North Carolina Certificate of Authority/Penalties

The penalty for doing business in North Carolina without a certificate of authority

A foreign LLC that transacts business in North Carolina without a certificate of authority is liable for $10 for each day of unauthorized business, up to $1,000 for each year or part of a year, on top of the fees and taxes registration would have produced, with interest and late-payment penalties (G.S. 57D-7-02(b)). The same two-part bill applies to a foreign business corporation.

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What the LLC statute does to an unauthorized foreign LLC

Consequence	Effect	Subsection
Lawsuits	The LLC cannot maintain a court proceeding unless it obtains the certificate before trial, and the issue is raised by motion and decided first	57D-7-02(a)
Back fees and taxes	The fees and taxes that would have been imposed had it applied, for each year or part of one, plus interest and penalties for late payment	57D-7-02(b)
Civil penalty	$10 for each day, capped at $1,000 for each year or part of a year	57D-7-02(b)
Collection	The Attorney General may bring actions to recover what is owed	57D-7-02(b)
Validity and defense	Its acts remain valid and it may defend any proceeding in the state	57D-7-02(c)
Enforcement	The Secretary of State must require compliance and may investigate	57D-7-02(d)

Clear proceeds of the civil penalty go to the Civil Penalty and Forfeiture Fund. The statute sets no grace period: the clock starts with the first day of unauthorized business.

The daily penalty in numbers

Days of unauthorized business in one year	Civil penalty	How it is counted
10 days	$100	10 days at $10
30 days	$300	30 days at $10
90 days	$900	90 days at $10
100 days or more	$1,000	The cap for that year
Two years, both capped	$2,000	Two years at $1,000
Three years, all capped	$3,000	Three years at $1,000

These are the civil penalty only. The back fees and taxes, with interest, come on top. Because the cap is per year or part of a year, a company that starts in December and carries on into January can face a cap in each calendar year.

What is in the "back fees and taxes" bill

The statute says the LLC owes the amount of "all fees and taxes that would have been imposed by law" had it duly applied. For an LLC the fees that would have applied include the certificate of authority fee of $250 and each year's annual report fee of $200. Taxes are those the Department of Revenue would have assessed on the business. The statute does not give a formula for the total, and the Attorney General brings the action.

Corporations, partnerships and LLPs

A foreign business corporation is under the same pattern in G.S. 55-15-02: it cannot maintain a case unless it obtains the certificate before trial, it owes back fees, taxes, interest and penalties, and its civil penalty is the same: $10 per day, $1,000 yearly at most (G.S. 55-15-02(d)). Its acts remain valid and it can defend (G.S. 55-15-02(e)). A foreign limited partnership may not maintain an action or proceeding unless it obtains a certificate of authority before trial (G.S. 59-907(a)); its acts remain valid, a limited partner does not take on general partner liability merely because of the missing registration, and, by operating unregistered, it makes the Secretary of State its recipient for service. A foreign registered LLP cannot maintain an action unless its registration is in effect (G.S. 59-92(a)), and its partners do not lose their liability limit solely for that reason.

What failing to apply does not do

These sections do not void the company's contracts, end its home-state existence or make its owners personally liable for company debts. They also do not say that the certificate can be obtained retroactively. What they allow is a catch-up: the entity applies, pays the fees and taxes that accrued, and is then authorized going forward. The practical order of business is to get the certificate first, because a pending case can be saved only by obtaining it before trial.

Fixing it

File Form L-09 (or the form for your entity type) with an original certificate of existence less than 6 months old, and pay $250. If there is a case on the calendar, add the $200 same-day expedite for a document in by 12:00 noon Eastern or the $100 24-hour service. A lawyer is the right person to advise on how to present an unauthorized period to the Attorney General.

North Carolina unauthorized business questions

Is the penalty charged automatically?

No. The Attorney General brings an action to recover the amounts due, and the Secretary of State has a duty to require compliance and may investigate.

Can an LLC without a certificate still defend itself in court?

Yes. The statute says the missing certificate leaves its acts valid and does not stop it defending a case.

Does the cap reset each year?

Yes: $1,000 for each year, including any partial year, in which the company operates without a certificate.

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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?

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