North Carolina lesson 5 of 6
North Carolina LLC taxes, licences and permits
North Carolina has no LLC franchise tax on pass-through entities, but members still owe the state's flat individual income tax on their share of profit, and many businesses need at least one licence or permit beyond formation.
How members are taxed
A North Carolina LLC taxed as a partnership or sole proprietorship for federal purposes passes income through to its members, who pay North Carolina's flat individual income tax on their share. The rate has been stepping down under a schedule set by the General Assembly: 4.99% in 2022, 4.75% in 2023, 4.5% in 2024, 4.25% in 2025 and 3.99% from 2026 onward, unless further reductions are triggered by state revenue targets. Confirm the current year's rate on the Department of Revenue's tax rate schedule before filing.
An LLC that elects to be taxed as a C corporation instead owes North Carolina's corporate income tax, currently a flat rate on net income, plus the state's corporate franchise tax with a $200 statutory minimum.
Sales tax and other registrations
If you sell taxable goods or certain services, register with NCDOR for a sales and use tax certificate before you start selling. If you have employees, register for income tax withholding at the same time through the department's online business registration system or Form NC-BR.
North Carolina has no general statewide business licence. Licensing depends on your industry and, for many businesses, your city or county.
Key takeaways
- The flat individual income tax rate is scheduled at 3.99% from 2026, down from 4.99% in 2022.
- There is no LLC franchise tax for pass-through entities, only for C-Corp elections.
- Register with NCDOR for sales tax or withholding before you need them.
Frequently asked questions
Does North Carolina have a separate LLC franchise tax like Texas or California?
No, not for LLCs taxed as pass-through entities. Franchise tax with a $200 minimum applies to C-Corp elections and to corporations generally.
Is there a statewide general business licence in North Carolina?
No. Check with your city or county and with any state board that regulates your specific industry.
Official sources
Or let us file your North Carolina LLC for you
Everything above is yours to use for free. If you would rather hand it over, we prepare and file the Articles of Organization (Form L-01), act as your registered agent, and track your ongoing deadlines.
Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team