How to start a North Carolina corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your North Carolina corporation.

How to start a corporation in North Carolina

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your North Carolina corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following North Carolina 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."

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a North Carolina S-Corp and C-Corp tax designation

There are similarities between a North Carolina S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• 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.

3. Appoint directors and shareholders for your North Carolina corporation

Each state has its own personnel requirements for incorporating. In North Carolina, corporations need at least one director. You don't have to name your directors in your Articles of Incorporation, although you can do so if you like. Directors do not have to live in the state and North Carolina does not have age requirements for directors or incorporators.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a North Carolina address) or choose one to do that service for you (if you are not located in North Carolina or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of North Carolina

Once you have a business name and registered agent, you can register your business as a North Carolina corporation with the state by filing your Articles of Incorporation. This document may be referred to in other states as "Certificate of Organization," "Certificate of Filing," or "Articles of Organization."

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in North Carolina must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your North Carolina corporation.

What to do after incorporating in North Carolina

North Carolina requires that your corporation create and maintain certain corporate documents:

• Corporate 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 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.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in North Carolina means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in North Carolina, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, you must also keep records – like Bylaws and Meeting Notes – to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state