How to start your LLC in Durham, NC

How should you name your LLC? You might have your heart set on a name, but there are important things to consider first. You’ll want to ensure that it follows state rules and isn’t too close to an existing business’s name.

The rules for naming your company in Durham, NC are fairly simple according to North Carolina General Statutes section 55D-20.

Your North Carolina LLC name must end with one of the following:

• Limited liability company
• Limited company
• An abbreviation of one of the two phrases above, like LLC, LC, or Ltd. Co.

Your LLC name must be unique and easily distinguishable from other North Carolina businesses. You want to avoid confusing the public with a name similar to that of another North Carolina business.

Let’s say you have your heart set on the name “Durham Air Conditioner Repair, LLC,” but after a search, you find another North Carolina corporation named “Durham Air Conditioner Repair, Inc.” The names are too similar even though “Inc.” is a different kind of company.

If you make a simple change to your name such as “Durham Air Conditioner Service, LLC,” you should be okay.

Whatever name you choose shouldn’t be misleading to the public. This includes using another company’s name or choosing a name that would cause people to confuse it with government entities.

If your business name implies that you carry any form of professional license, at least one of your members should have that valid license issued by an appropriate government agency.

For example, if your business is named “Durham Private Investigations, LLC,” you’ll need to hold a valid North Carolina Private Investigator License.

The North Carolina Secretary of State has compiled a thorough list of words that you cannot use in your company’s name. Some of these words, like “bank,” are commonly found in the laws of other states as well. Others, like “wholesale,” are less commonly restricted.

Once you have chosen a name, you can do some research using the Secretary of State’s website business entity search. This search allows you to search for an exact name or any combination.

After naming your company, it’s also legal in North Carolina to apply to do business under an assumed name or “DBA,” but more on that later in this article.

What is a registered agent? A registered agent is an individual or company that receives service of process, legal documents, and official notices on your business’s behalf.

Service of process is a legal term and refers to the legal papers you receive when someone files a lawsuit against you. Your registered agent is the gatekeeper between your business, the state, and the public.

North Carolina state law requires that you appoint a registered agent and provide their details at the time of filing your Articles of Organization. North Carolina’s rules for naming and changing registered agents are contained in North Carolina General Statutes section 57D-2-40.

Registered agents must meet the following requirements:

• Be at least 18 years old
• Have a physical address in the state of registration
• Be available to receive mail and sign official documents during normal business hours, Monday to Friday, 9 a.m. to 5 p.m.

A registered agent must also respond quickly in the event of a lawsuit so that your business avoids missed deadlines, fines, or penalties for non-compliance.

Some business owners choose to designate themselves as registered agents because:

• It’s cheap: You’re not paying someone for something you can do yourself.
• It’s simple: The only address and contact information you have to keep current is your own.
• It’s reliable: You will receive all important documents personally.

However, there are several downsides to this:

• No privacy: You’ll have to make your address available to the public on the Secretary of State’s websites.
• Junk mail/spam: Public-facing addresses are swarmed by junk mail in addition to a small amount of legitimate mail.
• No breaks: Registered agents must be open for service during all business hours. They don’t get time off.
• Business interruptions: If your agent’s address is the same as your business address, your business and clients may be interrupted by your duties as an agent. If you are getting served with a lawsuit in front of customers, that could be embarrassing or even hurt your business.
• It’s your fault if you miss something: You always have to make sure the agent’s address is correct and up to date. If you make a mistake or miss something, that’s on you.

For these reasons, most experienced business owners hire companies to act as their registered agents. These services cost between $100 and $150 per year. If you choose to use a law firm, you could spend up to $500 per year.

If you choose to start your LLC by using a business formation company, they often include a registered agent service in their packages. Feel free to take a look at our registered agent recommendations article for more information.

What are Articles of Organization? These documents turn your business idea into an actual legal entity ready to sign contracts and do business. North Carolina law states that filing the Articles of Organization makes it official.

To file, you’ll need the following basic information as listed in North Carolina General Statutes section 57D-2-20:

• The name of your LLC
• The registered street and mailing address of the LLC’s principal office
• The name and address of the LLC’s registered agent
• The name and address of each person forming the LLC
• If you are forming a professional LLC, you need to include a description of the services you will offer
• Any other provisions you choose to include in your Articles of Organization

The filing fee for your Articles of Organization is $125. You can file it with the state online using the Secretary of State Online Form.

The Secretary of State reports a processing time of five to seven business days for these filings. Because that can translate to over a week, you may want to speed things up a bit. In that case, expedited service options are available for an extra state fee:

• Within 24 hours: $100
• Same-day: $200

For the fastest service, you should submit your documents online. Be aware that if you choose this option, there is an extra $3.00 electronic transaction fee.

To save time and avoid the hassle of LLC filings, all seasoned entrepreneurs use LLC formation services. For recommendations, check out our article on the best LLC services.

What is an operating agreement? An operating agreement is a contract between you and other members of your LLC. It outlines the rules by which your company does business, keeps you prepared for everyday situations, and protects against the unexpected.

Your operating agreement should list each member of the company and how they’re expected to contribute to the business. Your operating agreement can be as simple or detailed as you’d like to make it.

Although not required by North Carolina LLC law, we strongly urge you to consider one. Without an operating agreement, state law acts as a fallback. Remember that state laws don’t always align with your expectations and intentions for your business.

The benefits of having an operating agreement include:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
• They say whether the LLC has a member or non-member manager and what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

When it comes to hiring, firing, and everything in between, an operating agreement allows you to customize the rules of the LLC according to your expectations. They should be signed by every member and kept somewhere safe.

The best LLC formation services provide operating agreement templates for as low as $50, and we highly recommend them.

What is an EIN? Employer Identification Numbers are tax identification numbers assigned to businesses by the Internal Revenue Service. They function much like social security numbers, but for businesses instead of individuals. They allow the IRS to keep track of companies and other business entities that pay taxes.

Here are the most common cases in which your business will need an EIN:

• You have more than one member
• You have employees
• Your business is taxed as a C or S corporation

We highly recommend getting an EIN even if they’re not required. Most banks and online payment services require them in order to open a business bank account for your LLC.

Obtaining an EIN is easy and can be done in minutes on the IRS website. You can also file via mail or fax.

It’s free of charge and shouldn’t be paid for unless part of a larger LLC formation package.

Read More: How to get an Employer Identification Number in North Carolina