Limited Liability Company

A limited liability company, known as an “LLC”, is a creature of statute. That means there are certain things that must be done to be, and stay, a limited liability company. Limited liability companies have more flexible management provisions than do corporations and allow limited liability protection. You should talk with your tax advisor about any additional tax advantages a limited liability company may provide you over a corporation.

A limited liability company is formed much like a corporation in that its Articles of Organization must be filed with the Secretary of State. The filing fee is set by statute and changes from time to time. Unless and until you are registered as a limited liability company, it is not official and you should never do any business until the articles are actually filed. Filing can take as long as four weeks. For an additional fee, the Secretary of State can expedite the filing period. A limited liability company must have a registered office and registered agent. The registered office must be located in North Carolina. The name must also be sufficiently different than another limited liability company to identify it and must contain the words “limited liability company” or “L.L.C.”. A search feature is available at the Secretary of State’s website to determine whether a name is available.

Limited liability companies can either be managed by a single member, multiple members, or a manager. An operating agreement should be entered into which is prepared to govern the way the limited liability company is managed. The operating agreement also will control as to how the limited liability company pays its distributions, manages assets and debts, makes decisions, etc. The operating agreement must be signed by all of the members and managers of the limited liability company. A limited liability company must file an annual report with the Secretary of State.