Why form a North Carolina Corporation?
There are certain advantages that had by forming a North Carolina corporation. The most important fact in forming a corporation is the limited liability that is afforded to you. There is no liability risk of your personal assets being affected in the event of a lawsuit. This protection is accomplished because forming a corporation in North Carolina causes a separation of the company from the individual.
Also, there are other advantages with the formation of a corporation. There are certain tax advantages with filing a corporation vs. a sole proprietorship. A CPA may be able to provide more detailed analysis of your tax savings.
Characteristics of a Corporation:
- The life of the corporation is independent of the incorporator, share holder or owner. The corporation dies when it is dissolved. It can in essence outlive the people who started the entity;
- Liability protection is the same as a LLC;
- You can easily transfer ownership of the corporation, you may need to meet certain criteria however;
Important rules in naming your corporation
Corporations may use the identifiers Company, Corporation, Incorporated, Limited, Co., Corp, Inc. and Ltd. The corporation name can’t be that of another entity already on file and the corporation can’t have the legal descriptor of an LLC. The name of the Corporation must be distinguishable. Names that have been dissolved are available 120 days after the dissolution, unless it was administratively dissolved, then you must wait 5 years after the dissolution to use that name. Restricted words are Bank, Banker, Banking, Trust, Mutual, Cooperative, Co-op, Insurance, Engineer, Engineering, Architect, Architecture, Architectural, Surveyor, Survey, Surveying, and Wholesale. Prior approval must be obtained before any filing is made with the Secretary of State.
Registered agent, do I need one?
Every Secretary of State requires an individual to serve as a registered agent. The registered agent should be someone that you can trust to delivery documents that the Secretary of State will send you. This individual need to be trust worth because the Secretary of State will be sending legal documents to serve process on the individual should your company be named in a lawsuit. The address must be a physical address located in the same state as your corporation.
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