North Carolina Certificate of Authority/Do I need one?

Do I need a certificate of authority in North Carolina?

A foreign LLC needs a North Carolina certificate of authority, applied for on Form L-09 for $250, before it transacts business in the state (G.S. 57D-7-01(b)). The statute carves out 11 activities from that term and adds that its list is not complete. Whether a given business falls inside the line is for the company and its lawyer to judge.

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How the statute frames the test

Chapter 57D bars the foreign LLC from transacting business until the certificate is issued and, instead of defining "transacting business," says that doing any one or more of the listed things does not amount to it. The corporation statute in Chapter 55 works the same way, with the same device. North Carolina therefore has no dollar threshold, no employee count and no minimum number of days. What matters is what the company does in the state and whether each activity is on the safe list.

The activities that do not count

The LLC statute sets aside these eleven activities (G.S. 57D-7-01(b)), grouped here by subject.

Disputes. Maintaining or defending any proceeding, or settling it or the claims in it.
Company business. Holding member, manager or official meetings and carrying on other internal affairs.
Money in the state. Keeping bank accounts or borrowing in North Carolina, with or without security and however often.
Its own interests. Offices or agencies to transfer and register the company's own equity or securities, and trustees or depositories for them.
Orders. Soliciting or procuring orders by mail, employees, agents or otherwise, where each order has to be accepted outside North Carolina to bind.
Lending. Making or investing in loans, servicing mortgages through independent agencies in the state, running foreclosures, buying at foreclosure and managing or renting the property acquired while liquidating it, provided no office or agency of the LLC is kept in the state; and taking security for debts owed to the company or enforcing its rights in that security.
Interstate and contractors. Transacting business in interstate commerce, and selling property or services through independent contractors.
One-off deals. An isolated transaction completed within 6 months that is not one of repeated transactions of a similar kind.
Holding assets. Owning real or personal property.

Situations, one at a time

We have an employee who works from home in North Carolina. Do we need a certificate?

An employee working in the state on the company's regular business is not covered by any exclusion, so this points toward needing the certificate.

We only sell online to North Carolina customers from another state. Do we need one?

Not on that fact alone. Selling in interstate commerce, and soliciting orders that must be accepted outside North Carolina, are both listed. The picture changes if you add staff, inventory or an office in the state.

Our LLC owns a rental house in North Carolina. Do we need one?

Owning real or personal property is an exclusion, so ownership alone does not count. A rental business with leases, repairs and collections is more than ownership.

We are doing a single construction project in North Carolina that will last eight months. Do we need one?

The isolated-transaction exclusion covers a single deal completed within 6 months, so an eight-month project falls outside it.

Do we need one just to have a North Carolina bank account?

No. Keeping bank accounts and borrowing in the state are on the list, however frequent.

We use independent contractors in North Carolina to sell our products. Do we need one?

Selling property or services through independent contractors is an exclusion. Contractors who are really employees, or a company-run office, would change that.

We made a loan secured by North Carolina property and now hold it. Do we need one?

Making loans, taking security and enforcing it are excluded, and the list covers managing or renting foreclosed property for a reasonable period while liquidating, if the LLC keeps no office in the state. Turning the property into a long-term operating business is a different matter.

We are a limited partner in a North Carolina partnership. Do we need one?

The LLC statute does not list holding an interest in another entity as a separate exclusion. Owning assets and the activities of the entity you own are not automatically the same thing.

Professional entities and other agencies

A foreign LLC that renders a professional service has an extra step: the form's own instructions say additional licensing may apply through the North Carolina licensing board (see G.S. 57D-2-02). Separately, the Secretary of State's guidance notes that a company entering the state may also need a Department of Revenue identification number and licenses or permits, since the state offers no single catch-all business license. The Secretary of State administers the certificate of authority only.

What operating without one costs

An LLC that transacts business with no certificate can keep a court proceeding alive only if it obtains the certificate before trial; the issue is raised by motion and decided before trial (G.S. 57D-7-02(a)). It owes the fees and taxes that would have applied, with interest and late-payment penalties, plus a civil penalty of $10 per day, capped at $1,000 for each year or part of a year. The Attorney General brings the collection action. It can still defend any proceeding, and its acts remain valid. See the penalty page.

If you have crossed the line

Apply as soon as you know. The statute sets no grace period, so the daily penalty runs from the first day of unauthorized business. Order the original certificate of existence first and complete Form L-09 or the matching form for your type of entity. If the company has a case pending, remember that the certificate has to be in hand before trial.

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Simple pricing

We file your certificate of authority

Form L-09 for LLCs, Form B-09 for corporations
The certificate of existence, ordered from the state where you formed
Submission to the Business Registration Division
Our North Carolina registered agent, or one you name
Your issued certificate of authority, sent to you
Renewal: after the first year, the agent service renews at $149 a year

$199

, plus the $250 state fee

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State fees are charged at cost and listed on their own line at checkout. $199 plus the state fee, including your first year of registered agent service; after that the agent service renews at $149 a year.

Where these facts come from

Doing business in North Carolina?

Apply online today and we will prepare, submit and track your certificate of authority.

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