How to Form a C Corporation in North Carolina
Introduction
If you’re starting a business in North Carolina, one of the first things you’ll need to do is incorporate. A corporation is a legal entity that allows you to protect your personal assets from liability for the debts of your new business. In this article, we’ll discuss how to form a C corporation in North Carolina and how to avoid common mistakes when doing so.
1. Search the North Carolina corporate registry to make sure your desired name is available.
You can perform a search online, by mail or by phone. You can also fax or email the request form. There is no cost associated with searching for available names and you will be notified of any results within five business days of your submission. If an exact match cannot be found, you may use some variation of the word(s) in question so long as it does not conflict with another registered entity in North Carolina or abroad; this includes foreign entities that have filed documents with the Secretary of State’s office (e.g., Foreign Corporation).
2. File your articles of incorporation online or by mail with the North Carolina Secretary of State.
In order to form a C corporation in North Carolina, you will need to submit the Articles of Incorporation. There are two ways to accomplish this: online or by mail. The cost of filing is $90 if you use the online method and $100 for filing by mail.
If you choose the online option, simply fill out information about your company and its officers on the Secretary of State website, print out your certificates, sign them in front of witnesses (or not), then mail them into their office with payment for fees. Your business should be officially incorporated within 10 days after they receive your documents if all goes smoothly—but it’s always better to allow several weeks just in case anything gets lost or delayed along the way!
If you decide instead that mailing is more convenient for you, there are still some steps involved before getting started: You’ll need to gather all of your documents together; make sure everything is correct; prepare envelopes addressed correctly; pack up all materials securely inside so they don’t get damaged during transit; then take care when dropping off at your local post office! After this initial process has been completed successfully though…? Well then there’s nothing stopping us from celebrating our newly incorporated company like rockstars!
3. Complete a registered agent authorization form, if applicable.
- If you are a foreign corporation, you must appoint a registered agent. A registered agent is a person or company that acts as the corporation’s authorized representative in North Carolina. The registered agent must be located in North Carolina and can be:
- an individual who is a resident of this state; or
- another domestic or foreign corporation that has filed with the Secretary of State one or more articles of incorporation (or certificate of withdrawal) and has included the statutorily required mailing address for service of process on it in such articles (or certificate).
4. Draft and adopt your bylaws.
You will also need to draft and adopt bylaws. Bylaws are the rules that govern your business and must be clear, concise and signed by the board of directors. It is not uncommon for a new corporation to have its first meeting before or at the same time as its incorporation so that the initial directors can approve them right away. After they have been adopted, you’ll need to file a certified copy with your state business license office within 30 days (or 60 days if it is not being filed online).
- Bylaws should address:
- The number of directors on the board of directors (directors)
- Any conditions for receiving notice from any other person or entity who wants information about how everything works within
5. Hold an initial meeting to appoint directors, authorize shares and appoint officers.
The first thing you need to do is hold an initial meeting of the board of directors. This is where they appoint the directors and authorize shares, as well as choose officers and set their compensation.
The initial meeting should be held at least once a year and at such place within or without North Carolina as the bylaws provide. If no such provision is made, then it must be held in North Carolina. At this meeting:
- You’ll appoint your directors, who will then approve all future major decisions about your company (like mergers or acquisitions).
- You’ll decide how many shares will be issued for each class of stock (common stock or preferred stock).
- You can also choose from three different methods for electing directors: cumulative voting where you can cast multiple votes per share owned; plurality voting with all candidates receiving votes being counted together; or secret ballot election by written consent without any nominations being made publicly available before voting takes place
6. Apply for a federal employer identification number from the Internal Revenue Service (IRS).
An Employer Identification Number (EIN) is a 9-digit number that the IRS assigns to businesses and corporations. The main purpose of an EIN is to identify each business entity, regardless of how many owners, partners or shareholders it has.
There are two types of entities that need to obtain an EIN: sole proprietorships and corporations. In general, if you’re starting your own business and have not yet formed a separate legal entity for your company (like a corporation), then you’ll need to apply for an EIN yourself.
Sole proprietors who operate as individuals should apply for their own Social Security Numbers (SSNs) first before applying for an EIN on their own behalf. The SSN serves as proof of identity when applying for credit cards and other financial services; however, it does not provide tax identification purposes like an EIN does.[2]
7. Obtain any local or state business licenses or permits you need to operate in North Carolina.
You should also look into any local or state business licenses or permits you might need to operate in North Carolina. For example, the state income tax is not applicable to businesses that have a single location in North Carolina and have total annual gross receipts of less than $200,000. However, businesses that have more than one location in the state must still file a corporate income tax return with the North Carolina Department of Revenue at least once every three years.[5]
In addition to an income tax on net profits from North Carolina sources, North Carolina has a sales tax rate of 4.75% (effective through December 31st), which applies to many retail transactions.[6] It also has a franchise/privilege fee equal to $800 (effective through December 31st) and gross receipts tax rate equal to 2.5%, which applies only when your business generates more than $2 million annually in gross receipts.[7] Finally, it imposes an annual property tax rate of 1.24%, which applies only if you own real estate located within its boundaries.[8]
Conclusion
Congratulations! You have completed all the steps to form a C corporation in North Carolina. Your new business is now ready to begin operations.
