If you’ve decided to form a corporation or limited liability company (LLC) for your North Carolina company, you’ve already made one of the most important business decisions you can make. Another crucial decision is whether you’ll form your new business entity yourself, hire an attorney to handle it for you, or opt for a business formation company.
Completing the formation process on your own will always be the most affordable option, but is it the best one? On the other end of the spectrum, hiring a lawyer will provide you with expert assistance, but the cost can be prohibitive for many startups. Somewhere in between these options are online business formation services. These companies can provide professional help while also saving you hundreds or even thousands of dollars compared to paying a business attorney.
If you’d like to learn more about your options for LLC or incorporation services for your North Carolina business, you’ve come to the right place. In this article, we’ll walk you through a few of the best options for business formation services. Which one is the right choice for you?
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The Best North Carolina LLC and Incorporation Services
There are dozens of companies providing online business formation services, and many of them offer nearly identical packages. How do you choose the right one?
We welcome you to check out our comprehensive guide to the best LLC and incorporation services available, but we’ll also discuss a few of the most popular options for North Carolina businesses right here.
ZenBusiness
We think ZenBusiness is the most well-rounded business formation service available today. It’s tough to beat the ZenBusiness pricing model, as we will form your business for free, as long as you pay your own state fee. In addition, ZenBusiness has outstanding customer feedback, with more than 10,000 reviews available online and nearly all of them being positive in nature.
At ZenBusiness, we believe in giving back to the communities we serve. ZenBusiness partners with Kiva.org to provide loans to low-income individuals, and also donates money to help build businesses owned by women and minorities. Doing good while providing helpful business services is the ZenBusiness way!
Northwest Registered Agent
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Northwest has a higher pricing model that costs $225 to form your LLC or corporation. What does Northwest Registered Agent do that makes them stand out? In short, Northwest has personalized customer service that goes beyond the support you’ll typically receive in this industry.
While most of its competitors have rather mediocre customer service departments, staffed by outsourced call centers, Northwest has highly trained professionals answering its phones at all times. These experts can help answer many tough questions that some competing companies’ support teams won’t have a clue how to answer.
In addition, Northwest also offers its customers a year of registered agent service. Unlike many competitors, Northwest locally scans every document it receives as your agent, while most other companies only scan the government forms they’re legally required to scan.
Incfile
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Along with ZenBusiness, Incfile is one of a very small handful of companies in this industry that will form an LLC or corporation with no service fees. All you need to do is pay your state’s fee and Incfile will take care of everything else. That’s not the only piece of good news we have regarding Incfile’s business formation services though.
Like ZenBusiness, Incfile also receives strong feedback from its customers, with around 34,000 positive reviews available online and just a few negative reviews.
However, Incfile has a couple of disadvantages as well. Most importantly, Incfile’s customer support team doesn’t always provide timely responses. In addition, Incfile has lots of upsells.
Should You Form a North Carolina LLC or Corporation?
Common Characteristics
There are some common aspects of the LLC and the corporation, starting with the personal asset protection they both provide. Also known as limited liability, this personal asset protection ensures that if your business is sued, only the business assets are at risk. Meanwhile, your personal assets — like your house, car, personal bank accounts, investments, etc. — are protected by your LLC or corporation’s business structure.
In addition, LLCs and corporations both provide their owners with business name exclusivity. If you own and operate a sole proprietorship or general partnership, you will not have exclusive rights to your business name. Instead, if another company decides to use your name as its own, you won’t be able to stop them. In fact, they could even register your business name and gain exclusive rights to it, forcing you to come up with a new one.
Advantages of the LLC
In general, an LLC is quicker and easier to form than a corporation. LLCs usually need to provide less information for their formation documents than corporations do, and there are fewer steps in the process as well. For instance, LLCs don’t need to draft corporate bylaws, name officers or board members, hold initial board meetings, or issue stock. On the other hand, corporations need to do all of these things and more.
The LLC is also a less rigid business structure that allows its owners greater flexibility. The business structure of a corporation is inflexible, with many regulations dictating how the business should look and function. Meanwhile, LLCs have options for business management structure and ownership responsibilities that corporations simply don’t have.
Another even more valuable option LLCs have is that they can choose how they want to be taxed. Most LLCs are taxed as pass-through entities, which means the business itself does not pay taxes but the profits are passed through the LLC itself to its owners, who pay taxes on this money on their personal returns. However, LLCs can also opt to be taxed like corporations (either as a C corporation or an S corporation), giving them more options for taxation than a corporation has.
Advantages of the Corporation
Corporations have some advantages too, like the ability to sell stock. It’s quite difficult for an LLC to attract outside investments because it cannot issue stock. The vast majority of investors prefer stock as their investment medium, and it’s also very rare to see venture capitalists investing in LLCs. For these reasons, the corporation is a much better option for businesses looking to attract investments.
In addition, the corporation has been around for hundreds of years, while the LLC is a newer addition to the American business landscape. This means that the corporation has more established legalities, and also that it’s easier to expand into other states because the corporation’s structure is essentially the same no matter where you form it.
Hiring an Attorney to Form Your North Carolina LLC or Corporation
If your business is especially complicated, or you simply prefer the peace of mind you get from having a qualified business attorney forming your entity, you could hire a lawyer instead of using a formation service. Hiring an attorney will definitely be far more expensive than using an online service, but you will receive the level of expertise and experience you can only get from a lawyer.
We took a look at a wide range of North Carolina business attorneys to help you find the best person to help you form your new entity. To find reputable lawyers, we took a look at Avvo’s list of the top-rated lawyers in North Carolina. Here are our top five choices in this state:
The Total Cost of Forming and Maintaining a Business in North Carolina
In addition to the costs of a business formation service or hiring an attorney (which are optional, as we’ve discussed), there are quite a few other required and optional expenses when forming and maintaining a North Carolina business.
To form a North Carolina LLC, you’ll need to file the Articles of Organization. For a corporation, you’ll instead file the Articles of Incorporation. For either form, there is a filing fee of $125.
Both types of businesses need to file an Annual Report each year as well. This simple filing keeps the state up-to-date about some basic but vital business information, such as your address and registered agent. However, the cost for corporations is just $23, while LLCs pay $203.
Then there are taxes to account for. Like most states, North Carolina charges different rates for both pass-through entities and businesses taxed as corporations. But state taxes aren’t the only ones to consider. You’ll also have to pay federal taxes, along with several others. For instance, if you have employees, you’ll pay unemployment insurance tax. If you sell goods or services, you’ll pay sales and use tax. Depending on the nature of your business, there could be other taxes required, so check with the North Carolina Department of Revenue to make sure.
Other than that, the other potential expenses only apply to certain businesses. These include things like professional or industry-specific business licenses and business insurance.
Hiring an Attorney to Form Your North Carolina LLC or Corporation
If your business is especially complicated, or you simply prefer the peace of mind you get from having a qualified business attorney forming your entity, you could hire a lawyer instead of using a formation service. Hiring an attorney will definitely be far more expensive than using an online service, but you will receive the level of expertise and experience you can only get from a lawyer.
You cannot form an LLC in North Carolina without filing the Articles of Organization, or the document that officially registers your business within the state. This filing costs $125 to submit. Meanwhile, if you intend to form a corporation, you will need to submit the Articles of Incorporation instead. This document has the same $125 filing fee.
No matter what entity type you form, your business will need to file annual reports every year. This form is pretty simple, but it keeps the state up-to-date regarding some basic but vital business information, such as your registered agent and business address. This filing costs $200 each year.
Your business will also need to account for business taxes. Like most states, North Carolina charges different rates for both pass-through entities and businesses taxed like corporations. But state rates aren’t the only ones you’ll be responsible for. You will also have to pay federal taxes, along with several others. For instance, if you have employees, you’ll pay unemployment insurance tax. If you sell goods or services, you’ll pay sales and use tax. Depending on the nature of your business, there could be other taxes required, so check with the North Carolina Department of Revenue to make sure.
Other than that, the other potential expenses only apply to certain businesses. These include things like professional or industry-specific business licenses and business insurance.
Frequently Asked Questions About North Carolina Business Formations
Before we wrap things up, here are the answers to some of the most commonly asked questions about forming LLCs and corporations in the state of North Carolina.
What are the business tax rates in North Carolina?
Franchise taxes may apply to your business, but the tax with the biggest impact on your bottom line is arguably the income tax. North Carolina is like most states in that it charges a different rate for businesses taxed as corporations and pass-through entities. Corporations will pay a flat rate of 2.5%, and pass-through entities pay 4.99%. Of course, C corporations will still be taxed at the federal rate of 21% (and so will your LLC, if you choose to be taxed as a C corp), while LLC profits are still subject to federal personal income tax brackets.
How long does it take to form an LLC or corporation in North Carolina?
Business formation turnaround times vary considerably from state to state. North Carolina usually takes 3-5 business days to process online submissions, while paper forms take 5-7 business days. If you want to, you can pay an extra $100 for 24-hour service or an additional $200 for same-day service.
How many small businesses are there in North Carolina today?
There are more than 964,000 small businesses currently operating in North Carolina, comprising all but 0.4% of businesses in the state. Roughly 45% of North Carolina’s workforce is employed by one of these businesses.
What are the top official state resources for entrepreneurs?
The Economic Development Partnership of North Carolina is a fantastic resource for state entrepreneurs, offering financing assistance, advising, training and education, and more. While the EDPNC focuses on new businesses, they also offer plenty of resources for established businesses.
What sets North Carolina apart when it comes to forming businesses?
There’s actually a lot to love about running a business in North Carolina. For starters, Forbes ranks NC as the easiest state to conduct business in for the entire country. North Carolina also has the third-lowest corporate income tax, and they rank fourth overall for states with the lowest business costs. Long story short, it’s both easy and affordable to operate a business within the state, making it a great place to start.
What else can online business formation companies do?
Companies like ZenBusiness and Incfile don’t stop after forming your LLC or corporation. These providers also offer many other services that can help your business save time and hassle. For instance, these companies can provide registered agent service, annual report service, EIN acquisitions, and much more.
In Conclusion
No matter which company you choose to form your new business — or if you opt to form your own, or hire an attorney, etc. — we hope this guide helped you iron out some of the wrinkles regarding LLC and incorporation services in North Carolina.