It’s important that you form your company before you start operating your business.
Many entrepreneurs ask me how long it will take to form an LLC in North Carolina. The answer to this question is more complicated than it may appear. Starting a new business can be broken down into two separate, but related, parts:
- Filing the appropriate documents with various government agencies
- Drafting and signing the founding documents that govern the behavior of the owners and managers of the new business
In this post, we’ll cover only the documents to be filed with the Secretary of State. I’ll cover typical turnaround time for the other founding documents in a later post. In short, there are two typical situations for company formations: forming a company here in North Carolina, and forming a business in another state but operating the company in NC.
Forming your Business with the North Carolina Secretary of State
The NC Secretary of State’s current turnaround time is 9-12 business days for standard processing (as of May 2016). At our office, we’re seeing an average of 3 weeks for turnaround of basic documents such as Articles of Organization (forming an NC LLC) or Articles of Incorporation (forming an NC corporation).
The Secretary of State used to process formations in about a week, give or take a few days. For most new business formations, that turnaround time worked fine. But with the new normal of 2-3 weeks, more and more new businesses are going the expedited filing route.
If you go the expedited route, you get 24-hour turnaround, but you pay an extra $100 on top of the normal filing fee. Luckily, North Carolina sends its notices of acceptance electronically, so once the filing is processed you know immediately. This is important to keep in mind if you need to get your legal ducks in a row quickly or open a business bank account tomorrow.
In short, it’s possible to form your business and open a business bank account in about a day. But, that doesn’t take into account the time it will take you to work with a lawyer on the other formation documents for an LLC (e.g., operating agreement) or corporation (e.g., bylaws, shareholder agreement, etc.).
Forming Your Company in Another State but Planning to Operate in NC
The timeline is slightly extended for businesses that form in other states but want to operate in NC—such as startups that form as a Delaware corporation but plan to keep headquarters in North Carolina. If you go the non-expedited route, the Delaware Secretary of State has a typical turnaround of 3-4 weeks.
Like North Carolina, there is an option to expedite for a fee (which varies depending on the document). Unlike North Carolina, Delaware does not send electronic copies of documents, so after processing, new businesses have to wait for their documents for as long as it takes to get here through snail mail.
If your company is based in North Carolina, you then have to file an application for a Certificate of Authority (a document needed to give a foreign entity the right to do business in our great state). This Certificate of Authority is then subject to the turnaround times listed above for filings with the NC Secretary of State.
All this means that, for foreign companies qualifying to do business in NC, even the most optimistic timeline requires budgeting at least one full week.
Contact an Attorney at Spengler & Agans
Contact our attorneys below to work with a business lawyer who can help form your company in NC or Delaware, with expedited processing available. Spengler & Agans offers a flat-rate legal checkup for startups and business needing a broad, overall legal review of their business and business practices.