Forming a Corporation in North Carolina

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in North Carolina. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the North Carolina Secretary of State's website, which has extremely useful information and resources.

1. Choose a business name for the corporation and check for availability.

  • North Carolina law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd." Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply).

2. Recruit and/or appoint a director or directors for the corporation.

  • Under North Carolina law, a corporation must have at least one director.
  • There is no minimum age requirement for directors.
  • Directors need not be residents of North Carolina or shareholders of the corporation, unless the articles of incorporation or bylaws so require.
  • Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may be named in the articles, but this is not required.

3. Prepare and file articles of incorporation with the Secretary of State.

4. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

6. Issue stock certificates to the initial owners of the corporation.

7. Obtain any required local licenses.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • If you have an employee or employees (including corporate officers), you need to register for NC employment taxes at any of the taxpayer service centers located throughout the state. The Department of Revenue has a directory of taxpayer service centers that will guide you to the most convenient location.
  • Whenever you hire an employee in North Carolina, you must inform both the IRS and the State of North Carolina. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the North Carolina New Hire Reporting website.
  • If you have three or more or employees (including corporate officers and shareholders who otherwise work for the company), you are required to carry workers' compensation insurance. The North Carolina Industrial Commission administers the program. Its website has a useful FAQ.
  • As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
  • North Carolina's current tax rate for corporations is 6.9% of gross income, plus a franchise tax. The minimum franchise tax is $35.

9. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.
Other Notable Requirements for Maintaining a Corporation in North Carolina
  • North Carolina corporations must file an Annual Report every year. You may file online at the Secretary of State’s website using the Online Annual Report Editor. The fee is $18 to file online. Alternatively, you may file a paper copy with the Department of Revenue, along with your tax return. You should be able to download a paper copy of the report from the Secretary of State's website, but the link was not working at the time of writing. The filing fee for paper filing is $25.
  • N.C. Gen. Stat. §55-16-20 requires North Carolina corporations to make certain annual financial statements available to shareholders of the corporation.
Additional Steps and Information about Forming an S Corporation
  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with North Carolina. There is no additional paperwork that must be filed with North Carolina to obtain "S" status.
  • If an S corporation has shareholders who are not residents of North Carolina, the company must submit Form NC-NA with its first tax return (one form for each non-resident shareholder). This form must be signed by the shareholder, who agrees to pay North Carolina income tax on their share of S corporation income.
  • While S corporations are not subject to corporate income tax in North Carolina, they are responsible for paying the franchise tax (see above). The minimum franchise tax is $35.
 

Last updated on January 31st, 2008

   
 
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