Registration Requirements in North Carolina
Business Corporations, Nonprofit Corporations, Limited Liability Companies (LLC), Limited Partnerships (LP), Limited Liability Partnerships(LLP or RLLP), and Limited Liability Limited Partnerships (LLLP) are required to register with the NC Secretary of State. The website can be found here:
Sole Proprietorships and general partnerships may be required to file an assumed name certificate in the county which their principal business is located.
Certain businesses in North Carolina will need to register with the North Carolina Department of Revenue. More information can be found at the link below:
S Corporation Tax
North Carolina does not require S corporations to pay income tax; however, they are required to pay the state’s corporate franchise tax, described below. In addition, each individual S corporation shareholder will owe state tax on his or her share of the company’s income. S corporations are required to file Form CD-401S - S corporation Tax Return.
Not required to pay income tax or corporation occupation tax to North Carolina. Business income is passed to partners who pay North Carolina income tax on their personal return. Partnerships are required to file Form CD-401S - Partnership Tax Return.
North Carolina’s franchise tax applies to both C corporations and S corporations. The tax applies to whichever of the three different tax bases yields the largest tax; the three bases are:
- Net worth
- Investment in N.C. Tangible Property
- Appraised Value of N.C. Tangible Property
Regardless of which of the three tax bases applies, the tax rate is $1.50 per $1,000. There is a minimum franchise tax of $200. Franchise tax is due at the same time as corporate income tax, the 15th day of the fourth month after year-end.
Qualified “Nonresident Partners” of S corporations may elect to have the business report and pay a “composite income tax” on behalf of the taxpayer. The rate for composite income tax is 5.499% minus the taxpayers share of credits. This election is found on the S corporation returns.
Individual Income Tax
Shareholders and partners with income assignable to North Carolina may need to file an individual income tax return that reflects their portion of North Carolina income. Individual income is taxed at a flat rate of 5.25%.
S corporation, partnership, and individual income tax returns are all due on the 15th day of the fourth month following the close of the tax year. For calendar filers, the due date is April 15th. If the due date falls on a weekend or holiday, the due date is the following business day.
Filing An Extension
The North Carolina Department of Revenue may allow an extension of up to six months if an extension application is received in a timely manner.
S corporations use form CD-419:
Partnerships use form D-410P:
Individuals use form D-410:
S corporations and partnerhsips in North Carolina are not required to make estimated payments.
Individuals who expect to owe $1,000 or more in tax are required to make estimated payments on Form NC-40:
The late filing penalty in North Carolina is 5% per month, up to 25% of the net tax due. Late payments are subject to a 10% penalty and interest on any unpaid balance. The current interest rate is 5% annually.
If your business was formed or is located in another state, but generates income in North Carolina, it may be subject to North Carolina taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
North Carolina Secretary of State
North Carolina Department of Revenue