How to Form an S Corporation in North Carolina

Introduction

If you want to start an S corporation in North Carolina, you’ll need to form the business entity and file the necessary paperwork with the state. It’s a relatively straight-forward process that will allow you to enjoy the benefits of being taxed as a corporation while retaining personal liability protection. By following these simple steps, we’ll walk you through how to form an S Corp in NC so that your business can get started on the right foot:

How to Start an S Corporation in NC

If you’re considering forming an S corporation in North Carolina, it’s important to understand the benefits of doing so. An S corporation is a business structure that was created by Congress to allow small businesses to enjoy the same tax advantages as larger corporations. In addition, these small businesses can still offer their employees stock options and other benefits that are typically only offered to employees of large corporations.

Unlike C corporations, which are subject to double taxation (that is, they must pay federal income tax on profits), S corporations are “pass-through” entities; this means that all profits earned by an S corporation pass through its books straight into its shareholders’ personal tax returns. This saves money when determining whether or not your business should be structured as an S corporation versus a C corporation; if there’s any doubt about how much more profitable your company will be in one form versus another, consult with a tax adviser before making any decisions.

Choose a Legal Name for Your Business

• Choose a name for your S corporation that is not too similar to an existing business. You should also avoid using words like “limited,” “corporation,” or “Inc.” in the name of your S corporation.
• The name of your business should be easy to spell, pronounce and remember. Avoid using names that sound like other words or phrases (e.g., Dotcom Inc.).

Register Your NC Company as an S Corp with the State

In order to form an S corporation in North Carolina, you must first register your company with the state. To do so, go to the NC Secretary of State website and click on “Corporations” at the top of the page. Then, click on “Form a Corporation” under “Filings with Us.”

Enter your information into this section: name of your business; type of business (corporation, LLC or limited partnership); number of authorized shares; and whether you want to file as a foreign entity. You can also enter a registered agent if you don’t want one listed by default.

When you’ve completed entering all applicable information and paying any required fees, submit your application and wait for it be processed by NC Secretary of State staff—the process typically takes about two weeks but may take longer during busy times like tax season or after holidays when many companies renew their registrations at once.

Hold Your First Board of Directors Meeting

As an S Corporation shareholder, you are a member of the corporation’s board of directors. This means that you hold no authority over daily operations but help guide the company in its overall direction. In order to form your corporation as an S Corporation and begin taking advantage of all its benefits, you must hold a meeting with your fellow shareholders and elect yourself (or another person) as the CEO.

The first meeting should be held within 90 days after filing your Articles of Incorporation with the Secretary of State. If this time period passes without having called for a first board meeting, it is likely that your business will have trouble registering for state licenses or qualifying for federal tax deductions during this time period. Therefore, it is important to hold these meetings on time so that everyone understands their role in running the company moving forward.

Issue Stock

The next step toward forming an S corporation is to issue stock certificates. This can be done through a transfer agent, who is responsible for overseeing all of the company’s records and transfers. Stock certificates should be issued in duplicate so that one copy can go to the shareholder and one copy goes to the corporation.

Once you’ve issued your stock certificates, you’ll need to transfer them into your name as the S corporation’s owner. You may want to consult with an attorney before doing this so that he or she can help ensure that your actions comply with any applicable tax laws regarding sales and transfers (see next section for more on this).

Keep your Records and Communicate with Stockholders

There are several things you must keep in mind as the owner of a corporation.

• You must keep good records of your business for at least seven years after the last day of the tax year.
• Any records that you’re required to keep under North Carolina law, such as business licenses and documentation regarding sales tax paid, must be kept in an organized fashion and stored on computer file(s).
• Your records should be kept in a safe place where they won’t be damaged by fire or water damage or theft.
• Your files should also be accessible by authorized individuals (such as accountants, lawyers, etc.).

Conclusion

Once you have formed your S corporation, you will need to file an annual tax return and pay taxes on any profits. Also, remember that your personal income is still subject to withholding for Social Security and Medicare taxes. You can use our free online tool to estimate the amount of tax you’ll owe after filing Form 1120S.