Meow Technologies, Inc.
North Carolina has earned a reputation as one of the best states in the country to start and operate a business. With business-friendly regulations, low corporate taxes, easy access to capital, and a skilled workforce, it’s no wonder entrepreneurs and startups are flocking to North Carolina to incorporate.
If you’re considering forming a corporation for your company in the Tar Heel State, you’ve made a smart choice. This comprehensive guide breaks down everything you need to know to legally establish your business in North Carolina.
There are many reasons North Carolina has a booming business economy:
At just 3%, North Carolina has the lowest corporate tax rate in the country. This can translate to huge savings especially as your company grows.
Under North Carolina’s labor laws, joining a labor union cannot be made a condition of employment. This gives both workers and corporations more flexibility.
The state offers competitive, performance-based economic incentive programs to qualifying industries including aerospace, aviation, biotechnology, and information technology among others.
Entrepreneurial support programs and business competitions provide access to seed funding and angel investors to help get your new venture off the ground. Several top universities also foster innovative startups.
With strong university degree programs available in business, tech, healthcare, engineering and other critical areas, businesses can readily fill jobs with skilled talent.
The cost of living in North Carolina’s metro areas is well below the national average while still offering an exceptional quality of life. This helps companies large and small maximize their budgets.
Now that you understand why so many businesses are eager to plant roots in North Carolina, let’s explore how to establish your corporation with the North Carolina Secretary of State’s office.
Your first step will be brainstorming an official name for your company and checking that it’s available for use in North Carolina:
Make sure your corporate name includes a required business structure signifier at the end such as Corporation, Incorporated, Company, or Corporation. Appropriate abbreviations like Corp. and Inc. also comply with state business name rules.
Nearly all states require designating a registered agent on record to accept official documents and communications on behalf of your corporation when formally incorporating.
North Carolina requires naming a registered agent who has an in-state street address. Using a third-party provider can help you avoid listing your personal address in the public corporate records. It also prevents important legal notices or tax documents from being delivered to your business’s front door.
The key document you must complete to legally form your corporation with the North Carolina Secretary of State is known as the Articles of Incorporation. You’ll need to include:
The standard state filing cost for articles of incorporation is $125 which is due at the time of submission. Expedited review options are available for time-sensitive filings costing $100 or $200 additionally.
While not mandatory, crafting your corporation’s bylaws is highly recommended. These establish comprehensive rules for your company’s structure and governance to pre-empt any future issues. They will detail:
Bylaws allow co-owners and senior management to understand their roles. Having these governance policies decided upfront also prevents potentially ugly disputes down the line as your company scales.
Initially the first company directors will need to be appointed by the incorporator. Then at the first official shareholder meeting, directors should be elected according to the process outlined in the corporate bylaws.
Directors elected to your corporation’s board make high-level decisions and bear the responsibility to act in the company’s best interest. They steer overall strategy as well as appoint and oversee officers.
Before commencing normal business operations, your corporation must host an organizational meeting. During this pivotal first meeting the board:
Minutes from this meeting establishing these foundation items are stored as important organization records that document your corporation’s inception.
When shareholders make capital contributions to the company, many corporations issue certificates as tangible proof of equity ownership. Printing impressive looking stock certificates remains optional but a nice goodwill gesture.
To raise additional funds from outside investors in exchange for shares of company ownership, corporations can sell stock. Just make sure to consult experienced legal counsel to ensure you comply with federal securities regulations if you seek private equity financing.
While North Carolina doesn’t require a general state business license, many permits and regulatory licenses could still apply to your particular industry:
Fortunately online tools like the Small Business Administration’s License Finder make it easier to determine which licenses might apply to your corporation based on location and business activities.
An employer identification number (EIN) serves like a Social Security Number does for individuals, allowing your business to pay state taxes and hire employees.
While a separate state tax ID covers your sales and payroll tax obligations, the EIN uniquely identifies your business on federal tax documents.
Applying for an EIN is free through the IRS website. You can obtain an EIN instantly as a placeholder but should formally apply in the company’s legal name after approval of your incorporation papers.
Even once all your formation legalities are handled, your corporation must continually meet compliance requirements to remain authorized in North Carolina: