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Editorial 9 MIN READ

North Carolina in December 2021: the fee schedule, reviewed

$125 to form, $200 a year to keep, and a tax code still walking itself down toward zero

The Editors
Staff, Incorporator.org
9 min read Updated
Contents 6 sections
  1. What the state charges, line by line
  2. The statute you are actually filing under
  3. The tax glide path that changed again in November
  4. How the deal compares to Delaware, honestly
  5. What to do before April
  6. Sources

North Carolina LLC still costs $125 to form and $200 a year to keep, and in 2021 that is the cheapest version of the deal the state has offered in years. The North Carolina LLC fee schedule did not move this year. The tax code around it did, and the direction is down.

This is a review for someone looking at North Carolina from the outside at the end of 2021, or for a founder who filed here in 2017 and has not re-read the arithmetic since. The filing fees are unchanged. The underlying statute is unchanged. The income and corporate rates that determine whether the state is actually cheap or just inexpensive to register in are the part that moved, and they moved again in November.

What the state charges, line by line

You still form by filing Articles of Organization (Form L-01) with the Secretary of State's Business Registration Division. The fee is $125, set by N.C. Gen. Stat. § 57D-1-22, and the amount has not changed since the rewritten LLC Act took effect on January 1, 2014. Online, by mail, in person on West Jones Street in Raleigh: the number is the same.

Expedited processing runs on top of the base fee: $100 for 24-hour turnaround, $200 for same-day service if the request arrives by noon. There is no one-hour tier, no two-hour tier, no weekend option. If you have ever used Delaware's expedite menu and then come to North Carolina, the quiet is the point. Most filings that go through the online portal clear on the next business day regardless of whether you paid for a tier.

The annual report is the other number, and it is the one people miss. Every North Carolina LLC owes a report to the Secretary of State every year, due by April 15, with a filing fee of $200 if filed online and $202 if filed on paper (a $2 paper-handling charge sits on top of the statutory fee under § 57D-2-24). For domestic LLCs the report is due on the fifteenth day of the fourth month following the end of the fiscal year, which for a calendar-year entity is April 15. The form is short: principal office address, registered agent, names and addresses of the company officials. Miss it, and the Secretary of State is empowered to administratively dissolve the LLC under § 57D-6-06. Getting reinstated costs money and lost time.

Corporations in North Carolina file a separate annual report with the Department of Revenue along with the corporate income and franchise tax return. The corporate fee is $25, not $200. Do not confuse the two; LLCs and corporations run on different rails here.

The registered-agent requirement comes from § 57D-2-40, which pulls in the registered-office rules shared with the Business Corporation Act at Chapter 55D. The agent must have a physical North Carolina street address. Post office boxes will not clear the filing. The commercial agent market in Raleigh and Charlotte runs roughly $100 to $200 a year, similar to most non-Delaware states, and the difference between the floor and the ceiling is the same as everywhere else: whether anyone will actually open the envelope when a summons arrives.

The statute you are actually filing under

The governing law is the North Carolina Limited Liability Company Act, Chapter 57D of the General Statutes, which replaced the old Chapter 57C effective January 1, 2014. That was a rewrite, not a patch. The 2014 Act modernized the default rules around operating agreements, member rights, manager duties, and dissolution, and it cleaned up two decades of accreted confusion in the earlier statute. If you formed in North Carolina before 2014 under the old Act, Chapter 57D has applied to your entity since January 1, 2014 regardless; there was no opt-in.

Two provisions in Chapter 57D do work that founders routinely overlook. Section 57D-2-30 makes the operating agreement (the statute calls it the "operating agreement," though it can be oral or implied) the controlling document for almost every question of internal governance the default rules would otherwise answer. North Carolina does not make you file the operating agreement and does not require you to have a written one, but in litigation the absence of a written agreement means the statutory defaults apply. That is usually not what the members wanted. Section 57D-3-20 runs the fiduciary-duty rules for managers and, notably, lets the operating agreement modify them within limits. Delaware lets you go further. North Carolina does not.

The point of all this, for a 2021 reader, is that the legal wrapper around a North Carolina LLC is roughly as modern as Delaware's and meaningfully more modern than the median state. The formation is cheap, the statute is coherent, and the court system, while not Chancery, is not hostile to LLC work.

The tax glide path that changed again in November

The fee schedule has not moved since 2014. The tax rates have moved four times in five years, and in November 2021 they moved again.

For 2021, North Carolina's individual income tax is a flat 5.25%, set by N.C. Gen. Stat. § 105-153.7. This is the rate your LLC's pass-through income is taxed at for North Carolina residents if the LLC is a disregarded entity, a partnership, or an S-corp. The rate has been sliding down since the 2013 tax reform: 5.75% in 2016, 5.499% in 2017, 5.25% in 2019 through 2021. The 2021 Appropriations Act (S.L. 2021-180, signed November 18, 2021) locks in another step. Beginning January 1, 2022, the individual rate drops to 4.99%, and the same act sets out a further glide to 3.99% over the following several years. The mechanics are in Part XLII of the session law; the individual-rate section is Part XLII.A.

For corporations, the story is more striking. North Carolina's corporate income tax in 2021 is 2.5%, already one of the lowest state-level corporate rates in the country; the next two states in the ranking charge more than double. That rate has been 2.5% since 2019, down from 3% in 2017 and 6.9% in 2013. S.L. 2021-180 goes further: the corporate rate stays at 2.5% through 2024, falls to 2.25% in 2025, to 2% in 2026, to 1% in 2028, and to 0% in 2029. North Carolina will be the first state in the modern era to phase its corporate income tax out on a published schedule.

A few caveats before anyone reorganizes on the strength of that sentence. The corporate income tax is not the franchise tax. North Carolina also levies a franchise tax on C-corps under § 105-122, computed on the largest of net worth, investment in tangible property, or 55% of appraised value, at a rate of $1.50 per $1,000 with a $200 minimum. S-corps pay a reduced franchise tax; LLCs electing corporate treatment are treated as corporations for franchise tax purposes. The franchise tax is not on the phase-out path. It is a smaller number than the income tax for most operating businesses, but it is not zero and it is not scheduled to become zero.

The other caveat is that the income tax only reaches North Carolina source income. An out-of-state LLC with no nexus in the state pays no North Carolina tax regardless of the headline rate. The phase-out is a signal about where North Carolina sees itself competing. It is not a structural advantage for a business with no North Carolina footprint.

How the deal compares to Delaware, honestly

The 2017 guide to forming in North Carolina ran this comparison, and the math has moved in North Carolina's favor since.

Delaware in 2021 costs $90 to form an LLC and $300 a year in franchise tax, no annual report required of LLCs. Delaware has the Court of Chancery, a body of case law other states defer to, and a political economy that treats the corporate franchise as a state asset. For a venture-backed company, a holding company of any complexity, or any entity that expects to raise institutional capital, those advantages are real and the $210 annual premium over North Carolina ($300 minus $90 filing year, $300 minus $200 in following years, give or take the paper-filing surcharge) is noise in the budget.

For a North Carolina operating business with North Carolina income, the calculus looks different. You will pay North Carolina's pass-through rate on North Carolina earnings whether you form here or in Delaware, because a foreign-qualified Delaware LLC doing business in North Carolina owes the $200 annual report here and files the same state tax return on the same income. The only thing Delaware registration adds for that business is a second annual obligation, a second registered agent, and a second administrative surface area. The foreign-qualification fee in North Carolina is itself $250 under § 57D-7-04. You are paying for Delaware twice and receiving its benefits once.

Where North Carolina wins outright in 2021 is the intersection of a coherent modern statute, a $125 filing fee, a $200 annual obligation, and a tax code aimed at zero. Where Delaware still wins is the case law and the investor expectation. The honest rule of thumb has not changed: if the plan is a venture exit, start in Delaware. If the plan is an operating business rooted in North Carolina, or a family holding structure with North Carolina assets, the home state is the better answer and is getting better.

What to do before April

If you already have a North Carolina LLC, three things on the December-through-April calendar are worth writing down now.

Pull the registered-agent record before the holidays. If the person or company on file is no longer the right one, change it now rather than discovering at summons-service time that notice went to a defunct address. Section 57D-2-40 lets you amend the agent for a $5 fee.

Confirm the principal office address. The annual report asks for it, and reports filed with an address the Secretary of State cannot verify sometimes bounce back for correction, which eats the time cushion before the April 15 deadline.

Decide whether to file the annual report in January. There is no discount for filing early and no penalty for waiting until April 15, but January filings clear in a week and April filings sit in a queue with every other procrastinator's. If the business is straightforward and the answers are the same as last year, there is no reason to wait.

The $125 fee buys a filing. The $200 a year buys a privilege. The state is betting, on the evidence of S.L. 2021-180, that the way to grow the tax base is to stop taxing the corporate part of it. Whether that bet pays off is a question for 2030. The fee schedule that sits on top of the bet is legible, stable, and cheaper than almost every alternative worth taking seriously.

Sources

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