may want to consider employing a professional business license service to make sure all the essentials are covered.
If you need help starting a corporation in North Carolina, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.