If you’re starting a business in North Carolina, one common question is, “Who owns an LLC?” It might seem like a simple question, but the answer holds a lot of significance when it comes to your rights and responsibilities.
Whether you’re forming an LLC with partners or going solo, ownership plays a major role in how your business operates and who makes the key decisions.
We’re here to break it all down for you so that you fully understand what LLC ownership means for you and your business. By the end, you’ll have a clear idea of where you stand and what steps you need to take to secure your business.
How Does a Limited Liability Company Work in NC?
When you’re starting a business in North Carolina, forming a Limited Liability Company (LLC) is one of the most popular ways to protect your personal assets while building your business. But what exactly does that mean for you?
Let’s break it down and explore how an LLC works, who owns an LLC, and why it might be the right business structure for your new venture.
What is an LLC?
A Limited Liability Company (LLC) is a type of business entity that offers liability protection to its owners, known as LLC members. This means that, unlike a sole proprietorship, where you might be personally liable for business debts, an LLC separates your personal assets and liabilities from those of the business.
If your LLC encounters legal trouble or financial liabilities, you’re generally protected from losing personal assets like your home or car.
LLC Ownership and Members
In an LLC, the ownership structure can vary depending on how many people are involved. If you’re the only person forming the LLC, it’s called a single-member LLC. On the other hand, if there are multiple owners, the LLC is referred to as a multi-member LLC.
Whether you have one member or multiple members in your LLC, understanding the rights and responsibilities within the company is crucial.
When we talk about who owns an LLC, it’s about the members and their ownership interest in the business.
LLC members contribute capital to the business, which can vary depending on how much each member contributes. The actual percentage of ownership owned by an individual member is reflected by their membership interest. This percentage may or may not be consistent with the amount of capital contributed by that individual member.
If you have questions about forming a business, Hopler, Wilms, and Hanna PLLC is here to provide the legal guidance you need. Let’s work together to build a strong foundation for your business.
Reach out today to schedule your consultation.
Manager-Managed vs. Member-Managed LLC
Members may have management rights based on the LLC’s structure. Members can be actively involved in the day-to-day operations or simply invest in the business.
When creating an LLC, one of the first decisions to make is how the LLC will be managed.
- In a member-managed LLC, the members are directly involved in running the business. These managing members oversee everything from daily operations to big financial decisions.
- But, if the members prefer not to manage these responsibilities, you can form a manager-managed LLC. In this case, the LLC managers handle the business’s operations, whether they’re members or hired outside managers.
Operating Agreement: Defining Management Structures With Roles and Responsibilities
An LLC operating agreement is key to how your company functions, laying out important details such as:
- LLC member’s ownership interest;
- Members’ responsibilities and voting rights;
- Issues related to the management of the LLC;
- Profit and loss allocation of Members;
- Rules related to holding meetings and taking votes;
- Buyout and buy-sell provisions, when a member wants to leave and sell their share, and what will happen in the event of a Member’s death.
This agreement is not required by state law in North Carolina, but we strongly recommend having one for an LLC, particularly with multi-member LLCs.
Without an operating agreement, state laws dictate how your LLC operates, which may not align with how you and your business partners want things to work.
Business Formation and Legal Structure
To get started, you’ll need to file the articles of organization with the state of North Carolina. This document includes the basic details of your LLC, like its name, your registered agent, and principal place of business.
Once approved, the LLC is recognized as a legal entity, and you’ll need to follow up with other requirements like filing your Employer Identification Number (EIN) with the IRS.
The structure of the LLC offers flexibility in how you manage your business income, and you should consult with an accountant to determine the best tax structure for your LLC.
Protecting Your Assets
One of the main reasons people form LLCs is the limited liability protection they offer.
As a legal entity, the LLC protects its members from being personally liable for the company’s debts or lawsuits as long as they’ve maintained a separation between their personal and business assets. This is especially important for small businesses, where many LLC owners want to shield themselves from the risks of starting a new business venture.
However, you must keep your LLC’s business structure intact and comply with state laws to keep that protection in place.
Ownership Structures: Is an LLC Right for Your Business?
Choosing an LLC as your business structure can offer flexibility, asset protection, and tax benefits. Whether you’re just starting out with a single-member LLC or managing multiple owners in a more complex setup, the LLC structure allows you to operate with more peace of mind.
From understanding who owns an LLC to managing business income and personal assets, an LLC gives you the tools to run your company efficiently and safely. Consider your specific needs, and seek legal help when necessary to ensure your business operates smoothly under North Carolina state laws.
Need Help Making Crucial Business Creation Decisions?
We Help You Make the Best Choices For Your Business Venture
From selecting your business structure to deciding how much involvement you want in the day-to-day operations, our business formation team at Hopler, Wilms, and Hanna helps you create an LLC that fits your specific needs.
Whether you’re looking at a single-member LLC or multi-member setup, we help you determine the best path forward. We assist you in drafting clear operating agreements, managing public records, and ensuring proper filing of your LLC articles according to state laws.
Get Started Today
Ready to get your business off the ground? Contact us at Hopler, Wilms, and Hanna to ensure your LLC formation goes smoothly and your business is set up for success.
Whether you’re an LLC owner or just beginning to explore your options, we’re here to provide the legal guidance you need. Let’s work together to build a strong foundation for your business.
Reach out today to schedule your consultation.