How to Move an LLC to North Carolina

There are many reasons why a business owner may want to move an LLC to North Carolina. This article discusses the use of conversion, known in some states as LLC domestication, to transfer an LLC to North Carolina.

What is North Carolina LLC Conversion?

North Carolina conversion is a legal procedure that an LLC formed in another state—an out-of-state LLC or foreign LLC—can use to officially transfer to North Carolina.¹ The out-of-state LLC starts the conversion governed by its current state’s law. When the conversion is complete, the LLC is governed by the North Carolina Limited Liability Company Act.² The company is now a North Carolina LLC but otherwise retains the same identity.³

North Carolina’s conversion process can work in reverse—changing an existing North Carolina LLC into an out-of-state LLC.⁴ And a North Carolina LLC can also convert to a different type of entity—for example, from an LLC into a corporation or limited partnership.

Some states use the name conversion only for transactions that change a business to a different entity type. Those states typically authorize a separate procedure—called a domestication—that can change an LLC’s legal home state. North Carolina’s statutory conversion procedure can achieve either goal—either changing an LLC’s entity type or changing its legal home state (i.e., its state of formation or domicile).

Why Transfer an LLC to North Carolina?

A North Carolina LLC conversion is the easiest and least costly method to move an existing out-of-state business to North Carolina. An out-of-state LLC owner might want to convert the business into a North Carolina LLC for a variety of reasons. Some of the more common reasons are:

• Owner convenience. Recent 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. It makes in-person meetings easier and fosters long-term professional connections. An owner who lives in North Carolina will have a relatively easier time finding 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 also ranks in the top tier of states for business taxes.
• 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 considered one of the best states for businesses. 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.

What are the Benefits of North Carolina LLC Conversion?

The North Carolina LLC conversion process has the advantage of not interrupting a company’s ordinary business. An LLC conversion offers multiple benefits compared to other methods of moving a business to a new state.

• Same entity. The out-of-state LLC before conversion and the North Carolina LLC after conversion are the same company.⁵ The business retains its tax history, and it can continue using the same Employer Identification Number (EIN). Keeping the same identity reduces the risk of administrative errors.
• Same bank accounts. An LLC that converts to North Carolina need not close its old bank accounts and open new ones (unless it wants to).⁶ It is still the same company with the same account history.
• Uninterrupted employment. 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.
• Operations continue. An LLC conversion does not interrupt the business’s ordinary operations. Day-to-day activities can continue throughout the conversion. Existing contracts stay in place, so creating new agreements with contractors and other third parties is unnecessary.
• No termination or dissolution. An out-of-state LLC that converts to North Carolina continues to exist as the North Carolina LLC. The conversion is not treated as a termination or dissolution of the company in the original state.⁷ Thus, an LLC conversion will not trigger contractual provisions that take effect in the event a party is terminated, dissolved, or liquidated.
• Original state registration. An 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.

What LLCs Can Convert to North Carolina LLCs?

Conversion is the best option for most out-of-state LLC owners who want to move the business to North Carolina. However, an out-of-state LLC can convert to North Carolina only if its current state permits LLC conversions.⁸ Some states call the process domestication, but other states have no statutory procedure that lets an LLC change its state of formation to another state. An LLC in a state with no conversion or domestication procedure for LLCs cannot convert to North Carolina.

An LLC conversion must also be permissible under the out-of-state LLC’s articles of organization and operating agreement.⁹ If the governing documents disallow conversion, the LLC must formally amend the documents before starting a conversion.

Another factor to consider is whether North Carolina LLCs can do the company’s type 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.¹⁰ 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.¹¹

Professional Limited Liability Companies

North Carolina has special rules for LLCs that provide professional services—called professional limited liability companies or PLLCs.¹² North Carolina PLLCs are governed by the LLC laws and North Carolina’s Professional Corporation Act.¹³

A professional service is a type of service that a person can provide to the public only after obtaining the right license.¹⁴ Examples of professional services in North Carolina 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.¹⁵ 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.

How Much Does North Carolina LLC Conversion Cost?

A business’s total costs for an LLC conversion to North Carolina will include filing fees, labor costs paid to the document preparer, and registered agent fees (if needed).

Filing Fees

State agencies charge filing fees when a company files the documents for the conversion. The North Carolina Secretary of State’s Business Registration Division charges a $125.00 filing fee to an out-of-state LLC converting to North Carolina.¹⁶ The fee covers the articles of conversion and articles of organization—which North Carolina combines into a single document.

The LLC’s current state will also charge a filing fee for the document that state requires for LLCs converting to another state. North Carolina’s filing fee is $50.00 for LLCs converting from North Carolina to another state.

Document-Preparer Costs

The document preparer that the LLC hires to manage the conversion will charge for its time. The document preparer’s work includes time spent:

• Gathering information;
• Preparing documents;
• Communicating with the business owners and state offices; and
• Filing the conversion documents.

The precise service-provider fees for an LLC converting to North Carolina depends on the provider and the nature of the conversion. Some providers offer a flat rate, and some bill hourly.

Registered Agent Fees

All North Carolina LLCs must have a registered agent listed with the secretary of state.¹⁷ 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.¹⁸

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.

How Long Does North Carolina LLC Conversion Take?

A North Carolina LLC conversion proceeds in several steps. The length of the conversion process depends on the parties’ turnaround time for each step:

• How long for the business owners or managers to give the document preparer information for the conversion documents;
• How long for the document preparer to analyze the information and draft conversion documents;
• How long for the owners or managers to review and approve the draft documents or request revisions;
• How long for the document preparer or other responsible person to submit conversion documents to the North Carolina Secretary of State and the other state’s equivalent office; and
• How long for the state agency offices to process the conversion documents.

The North Carolina Secretary of State’s office processes most business filings within 5-7 business days. Filers can request same-day processing for an extra $200.00 fee or 24-hour processing for an extra $100.00 fee.

What Laws Govern North Carolina LLC Conversion?

A North Carolina LLC conversion must be carried out in compliance with both North Carolina law and the law of the business’s current state. A converting LLC must take care to complete any tasks that either state requires. If the LLC’s operating agreement or articles of organization address conversions, the process must be consistent with those documents as well.

Some aspects of a North Carolina LLC conversion are governed by a specific state’s law.

• North Carolina law determines the conversion documents that must be filed in North Carolina and the documents’ contents.¹⁹ North Carolina requires articles of conversion and articles of organization—which are typically combined into a single document titled Articles of Organization Including Articles of Conversion.
• The current state’s law determines the documents that must be filed in that state to complete the conversion.
• The current state’s law sets the standards for approving, amending, or abandoning the plan of conversion.²⁰
• North Carolina’s conversion law decides when the conversion becomes effective in North Carolina and the legal effects of a completed conversion.²¹ The conversion takes effect when the new North Carolina articles of organization is effective—either immediately upon filing or on a delayed effective date up to 90 days after filing.

The LLC’s written plan of conversion must contain all items required either by North Carolina law or by the current state’s law. If the current state requires information that North Carolina does not require (or vice versa), that information must appear within the plan of conversion.

What is the North Carolina LLC Conversion Process?

The North Carolina LLC conversion process consists of two components: document preparation and administrative tasks.

Document Preparation

A converting LLC must prepare and adopt several conversion documents to complete a North Carolina conversion. Documents must be drafted with care so that they comply with any relevant provisions of either state’s law.

• Plan of Conversion. A Plan of Conversion that is designed to comply with the requirements of both North Carolina law and the law of the state that the LLC is moving from.
• North Carolina Articles of Conversion. The North Carolina Articles of Conversion with all information and any related documents needed for filing with the Corporations Division of the Department of the Secretary of State.
• Conversion Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.²²
• 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.

Administrative Tasks

A converting LLC that has prepared compliant conversion documents must next complete a series of administrative tasks that adopt the conversion as the LLC’s act and make the transfer to North Carolina official.

• Conduct preliminary name search. Check the official records of the Corporations Division of the North Carolina Secretary of State to determine whether the LLC’s name is available in North Carolina. (If the name is unavailable, a slight name change may be required to complete the conversion.)
• Obtain signatures on the Articles of Conversion. The Articles of Conversion must be signed by the required parties. The Corporations Division allows the Articles of Conversion to be e-signed.
• File the Articles of Conversion. File the Articles of Conversion with the Corporations Division of the North Carolina Secretary of State. The Corporations Division allows the Articles of Organization to be e-filed.
• File conversion documents with prior state. File the conversion documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.

What is the 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 an LLC 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 EIN. Conversion does not involve dissolution or termination of the company.²³ The company simply becomes a North Carolina LLC and is no longer governed by the prior state’s law.²⁴
• LLC property. The North Carolina LLC continues to own all the same property that the out-of-state LLC owned.²⁵ 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.²⁶ The conversion does not affect any owner’s personal responsibility for company debts or obligations from before the conversion.²⁷
• 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.
• Legal proceedings. Pending legal cases or other proceedings that involve the out-of-state LLC go forward as though the conversion had not occurred.²⁸ 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 North Carolina LLC’s new name replaces the former name.
• Membership interests. Ownership interests in the out-of-state LLC become ownership interests in the North Carolina LLC.²⁹ 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).

1. N.C.G.S. § 57D-9-20.
2. N.C.G.S. §§ 57D-1-01, et. seq.
3. N.C.G.S. § 57D-9-23.
4. N.C.G.S. § 57D-9-30.
5. N.C.G.S. § 57D-9-23(a)(1).
6. N.C.G.S. § 57D-9-23(a)(2).
7. N.C.G.S. § 57D-9-23(b).
8. N.C.G.S. § 57D-9-20(a)(1).
9. N.C.G.S. § 57D-9-20(a)(2).
10. N.C.G.S. §§ 57D-2-01(c); 57D-2-02.
11. N.C.G.S. § 57D-2-01(d).
12. N.C.G.S. § 57D-2-02(a).
13. N.C.G.S. § 57D-2-02(a); see N.C. General Statutes, Chapt. 55B.
14. N.C.G.S. § 55B-2(6).
15. N.C.G.S. § 57D-2-02(b). “PLLC” (with no periods) is also acceptable.
16. N.C.G.S. § 57D-1-22.
17. N.C.G.S. § 57D-2-40.
18. N.C.G.S. § 55D-4.
19. N.C.G.S. § 57D-9-22.
20. N.C.G.S. §§ 57D-9-21(d)-(e).
21. N.C.G.S. § 57D-9-23; see also N.C.G.S. § 57D-9-33 (effects of conversion of North Carolina LLC to another state).
22. Fourteen states use the term articles of domestication to refer to the document that must be filed with the state to approve the domestication: Iowa, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, South Dakota, Utah, Vermont, Virginia, Wisconsin, Wyoming, and Indiana. The corresponding document may be called a statement of domestication (Alaska, Arizona, Connecticut, Idaho, Illinois, Mississippi, and Pennsylvania); articles of conversion (Florida, Nevada, North Carolina, Oregon, and Washington) or certificate of conversion (California, Delaware, Georgia, Michigan, Ohio, and Texas). It may also be called a statement of conversion (Colorado, Maine), certificate of domestication (Kansas), request for conversion (Louisiana), or statement/plan of domestication (District of Columbia).
23. N.C.G.S. § 57D-9-23(b).
24. N.C.G.S. § 57D-9-23(a)(1).
25. N.C.G.S. § 57D-9-23(a)(2).
26. N.C.G.S. § 57D-9-23(a)(3).
27. N.C.G.S. § 57D-9-23(b).
28. N.C.G.S. § 57D-9-23(a)(4).
29. N.C.G.S. § 57D-9-23(a)(5).