Forming your business entity in Delaware—specifically, a corporation—gives you a lot of flexibility, but you may still need to follow local laws depending on what state you operate in.
Specifically, if you do business in North Carolina, you need to register with the state. We’ll walk through the process and simplify it. But first, how can you tell whether you’re legally doing business in North Carolina?
When to register as doing business in North Carolina
Delaware C corps—and all other corporations formed outside of North Carolina—are referred to as “foreign” corporations by the State.
North Carolina statutes do not specifically define what is considered doing business in the state. However, North Carolina statutes provide that the following activities would not require you to register with the State:
Defending or settling a lawsuit
Having a bank account in the state
Selling through independent contractors
When to register to collect sales tax in North Carolina
Every state has rules about when a company is required to pay sales tax. These are called sales tax nexus rules.
You can think of the nexus as a special version of that state’s border; if you perform certain business activities within that border, you fall into the state’s sales tax nexus, and you’re required to register for and collect state sales tax.
Typically, these actions take the form of buying and selling goods and services.
In North Carolina, the sales tax nexus rules only apply to sellers who sell physical goods or services to North Carolina residents.
Until 2018, selling or buying non-physical goods—like subscriptions to streaming services, SaaS memberships, etc.—did not, generally speaking, qualify you for sales tax nexus. After an important court ruling in 2018, that changed. Now, if you buy or sell non-physical goods or services in a state, you may fall within its sales tax nexus.
North Carolina sales tax nexus (physical goods and property)
If you have physical presence in North Carolina, then you will likely need to collect and remit sales tax. You may be physically present in a state if you have warehouses, retail spaces, or employees and/or representatives of the business in the state.
You will need to pay sales tax as long as you have physical presence regardless of any minimum thresholds. You can learn more about physical presence for sales tax purposes through the State’s website.
North Carolina sales tax nexus (non-physical goods and property)
The new state sales tax laws applying to non-physical (ie. internet) sales allow you to qualify for sales tax nexus even without physical presence or goods. In North Carolina, you need to cross a certain threshold to qualify.
You will need to collect and remit sales tax if you do the following in the current or previous year:
- Collect $100,000 or more in retail sales from North Carolina; or
- Have 200 or more separate transactions into North Carolina
If you would like to take a deep dive, you can check out the State’s website.
As usual, this isn’t legal advice—just a guide. If you’re not 100% clear on whether you fall within North Carolina’s sales tax nexus, it’s best to confer with your legal counsel and/or an accountant that has expertise in North Carolina’s legal code and tax regulations.
How to register to do business in North Carolina
- Select a name under which to do business. This doesn’t have to be the name you registered when incorporating in Delaware, but it can be.
- Fill out an application. You’ll need to file an Application for Certificate of Authority to the North Carolina Secretary of State.
- Pay the fee. Now you pay the North Carolina Secretary of State a $250 filing fee.
- Submit your Application for Certificate of Authority.
- Wait. Processing typically takes two to four weeks.
Once you’re approved to operate as a qualified foreign business in Alabama, you’ll need to comply with certain requirements.
Compliance has a qualified business in North Carolina
To stay in compliance and continue legally doing business in North Carolina, you need to meet two requirements: maintaining a registered agent and filing your annual report. On top of that you will also need to pay your corporate income and franchise tax.
Registered agent in North Carolina
Your registered agent in North Carolina is your point of contact with local authorities. If you don’t have a physical address for your company in North Carolina, it may be advantageous to find a registered agent to receive state notices on your behalf.
Foreign corporations are required to have a registered office in North Carolina. The office cannot be a P.O. box, rather it must be a physical address of your registered agent or a licensed registered agent service.
Your registered agent will forward any important information, such as business mail, to you. There are a number of firms that contract out registered agents. They typically cost $50 – $100 per year.
Annual reporting in North Carolina
Every two years, you must file a statement with the State, updating any changes to the company address or the composition of the Board and officers. You’ll include info like:
- The legal name of your business
- The name and address of your registered agent
- The names and addresses of board members, managers, and officers
Your annual report filing fee is $20.
Paying your corporate income and net worth tax
North Carolina has a corporate income and franchise tax. A corporate income tax is a direct tax imposed on the income of a corporation. A franchise tax is imposed on the net worth of a corporation, levied in exchange for the privilege of doing business in a state. For more information on paying your corporation income tax, please see the following guidance from North Carolina’s Department of Revenue.
Registering for sales tax in North Carolina
If you meet the requirements to collect sales tax in North Carolina, you will need to register with the North Carolina Department of Revenue. You can register to collect sales tax through the online business registration system provided by the North Carolina Department of Revenue.
Hiring and paying employees in North Carolina
When you hire a new employee in North Carolina, federal and state laws require that you report new hires to the state within 20 days of their hire date. You can report your new hires online.
Your payroll provider should be able to take care of paycheck withholdings, but it’s up to you to register as an employer with the State and set up an online employer account.
For a comprehensive guide of your responsibilities, North Carolina provides the following information.
The easiest way to register your business in North Carolina
To register your business in North Carolina, you’ve got to keep track of a lot of moving parts. Failing to file the right forms, provide the right information, or stay on top of compliance laws can lead to serious headaches.
Capbase makes it easy. When you incorporate your Delaware corporation on Capbase, we will generate the required information needed to register to do business in North Carolina and keep you up to date on any required filings.
The compliance calendar inside your Capbase account will notify you of upcoming fees, reporting, or other requirements, so you can keep your startup in good standing with North Carolina state officials. Try Capbase now.