Benefits of a Corporation
A corporation protects its owners from the company’s debts and liability. This is because a corporation is considered a separate entity from its owners, and the owners are not personally responsible for most of the company’s financial obligations such as debt or legal settlements. In addition, a corporation may afford tax savings and is often more attractive to outside investors.
Requirements for Incorporating in North Carolina
Preparing Your Articles of Incorporation
Your corporation’s existence begins when you file articles of incorporation and pay a fee to the North Carolina Secretary of State. The articles of incorporation can contain many provisions, but at a minimum, they must include the following:
- Name of the corporation
- Street address of the corporation’s principal office
- Stock structure
- Names and addresses of incorporators
- Registered office and registered agent
A corporation can offer different types of stock, called classes or series. These classes can offer different rights to their shareholders, for example some classes of stock may offer voting rights while others do not.
Regarding stock structure, the following applies:
- The total number of shares the corporation is authorized to issue
- If there is more than one class of shares, the articles must provide a distinguishing designation for each class and describe the preferences, limitations and relative rights of each class and series of shares.
Naming Your Corporation
Before incorporating, you should check to see if the corporate name you want is available. You can do this by calling the Secretary of State’s office, searching the Secretary of State’s records online.
You can reserve a name for 120 days by filing an application with the Secretary of State.
When choosing a name for your corporation, it must meet the following requirements:
- Your corporation’s name must contain the words “incorporated,” “corporation,” “company” or “limited,” or the abbreviations “inc.,” “corp.,” “co.” or “ltd.”
- Your corporation’s name must be distinguishable from the names of other business entities on file or reserved with the Secretary of State.
An incorporator signs the articles of incorporation and delivers them to the Secretary of State for filing. The following requirements apply when specifying incorporators:
- The articles of incorporation must include the incorporators’ names and addresses.
- There must be at least one incorporator.
- An incorporator must be a person.
- If initial directors are not named in the articles of incorporation, the incorporators must hold an organizational meeting and elect directors. The incorporators may also appoint officers and approve bylaws. After that, the incorporators have no further duties.
Corporate directors oversee the corporation’s management. They have a fiduciary duty to the corporation, which means they must be diligent in managing corporate affairs and must always act in the best interests of the corporation and its shareholders. North Carolina law does not have any eligibility requirements for directors, but the bylaws may impose eligibility requirements.
The following requirements apply when specifying directors for your corporation:
- A corporation may have one or more directors.
- Either the articles of incorporation or bylaws must specify the number of directors.
Specifying a Registered Office and Registered Agent
All North Carolina corporations must have a registered office where the corporation will receive legal documents and other official correspondence. Corporations must also have a registered agent, which is a person at the registered office who receives documents and forwards them to the corporation.
When specifying your corporation’s registered agent and registered office, you must adhere to the following guidelines:
- You must list the street address and county of your corporation’s registered office. The registered office may be at the same address as any of your corporation’s places of business.
- Your corporation’s registered agent may be an individual who resides in North Carolina, a corporation or a limited liability company.
- The registered agent’s address must be the same as the registered office address.
Stating a Corporate Purpose
Unlike many states, North Carolina does not require articles of incorporation to contain a statement of corporate purpose. Every North Carolina corporation has a purpose of engaging in any lawful business.
Determining Incorporation Bylaws
A corporation’s bylaws are guidelines for its structure and operating procedures. Bylaws may contain provisions for managing the business and regulating the affairs of the corporation. Typically, bylaws address such matters as the number of officers and directors, how officers and directors are chosen and how directors’ and shareholders’ meetings are called and conducted.
You must meet the following requirements when determining bylaws for your corporation:
- The board of directors or incorporators must adopt bylaws.
- Bylaws cannot be inconsistent with the law or the articles of incorporation.
Costs of Incorporating in North Carolina
The North Carolina Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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