Those who want to launch a company in North Carolina may be having plenty of questions concerning the documents they have to prepare for the matter. If you are a resident of this American state and plan to establish a business entity with limited liability (or LLC), it is highly likely that you will need to draw the North Carolina LLC operating agreement among other legal forms.
There exist several reasons to create such an agreement for your company. Among them are revealing specific details about your entity, establishing rules related to management, listing all the owners, and other reasons described in our article: https://formspal.com/llc-operating-agreement-template/.
No matter where you create such an agreement, the items to add are the following:
The mentioned companies do not necessarily have more than one proprietor. Sometimes, a person runs such an entity on their own. Therefore, there are two common types of operating agreements: a single-member and a multi-member LLC operating agreement.
The agreement is a handy tool for entrepreneurs who act alone to define their investments into the company and separate them from their personal funds. In this case, a single-member agreement should be more preferable. But if the company merges two or more members, a multi-member agreement is needed.
While a single-member agreement helps a business person to split the funds, a multi-member agreement ensures that all the company’s members understand each other and agree on the fundamental principles established in the company. Therefore, the conditions listed in such an agreement should be discussed with all the company’s members before signing a document.
Although the state law does not mandate creating an agreement, we strongly recommend discussing and creating this document. It is a positive and beneficial practice, and plenty of entrepreneurs perform the procedure. Moreover, it is preferred to notarize these agreements.
After all the peculiarities are discussed and all the interested parties have accepted the conditions, each company’s member has to sign the document and leave their name and date of signing. Otherwise, the form will not be effective. It is crucial to issue a signed copy of an agreement to all entity’s proprietors.
Do you need the relevant North Carolina LLC operating agreement template? Use our convenient form-building software to get the requested file in seconds. Below are more details about the regulations for such entities and operating agreements in the state of North Carolina.
We have already mentioned that the document structure and content are generic for all American states. However, the laws regulating the topic and such documents differ inter-state.
For starters, let’s define in simple terms what a company with limited liability is. If you form an entity of this kind, you will be liable only in certain limits: the sum you have contributed to your business. If you have partners, the same rule applies: their liability will also be limited.
There are several advantages of LLCs that make people form such companies:
Chapter 57D of the North Carolina General Statutes regulates entities with limited liabilities and all related items. Section 57D-1-03 of the mentioned chapter contains definitions of various terms, including an operating agreement’s definition applicable in the state. Also, Sections 57D-2-30–57D-2-32 tell more about the scope and functions of operating agreements.
Other parts of Chapter 57D explain in detail the LLC formation process, fees to cover, naming, and so on. We will touch on various sections below when describing the steps to form an entity with limited liability in North Carolina.
Some provisions regarding these companies are also incorporated in the North Carolina Administrative Code (NCAC).
Finally, some questions (for example, companies’ naming and registered agents) are covered in Chapter 55D of the North Carolina General Statutes.
We have prepared a detailed guide on creating an LLC in North Carolina for your understanding and convenience.
1. Pick Your Company’s Name
The naming of such companies in North Carolina is governed by Section 55D-20 of the North Carolina General Statutes and Sections 04.0502, 04.0503 of Title 18 of the NCAC.
The NCAC sections describe the words that you cannot use or can use with some limitations. According to the local laws, your company’s name should be unused by other entities and contain words that may lead to misunderstandings. You can use a special website to check if someone has already come up with the same name or not.
You should also add one of these to your company’s name:
2. Choose Your Company’s Registered Agent
As stated in Sections 57D-2-40 and 55D-30 of the North Carolina General Statutes, each limited liability company requires a registered agent. This is someone who receives correspondence from public authorities, prepares replies, and deals with relevant matters.
Section 55D-30 gives you three options regarding your company’s restricted agent. It can be:
Some people prefer to hire an agency specializing in such matters; others appoint themselves as registered agents for their business.
3. Submit the Required Application
To submit the needed form, you need to define whether you are forming a domestic or a foreign company. Registering a foreign company is twice as expensive—you will pay $250 instead of $125 for a domestic company.
A domestic company requires filing an Articles of Organization form, while a foreign entity needs a Certificate of Authority. Regardless of the chosen form and type, you will add similar details to such documents: information about the company, its registered agent, specialization, and so on. Additionally, you should submit a Cover Letter.
You can send all the papers via regular mail or the official website of the North Carolina Secretary of State.
4. Make an Operating Agreement
As you already know, an operating agreement is not obligatory for the government but is a handy document for your company.
Talk all the provisions through with your partners and draw a template. After the document is ready, sign it together and share the copies. If you act alone, do not forget to include all necessary details about your entity in the agreement.
5. Request Your Company’s Tax Number
Contact the Internal Revenue Service (or IRS) to get a unique tax number for your entity. It is free, and you will have to wait only 15 minutes if you apply online. If you apply via regular mail or fax, it will take longer—approximately a month with regular mail and four working days with fax.
After receiving a tax number, your company will be able to hire workers, open a bank account, contract with other parties and customers, and so on. Short names of a tax number are EIN, FTIN, or FEIN; all these acronyms have the same meaning.
6. Submit the Annual Report
It is mandatory to submit the annual report about the company’s activity for the past year no later than April 15. The filing fee is $200. If you skip the deadline and are two months late, your company may be liquidated.