Entity Types at a Glance
North Carolina overlays several corporate flavors on top of the Business Corporation Act (Chapter 55). This menu orients you before diving into detail pages.
Authority snapshot: Chapter 55 (NC Business Corporation Act), Chapter 55B (Professional Corporations), Chapter 55D Articles 2 & 5 (naming and registered agents), Article 18 for Benefit Corporations, and NC Revenue statutes in Chapter 105 for franchise/income tax.
| Entity | Statutes | Typical use case | Notes |
|---|---|---|---|
| Standard NC business corporation (C-corp) | Chapter 55 | Manufacturing, tech, holding companies that want classic stock structure. | Subject to 2.5% corporate income tax + franchise tax; Articles filed on Form B-01. |
| S-corporation | Chapter 55 + IRS/NC Dept. of Revenue elections | Owner-operated professional or service firms seeking payroll tax optimization. | Still a Chapter 55 corporation; pays $200 franchise tax minimum, limited shareholders/classes. |
| Professional corporation (PC) | Chapter 55B + Chapter 55 | Law, medicine, engineering, accounting, architecture, and other licensed practices. | Ownership/officers limited to licensees; naming rules require "Professional Corporation", "P.A.", or "P.C." |
| Medical corporation | Chapter 55B + medical board rules | Physician and dental groups that must file with NC Medical Board. | Requires board certification, malpractice insurance attestation, and shareholder licensing. |
| Benefit corporation | Chapter 55, Article 18 | Social enterprises and ESG-focused companies wanting statutory public benefit duties. | Articles must declare benefit status; annual benefit report referencing third-party standard. |
| Foreign corporation authorized in NC | Chapter 55, Article 15 | Delaware/Wyoming/other state corporations operating in NC. | File Application for Certificate of Authority (Form B-09) + franchise tax on NC capital. |
Standard North Carolina Corporation (C-Corp)
The Chapter 55 corporation is the foundation for every variant. Formation happens via Articles of Incorporation filed with the Secretary of State’s Business Registration Division.
Key fields on Form B-01
Name & Registered Agent
Name must include Corporation, Incorporated, Company, Limited (or abbreviation) and be distinguishable on SOS records. Registered agent must provide a physical NC address and sign the consent in the Articles.
Authorized shares
List authorized shares and any classes/series. NC doesn’t require par value, but franchise tax uses apportioned capital stock value, so align share counts with capitalization plans.
Incorporators & principal office
Include at least one incorporator with address. Principal office info can be omitted initially but is needed for annual reports. Provide email for SOS notices.
Optional provisions
Use Article 2 to address indemnification, director liability waivers (consistent with Chapter 55-2-02(b)), pre-emptive rights, and cumulative voting modifications.
Fees & processing
| Filing | Fee | Notes |
|---|---|---|
| Articles of Incorporation (B-01) | $125 | Online or paper; include cover sheet; typical processing 5–7 business days. |
| 24-hour expedite | $100 | Attach Expedited Service Request. Clock starts when SOS accepts filing. |
| Same-day expedite | $200 | Submit before noon Eastern for 4 p.m. decision. |
Share structure tips: Early-stage founders often authorize 10–20 million no-par shares to mimic Delaware setups. Balance that flexibility against higher franchise tax bases—NC uses total capital stock, surplus, and undivided profits when computing the tax.
S-Corporations & North Carolina Tax Treatment
An S-corp in NC is still a Chapter 55 corporation. The difference lies in federal and state tax elections (IRS Form 2553 + NC Form CD-401S). NC recognizes the S election but still charges franchise tax.
Entity requirements
100 or fewer shareholders, one class of stock, shareholders limited to U.S. persons/qualifying trusts, and calendar-year default unless permission granted.
NC taxation
S-corps generally pay no 2.5% corporate income tax; profits flow to shareholders taxed at 4.75% individual rate. However, each S-corp owes at least $200 in franchise tax annually.
Payroll & PTET
Owners must take reasonable salaries subject to payroll tax. Consider North Carolina’s Pass-Through Entity Tax election (Form CD-429) for SALT deduction planning.
C vs S vs LLC snapshot
| Feature | C-Corp | S-Corp | LLC (partnership) |
|---|---|---|---|
| NC entity-level tax | 2.5% income tax + franchise tax (≥$200) | $200 min franchise tax; no income tax | None |
| Equity flexibility | Multiple classes, preferred stock, QSBS potential | Single class of stock | Membership units; flexible allocations but harder for VC |
| Investor expectations | Standard for VC and institutional capital | Acceptable for closely held, service-heavy firms | Great for pass-through real estate/services |
| Payroll/SE tax | Officer salaries subject to payroll tax; dividends taxed twice | Owner salaries subject to payroll tax; distributions avoid SE tax | Members pay SE tax on active income |
Worked example: A consulting corporation nets $400,000. As a C-corp, it owes 2.5% income tax ($10,000) plus franchise tax based on capital stock (minimum $200) before dividends trigger shareholder tax. As an S-corp with $240,000 of reasonable wage, payroll tax hits wages but remaining $160,000 passes through with only individual income tax and franchise minimum.
Professional & Medical Corporations
Chapter 55B overlays licensing rules for professional corporations (P.A./P.C.). Each board (NC State Bar, Medical Board, Board of Architecture, etc.) issues its own approval processes.
Ownership restrictions
Shareholders, officers, and directors must generally hold licenses in the profession. Boards may allow minority passive ownership for estate planning only if expressly permitted.
Naming rules
Include “Professional Association,” “Professional Corporation,” “P.A.,” or “P.C.” Certain boards require principal surname(s) in the name and will reject brand names without approval.
Board filings
Obtain a Certificate of Registration or similar letter from the relevant board before filing Articles. Attach that certificate to Form B-01. Annual renewals may be required with both the SOS and the board.
Medical corporations submit forms to the NC Medical Board confirming professional liability insurance, shareholder licensure, and compliance with NC Gen. Stat. § 55B-14. If you operate across states, coordinate PLLC/PC structures to keep each jurisdiction satisfied.
Benefit Corporations
North Carolina allows corporations to elect “benefit corporation” status under Chapter 55, Article 18. This is optional but useful for impact funds and ESG-aligned ventures.
- Articles must state that the entity is a benefit corporation and commit to pursuing a general public benefit.
- Directors must consider effects on shareholders, employees, customers, community, and the environment when making decisions.
- Annual benefit reports must use an independent third-party standard; provide the report to shareholders and post it on your website if feasible.
- Converting into or out of benefit status requires at least two-thirds shareholder approval (unless bylaws/articles demand more).
Investor note: Benefit status doesn’t exempt you from franchise or income tax. It’s a governance signal—pair it with clear shareholder agreements to avoid misunderstandings about profit vs. mission.
Close Corporations & Shareholder Agreements
NC permits statutory close corporations (Articles referencing Chapter 55-7-30 et seq.) and, more commonly, nonstatutory close corporations that rely on shareholder agreements.
Key features
Limited number of shareholders, restrictions on share transfers, ability to dispense with a board, and partnership-style governance where shareholders assume direct management.
Why it matters
Close corp language can prevent minority freeze-outs, document buy-sell mechanics, and pre-plan dispute resolution. NC law enforces these agreements if they’re in writing and referenced in the Articles or stock certificates.
Sample restriction (conceptual): “No shareholder may transfer shares without first offering them to the corporation and remaining shareholders at appraised value. Disputes over valuation go to binding appraisal by a mutually selected CPA.” Tailor triggers for death, disability, divorce, or bankruptcy.
Formation Checklist & Filings
Regardless of corporation type, work through this timeline.
Search the NC SOS database. Reserve for 120 days using Application to Reserve a Business Entity Name ($30) if brand launch is months away.
Secure an NC physical address. Agents can be individuals or businesses authorized in NC. Prepare consent signature.
Choose share structure, management notes, optional provisions, and attach board approvals (for PCs/benefit conversions). File Form B-01 with fee.
Adopt bylaws, appoint directors/officers, issue stock, approve banking resolutions, and authorize EIN application.
Apply for EIN, register with NC Dept. of Revenue (Form NC-BR) for withholding/sales/franchise, and enroll with NC Division of Employment Security for unemployment.
Calendar annual report (April 15), franchise and income tax deadlines, CTA filings, and license renewals.
Naming Rules & Registered Agents
Corporate names
- Must include Corporation, Company, Incorporated, Limited or abbreviation (Corp., Co., Inc., Ltd.).
- Cannot imply banking, insurance, trust, or professional licensing without regulator approval (Commissioner of Banks, Department of Insurance, etc.).
- Must be distinguishable on the records; punctuation or article changes alone don’t suffice.
- Professional corporations must meet board-specific naming rules; many require surnames plus professional designator.
Registered agent requirements
- Maintain a registered office at a North Carolina street address.
- Agent may be an NC resident, domestic entity, or foreign entity authorized to do business in NC.
- Change agent via Form BE-06 ($5 mail, free online). Failure to maintain agent triggers administrative dissolution after notice period.
Tip: Pair your agent updates with CTA beneficial ownership updates when leadership changes. NC annual reports do not automatically update registered office information in all cases.
Annual Reports & Franchise Tax
North Carolina requires every domestic and foreign corporation to file an annual report by the 15th day of the fourth month following fiscal year end (April 15 for calendar-year corps).
Annual report basics
- File online for $23 (or $25 by mail).
- Report principal office addresses, registered agent, officers, and authorized shares.
- Align the report with franchise/income tax filings—late reports can cause the Secretary of State to administratively dissolve/withdraw the corporation.
Franchise tax overview
| Taxpayer | Rate/base | Minimum | Notes |
|---|---|---|---|
| C-Corp | $1.50 per $1,000 of the largest of: (1) apportioned capital stock, surplus, and undivided profits; (2) 55% of appraised property value in NC; or (3) investment in NC tangible property. | $200 | File with corporate income tax return (Form CD-405). Credits offset limited portions. |
| S-Corp | Same base and rate | $200 | Paid with Form CD-401S regardless of income. |
| Holding companies | Subject to same regime unless qualifying for specialized exemptions. | $200 | Consider share structure and paid-in capital to minimize base. |
Penalty risk: Missing the franchise tax payment triggers late-payment penalties (10% of tax due, minimum $5) plus interest and can jeopardize good standing. Reinstatement requires all delinquent reports, tax returns, penalties, and a $100 reinstatement fee.
North Carolina Corporate Tax Comparison
Use this comparison when deciding between an NC C-corp, S-corp, or keeping an NC LLC taxed as a partnership.
| Scenario | Entity-level NC tax | Owner-level NC tax | Ideal for |
|---|---|---|---|
| NC C-corp with $1M net income | $25,000 income tax + franchise tax on base (≥$200) | 4.75% on dividends to individuals | VC-backed or QSBS-focused companies reinvesting profits |
| NC S-corp with $1M net (after salaries) | $200 franchise minimum | Shareholders pay 4.75% on pass-through income; payroll taxes on salaries | Mature services firms paying consistent distributions |
| NC LLC taxed as partnership | None | Members pay 4.75% and self-employment tax if active | Real estate, consulting, and holding companies valuing flexibility |
NC offers the Pass-Through Entity Tax (PTET) election for S-corps and partnerships through 2025, allowing a 4.75% entity-level tax with owner credits to bypass SALT deduction caps. Layer this with payroll strategy when modeling S-corp wages.
Foreign Corporations Doing Business in NC
Corporations formed elsewhere must obtain authority before “transacting business” in North Carolina (maintaining an office, employees, inventory, or significant projects).
- File Application for Certificate of Authority (Form B-09) with $250 fee.
- Attach a Certificate of Existence from the home jurisdiction dated within 6 months.
- Appoint NC registered agent and list principal office / officers.
- File annual reports ($23) and pay NC franchise tax on NC-apportioned capital.
Common mistakes: Waiting until after hiring employees to qualify (risking penalties), misallocating capital stock for franchise calculations, and forgetting to update assumed names when expanding into new NC counties.
Corporate Transparency Act Overlay
As of 2024, most NC corporations are “reporting companies” under the Corporate Transparency Act unless they fall into an exemption (large operating company, SEC reporting issuer, bank, etc.).
- Corporations formed before Jan 1, 2024 must file BOI by Jan 1, 2025.
- Corporations formed in 2024 get 90 days from formation to file; in 2025 the window drops to 30 days.
- List each beneficial owner (25%+ ownership or substantial control) and company applicants for new entities.
- Litigation challenging CTA doesn’t protect NC filers unless they are named plaintiffs—plan to comply.
I bundle BOI data collection with my engagement letters so incorporators, directors, and shareholders stay aligned on privacy and update triggers.
When to Choose an NC Corporation vs LLC or Delaware
Stay in North Carolina when…
- Your management team, facilities, or professional licenses center in NC.
- You need a professional corporation subject to NC board oversight.
- You want to avoid Delaware franchise tax and annual registered agent double fees.
Go Delaware (then foreign-qualify) when…
- Venture capital requires Delaware law and standard NVCA documents.
- You plan to issue multiple preferred classes, SAFEs, or complex option pools.
- You need series structures or plan to reincorporate before an exit.
Either way we harmonize the compliance calendar: Delaware franchise tax (March), NC annual report/franchise tax (April), CTA deadlines, and board/industry renewals.
How I Help with North Carolina Corporations
- Entity choice consults comparing NC LLC vs NC corporation vs Delaware parent + NC qualification.
- Drafting Articles of Incorporation, benefit language, professional corporation approvals, and bylaws.
- Designing shareholder agreements, close corporation structures, and buy-sell mechanics.
- Tax coordination: S-election modeling, PTET strategy, franchise tax base planning, and reinstatement support.
- Foreign qualification packages for Delaware/Wyoming corporations opening NC offices.
- CTA / BOI compliance programs aligned with shareholder onboarding.
Need this tailored to your deal? Drop the page into your workspace or schedule a consult and I’ll map filings, budgets, and governance documents.