What you should know if you own an LLC in North Carolina:

1)   Having a limited liability company protects your personal assets

An LLC, or Limited Liability Company, is a type of business structure that protects its owner(s) from being personally responsible for the company’s debts or legal problems. If the business gets sued or owes money, only the business, not the owner’s personal property, is at risk.

2)   You must file a yearly annual report with the NC Secretary of State

In North Carolina, the annual report for LLCs is due every year by April 15th, starting the year after the LLC is formed. This deadline applies regardless of your fiscal year end, and late filings risk administrative dissolution after a 60-day grace period if not addressed. The annual report is done through a form on the Secretary of State’s website and must include the following information: your LLC’s name, street and mailing address, telephone number, contact information for your company’s principal officials, and a brief description of the nature of your business.

3)   You should avoid mixing Personal and Business Finances

Having an LLC means that your business is A frequent and serious error that business owners make is combining personal and business finances, such as using the same bank account or credit card for both types of expenses. This mistake can “pierce the corporate veil,” potentially exposing personal assets to business liabilities, which is what the LLC is designed to prevent. Always maintain separate accounts and detailed records to protect your personal assets.

4)   You should always have clients sign a service contract

Service contracts are crucial for business owners because they provide clear terms, reduce financial risk, improve reliability, and help prevent disputes with clients or service providers. Contracts with clients and vendors are imperative as they clearly define each party’s roles and responsibilities. They also aid clearing up financial disputes. At a minimum, a service contract includes necessary terms such as 1) the parties involved 2) the scope of services being offered 3) the payment terms 4) cancellation and reimbursement policies.