A North Carolina LLC is a hybrid business entity that includes the best features from a sole proprietorship, partnership, and a corporation. Because it gives you the best features of all 3, it is hugely popular among business owners and entrepreneurs. Some of the key features that make it hugely popular include:
- Easy management
- Pass-through taxation
- Personal liability protection
The limited liability feature of LLCs is what makes NC LLCs so incredibly popular for many business owners and entrepreneurs. What limited liability means is that your business is an entity that is completely separate from you. Your LLC can be used to run a business, or it can be used to hold certain assets of yours like real estate or vehicles.
If someone were to sue your LLC, this means that they can only go after the LLC’s assets. All of your personal assets aren’t connected to your LLC – like your house, cars and bank account – so they cannot be taken away from you. This protection of your home items means LLCs are hugely popular in North Carolina.
Another great perk of LLCs is the fact that you are either taxed as a sole proprietorship if you’re a single-member LLC, a partnership if you’re a multi-member LLC or you can vote to be taxed as a corporation. If you’re taxed as a sole proprietorship or a partnership, you get a great perk with taxation – pass-through tax treatment. This is when LLCs do not have to pay tax on income at the entity level – instead it is passed down to individuals, who pay taxes on their individual earnings.
This is in contrast to C corporations in North Carolina, where your income is taxed twice – first at a corporate level and then at the individual level when the after-tax income is distributed to shareholders as a dividend. If you live in Charlotte, Raleigh, or any other city in NC (and the wider US) you might want to take advantage of TurboTax Live, which is a service that allows you to ask questions of a network of tax experts and CPAs.
Lots of flexibility
Another reason why people choose LLCs over corporations is the fact that there are much less restrictions with LLCs in North Carolina. For instance, C corps have to hold annual shareholder meetings and prepare minutes of meetings, as well as retaining applicable documents as proof that state laws have been heeded. In contrast, LLCs don’t have any such requirements. They can simply conduct business according to rules specified in the LLC’s operating agreement. An operating agreement isn’t even necessary in North Carolina, which makes North Carolina LLCs even more popular, but often this can mean having to follow the rules prescribed by the state of formation by default, and these aren’t normally as flexible as the rules you can make for yourself and your LLC. There is much more independence with LLCs.
As well as this, LLCs in North Carolina are more popular than partnerships, because LLC members can participate in the management of the LLC without losing their personal liability protection. In a general partnership one can lose their limited liability if they participate in the management of the partnership.
An LLC takes many features from other business structures, but it’s better because it provides more flexibility, makes life easier and gives limited liability.
Registration is simple
The founder of Simple.be, Brett Hamilton, says ‘an LLC is an ideal company structure for a startup because it is fast and simple. You can do the registration without an attorney.’ This is another reason why LLCs are hugely popular – because it is so simple to form them, especially in North Carolina, often you do not need to hire anyone, and this means people save lots of money. And once you’ve registered and have an EIN, you can get business bank accounts and checks. It is really that simple. Arguably the hardest part of forming an LLC is just picking a name for it.
TRUiC has an amazing step-by-step plan on how to form and maintain LLCs in North Carolina. Visit this site to find more.
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