Like almost every state, North Carolina offers standard and expedited processing times for corporate filings. Check the average wait times for each to decide the right option for you.
North Carolina charges a filing fee, as well as an additional fee for expediting your filing.
Deciding Between a North Carolina C-Corp or S-Corp Tax Designation
A C-Corp and an S-Corp are the same in terms of structure, management, limits on liability and compliance documents. When choosing which designation is right for your business, here are some differences you should keep in mind:
- Ownership Rules: A C-Corp can have as many or as few stock classes and shareholders as you like. An S-Corp may have only one stock class and up to 100 shareholders. Also, all shareholders in an S-Corp must be United States citizens or legal residents.
- Taxes: C-Corps pay corporate taxes on their earnings. This is separate from any taxes that individual shareholders may then pay on dividends they receive. S-Corps do not pay corporate taxes. They 're "pass-through" entities. They pass their earnings to individual shareholders. Each shareholder then pays taxes on his or her share.
- Documents: A C-Corp is the default tax designation for a corporation. To change that to an S-Corp, you must file IRS Form 2553, Election by a Small Business Corporation.
Personnel Requirements
Your corporation must meet North Carolina's personnel requirements:
- Age requirement: The state does not have age requirements for directors or incorporators.
- Minimum number of directors: North Carolina corporations need at least one director.
- Residency requirement: Directors do not have to live in the state.
You don't have to name your directors in your Articles of Incorporation, although you can do so if you like.
Other Requirements for Your Articles of Incorporation
In addition to personnel requirements, North Carolina sets specific requirements for your Articles of Incorporation.
Every corporation needs a registered agent, a person or business responsible for receiving legal, tax and government documents for your business during regular business hours. Your agent must have a physical North Carolina address, not a post office box. We help you designate your registered agent when you incorporate with us.
Your Articles of Incorporation must include your registered agent's name and physical address. If your agent's mailing address is different from the physical address, you must also list the mailing address.
You must include the following in your Articles of Incorporation in North Carolina:
- Your corporate name.
- The address of your corporation's principal office, if any.
- The number of shares the corporation is authorized to issue.
- If shares are divided into classes, the class designations, preferences, limitations and relative rights of each share.
- The name and address of all incorporators.
- The signature of at least one incorporator.
North Carolina also has some optional provisions for your Articles of Incorporation. They include:
- Your business purpose. If it's not specified, North Carolina designates the purpose as engaging in any lawful business.
- Definitions or limitations on the powers of the corporation or its directors
- Limitations on the personal liability of directors
You must also include a cover sheet with your filing. The cover sheet is available on the Secretary of State's website.
Guidelines for Your Name
Your name is an important part of your corporate identity. Whatever you choose, it must meet North Carolina's requirements:
- Include the word or an abbreviation for "Company," "Corporation," "Incorporated," "Limited," "Co.," "Corp.," "Inc." or "Ltd."
- Your name should not be deceptive, and it can't imply a business purpose other than what is permitted by law or by your Articles. For example, calling your business "Hamburger Heaven" when you sell shoes is deceptive.
- Your name should be different from any other existing business name registered or reserved with the state.
- Certain words can only be used with permission from the appropriate legal authority. These include "Bank," "Trust," "Mutual" and "Co-op."
North Carolina Corporate Taxes & Reports
Taxes are no fun, but they're an important part of owning a business. Prepare for them by applying to the IRS for an employer identification number, or EIN. This number is similar to a Social Security number for individuals. All businesses with employees must have one.
If you'd like to learn more about corporate taxation, Rocket Lawyer has information about the differences between a C-Corp tax structure and an S-Corp tax structure.
Every corporation must file an annual report with the Secretary of Revenue. This report should be filed with your income and franchise tax return, if you're filing by mail. You may also file online. Either way, the due date is the fifteenth day of the fourth month after the end of your fiscal year. For example, a corporation whose fiscal year ends on Dec. 31 must file by April 15. If you get an extension on your tax return, you also have an extension on filing your annual report.
A corporation must also mail an annual financial statement, or notice of the statement's availability, to all shareholders within 120 days of the end of its fiscal year. This statement must include a year-end balance sheet, income statement and cash flow statement for the year, or the equivalent information somewhere in the statement.
Keeping Corporate Records and Ongoing Filing Requirements
North Carolina requires that your corporation create and maintain certain corporate documents.
- Bylaws are a document detailing rules for your business, such as how it will be managed and its operating procedures. You can include just about any other provisions you'd like in your bylaws as well, as long as they're consistent with your Articles and with the law.
- Corporate meeting minutes documents record actions taken and decisions made during meetings of your directors and your shareholders. Copies of meeting records must be kept at your principal office for three years.
State requirements for meeting minutes and bylaws vary, but both documents help you maintain your corporate status. You do not have to file either one with the state. Just keep them with your other corporate records.
We wish you the best of luck with your new North Carolina business. When you're ready to form your corporation, we can make it easy.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
