How to Move an LLC to North Carolina

An out-of-state LLC can change its state of organization to North Carolina through statutory conversion. North Carolina conversion is a legal procedure that changes an LLC’s state of organization, the state whose law primarily governs the company. An out-of-state LLC, also called a foreign LLC, that converts to North Carolina becomes a North Carolina LLC governed by the North Carolina Limited Liability Company Act (N.C. Gen. Stat. ch. 57D).

The LLC is otherwise the same business entity before and after the conversion process. Whether the conversion can proceed also depends on the laws of the state the LLC is leaving. To find out whether your LLC qualifies and what the process involves, request a free analysis of your LLC move.

Some states use the name domestication for the legal procedure that changes an LLC’s state of organization, also called its domicile. North Carolina uses the term conversion to describe this transaction. A conversion can accomplish either goal: changing an LLC’s domicile to North Carolina, or changing a business from one entity form to another.

For example, an out-of-state LLC might convert to a North Carolina corporation, or a North Carolina business might convert from an LLC to a different entity type. This article deals with conversions by out-of-state LLCs that want to become North Carolina LLCs.

Why Business Owners Move LLCs to North Carolina

A North Carolina LLC conversion may make sense if a business owner moves to North Carolina or if the owners prefer to have North Carolina law govern the company. An out-of-state LLC owner might want to convert the business to North Carolina for a variety of reasons.

• Owner convenience. Census estimates show that only three states are gaining more residents per year than North Carolina. A business owner relocating to North Carolina might want the business to be governed by his or her new home state. A North Carolina conversion may allow for more convenient meetings with state agencies and help to avoid legal confusion when evaluating business decisions.
• Easier hiring of professionals. Business owners often prefer to hire professionals who are local. A North Carolina conversion helps owners who live in North Carolina more easily find local accountants and attorneys who are experienced in North Carolina law.
• Decreased filing and fees. An LLC that does most of its business in one state but is governed by another state’s law often must file annual reports in both states. A conversion to North Carolina might decrease an LLC’s annual filing and fee burden if it ends the need to file multiple reports.
• Tax savings. A state can tax a business only if there is a strong enough connection, or taxable nexus, between the business and the state. An LLC might reduce its overall tax bill by converting to North Carolina if the conversion ends the taxable nexus with the original state. North Carolina ranks highly in business tax rankings.
• Legal benefits. A conversion to North Carolina may be a wise decision if North Carolina law offers advantages over an LLC’s current state. North Carolina is recognized as one of the best states for business. If North Carolina’s LLC statute or pro-growth programs complement the owner’s business plan, moving the LLC to North Carolina may be a good move even if the owner does not live there.

North Carolina LLC Conversion Requirements

North Carolina LLC conversion under N.C. Gen. Stat. § 57D-9-20 is not available for every out-of-state LLC. An LLC converting to North Carolina must comply with both North Carolina law and the law of the business’s current state. North Carolina law controls the process and documents filed in North Carolina and determines the conversion’s legal effects.

The current state’s law governs whether the LLC can convert to North Carolina (the state must authorize conversion), the content of the written plan of conversion if required, the standard under which the LLC’s members or managers must approve the plan, and the effective date for the conversion.

Eligibility for North Carolina LLC Conversion

An LLC considering conversion to North Carolina must confirm that it is eligible for the process. The principal requirement is that the current state must authorize LLC conversions. Not all states do. The current state may call the process conversion, domestication, or another name. The important part is that the state must have a statutory procedure that lets an LLC organized in that state change its domicile to a new state.

Business owners must also review the LLC’s articles of organization and operating agreement to ensure there are no provisions that prevent conversion to a new state. If any restrictions are present, the LLC may need to formally amend the documents to allow the procedure.

An out-of-state LLC must also confirm that North Carolina allows LLCs to engage in the company’s field of business. The general rule in North Carolina is that an LLC can engage in any lawful business that an individual or corporation can do. However, if there is a North Carolina law that applies specifically to the company’s type of business, the company must be sure that the other statute does not bar LLCs from that field.

Professional Limited Liability Companies

North Carolina has special rules for LLCs that provide professional services, called professional limited liability companies or PLLCs. A professional service is a type of service that a person can provide to the public only after obtaining the right license. Examples include law, medical practice and dentistry, veterinary care, architecture, land surveying, and forestry.

An LLC can offer a professional service in North Carolina only if its name includes the word “professional” or the abbreviation “P.L.L.C.” and if a professional corporation could offer the same service. Before converting to North Carolina, an out-of-state LLC that provides a service considered professional in North Carolina must obtain the necessary licenses. The company should also verify that it can meet all requirements of the statute that governs the specific professional service.

Required Documents for North Carolina LLC Conversion

The North Carolina LLC conversion process involves preparing and adopting several conversion documents that must satisfy both states’ requirements. The conversion documents memorialize the terms of the conversion and control the company when the conversion takes effect.

• Plan of Conversion. A Plan of Conversion designed to comply with the requirements of both North Carolina law and the law of the state that the LLC is moving from.
• Articles of Organization Including Articles of Conversion. North Carolina combines the Articles of Organization and Articles of Conversion into a single document for filing with the North Carolina Department of the Secretary of State.
• Conversion Document for Filing in Prior State. Depending on state law, this document may be called articles of conversion, statement of conversion, certificate of conversion, or a similar term.
• North Carolina Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a North Carolina LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Conversion. A resolution approving the transaction and adopting the North Carolina organizational documents as the LLC’s governing documents.

The Articles of Organization Including Articles of Conversion accept electronic signatures under North Carolina law. Filing through the North Carolina Department of the Secretary of State allows e-filing for electronically signed documents.

Cost of Moving an LLC to North Carolina

The cost of moving an LLC to North Carolina depends on the scope of work involved. The documents and filings described above require professional preparation to comply with both states’ requirements, and coordinating submissions with two separate state agencies adds further complexity.

The document preparer that the LLC hires to manage the conversion will charge for its time, which includes gathering information, preparing documents, communicating with the business owners and state offices, and filing the conversion documents. Some providers offer a flat rate, and some bill hourly. To find out what your specific move will cost, request a free analysis of your LLC move.

In addition to professional service costs, the North Carolina Department of the Secretary of State charges a $125.00 filing fee for the Articles of Organization Including Articles of Conversion. The LLC’s current state will also charge a filing fee for the document that state requires for LLCs converting to another state. The fees paid to North Carolina are in addition to any filing fees that must be paid to the LLC’s original state.

An out-of-state LLC that converts to North Carolina will also incur labor costs and, if applicable, registered agent fees. Work that goes into a conversion includes obtaining and organizing information, drafting the conversion documents, communicating with the business owners and state agencies, and filing conversion documents with state agencies.

Processing Time for North Carolina LLC Conversion Filings

A North Carolina LLC conversion proceeds in several steps. The length of the conversion process depends on how long each step takes: the business owners’ time to organize the necessary information, the service provider’s time to review the information and prepare the conversion documents, the owners’ time to approve and sign the draft documents, the service provider’s time to file the final conversion documents with state agencies, and the state agencies’ time to accept and process the filed documents.

The North Carolina Department of the Secretary of State processes most business filings within 5 to 7 business days. Filers can request same-day processing for an extra $200.00 fee or 24-hour processing for an extra $100.00 fee. The conversion becomes effective when the Articles of Organization Including Articles of Conversion are filed or on a delayed effective date up to 90 days after filing, as the converting LLC chooses.

Moving an LLC Out of North Carolina

North Carolina permits outbound LLC conversion under N.C. Gen. Stat. § 57D-9-30. A North Carolina LLC can convert to another state’s jurisdiction, provided that the destination state also authorizes the procedure.

North Carolina Outbound Conversion Requirements

A North Carolina LLC that converts to another state must file Articles of Conversion with the North Carolina Department of the Secretary of State. The outbound filing must include a plan of conversion approved by the LLC’s members or managers. North Carolina does not require a separate certificate of surrender. The Articles of Conversion complete the North Carolina side of the transaction. The destination state will require its own formation and conversion or domestication documents.

Filing Fees for Moving an LLC from North Carolina

The North Carolina Department of the Secretary of State charges a filing fee of $50.00 for an outbound Articles of Conversion. The destination state will charge separate filing fees for its formation and conversion documents.

Legal Effect of North Carolina LLC Conversion

North Carolina’s conversion process is designed to change an LLC’s domicile with little or no disruption to the business’s everyday operations. The legal effects of a conversion to North Carolina minimize the administrative hassle of completing the transfer between states.

• Company identity. When a North Carolina LLC conversion takes effect, the LLC is the same essential company with the same tax-filing history and Employer Identification Number. Conversion does not involve dissolution or termination of the company. The company simply becomes a North Carolina LLC and is no longer governed by the prior state’s law.
• LLC property. The North Carolina LLC continues to own all the same property that the out-of-state LLC owned. Title to company assets is still held by the same entity, so there is no need to record new deeds or create asset assignments.
• LLC liabilities. The North Carolina LLC remains responsible for any debts, legal obligations, or liabilities that the company had before the conversion. The conversion does not affect any owner’s personal responsibility for company debts or obligations from before the conversion.
• Business contracts. Conversion does not affect the LLC’s business contracts. It remains a party to all contracts with the same contractual rights and duties.
• Business relationships. The LLC’s employees are employed by the same entity throughout the conversion process. There is no need to end employment relationships and re-hire employees. Day-to-day activities can continue throughout the conversion.
• Legal proceedings. Pending legal cases or other proceedings in which the LLC is involved continue as though the conversion had not occurred. The North Carolina LLC stands in the same position as the out-of-state LLC before conversion. If the company’s name changes during the conversion, the new name is simply substituted for the old name.
• Membership interests. Ownership interests in the out-of-state LLC become ownership interests in the North Carolina LLC. Alternatively, the LLC members may decide in the plan of conversion that ownership interests will be exchanged for cash, property, or debt owed by the company, or a combination.
• No dissolution. Conversion does not formally terminate the LLC in the original state. Dissolution, liquidation, and winding up are unnecessary. Conversion does not trigger contractual rights that take effect upon dissolution or liquidation. An out-of-state LLC that converts to North Carolina can register in the original state as a foreign LLC if it will continue doing business there. If the company does not plan to do business in the original state, there is no need to register as a foreign LLC.

North Carolina LLC Laws That Apply After the Move

The North Carolina Limited Liability Company Act (N.C. Gen. Stat. ch. 57D) imposes ongoing requirements on all domestic LLCs, including those formed through conversion from another state. An LLC that converts to North Carolina becomes subject to these obligations immediately upon effectiveness of the conversion.

North Carolina Annual Report and Compliance Requirements

North Carolina requires domestic LLCs to file an Annual Report with the North Carolina Department of the Secretary of State each year by April 15. The filing fee is $203.00. This reporting requirement is ongoing for all LLCs domiciled in North Carolina. An LLC that converts to North Carolina from another state will become subject to this annual filing obligation in place of whatever filing requirement applied in the original state.

North Carolina LLC Operating Agreement Requirements

North Carolina refers to an LLC’s internal governance document as an “Operating Agreement” under N.C. Gen. Stat. § 57D-1-03(23). The Operating Agreement governs the LLC’s internal affairs, including the rights and obligations of members and managers, profit distributions, and management structure. The Operating Agreement is not filed with the state; it is maintained by the LLC as a private document.

North Carolina Registered Agent Requirements

All North Carolina LLCs must have a registered agent listed with the secretary of state. The registered agent is a person with the power to accept service of process for the company. An LLC’s registered agent can be an individual North Carolina resident, a North Carolina business entity, or a foreign business entity with authority to do business in North Carolina.

An LLC that converts to North Carolina can appoint a member or manager of the company as its registered agent. Because the agent’s name and address are publicly available, companies sometimes prefer to hire commercial registered agents, which are services that charge an annual fee for serving as a business’s registered agent. Commercial registered agent fees are relatively low, and they have the advantage of keeping service on the company consistent and organized.

Alternatives to North Carolina LLC Conversion

When conversion is not available because the other state’s law does not allow it, a merger-based reorganization achieves the same result. The reorganization involves forming a new North Carolina LLC and merging the out-of-state LLC into it, with the North Carolina LLC as the surviving entity. The surviving LLC succeeds to all property, contracts, and obligations of the original LLC by operation of law.

This approach offers full legal continuity similar to conversion but uses the statutory merger procedure instead. For a detailed explanation of how the reorganization process works, see our guide to LLC reorganization. For a state-by-state comparison of LLC conversion and domestication laws across all states, see our guide to LLC conversion and domestication by state.

Outbound Conversion and Ongoing Compliance

After a North Carolina LLC converts to another state, the company exits North Carolina’s regulatory environment. The Annual Report filing requirement, registered agent requirement, and North Carolina’s Operating Agreement provisions no longer apply. Instead, the surviving LLC becomes subject to the requirements of the destination state.

If an out-of-state LLC converts to North Carolina but continues to conduct business in its original state, it may need to register as a foreign LLC in that original state. This registration maintains the LLC’s authorization to do business there while the company is now domiciled in North Carolina. The original state’s requirements for foreign LLCs will apply in addition to North Carolina’s requirements.