North Carolina LLC Taxes: The Complete Filing Guide (2025)
Running a limited liability company (LLC) in North Carolina means dealing with taxes at federal, state, and sometimes local levels. This guide simplifies everything you need to know to stay compliant and avoid surprises, from income tax and sales tax to city-specific requirements.
Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.
North Carolina LLC Tax Basics
Navigating your North Carolina LLC tax obligations doesn’t have to be complicated. We’ll walk you through the essentials of pass-through taxation, explain North Carolina’s specific requirements, and highlight strategies to stay compliant and organized. This guide covers everything from federal income taxes to city-specific requirements and filing deadlines.
Use the links below to jump directly to the section you need:
- North Carolina LLC Taxes at a Glance
- Understanding LLC Taxation Basics
- Federal Tax Obligations
- North Carolina State Taxes
- Local Tax Considerations
- Tax Calendar and Filing Tips
- Tax Strategies for North Carolina LLCs
- Forms and Resources
North Carolina LLC Taxes at a Glance
| Tax Type | Rate | Filing Deadline | Forms Required |
|---|---|---|---|
| Federal Income Tax | 10-37% (personal brackets) | April 15, 2025 | Form 1040 + Schedule C or Schedule E/K-1 |
| Self-Employment Tax | 15.3% | April 15, 2025 | Schedule SE |
| North Carolina Individual Income Tax | 4.5% flat rate (4.25% for 2025) | April 15, 2025 | Form D-400 |
| North Carolina Corporate & Franchise Tax | 2.5% income tax + min. $200 fee | April 15, 2025 | Form CD-405 |
| North Carolina Pass-Through Entity Tax | 4.5% flat rate (4.25% for 2025) | April 15, 2025 | Form D-403 |
| Federal Payroll Taxes (If Employees) | 7.65% employer + 7.65% employee (FICA) | Quarterly (April 30, July 31, October 31, January 31) | Form 941 |
| North Carolina Unemployment Tax (If Employees) | 0.06%–5.76% (new employers: 1.0%) | Quarterly | Form NCUI 101 |
| Federal Unemployment (FUTA) | 6% on first $7,000 per employee (0.6% after credits) | January 31, 2026 (annual) | Form 940 |
| Sales & Use Tax | 4.75% (+ local rates up to 2.75%) | Monthly or quarterly (based on sales volume) | Form E-500 |
| Annual Report | $200-$203 | April 15, 2025 | File online |
Understanding LLC Taxation Basics
How North Carolina LLCs Are Taxed By Default
Your North Carolina LLC doesn’t pay taxes itself. Instead, profits flow through to you and your members, who report them on personal tax returns. This is called pass-through taxation.
Here’s how it works:
- Your LLC earns income from business activities
- The LLC itself files no tax return (unless you elect otherwise)
- Profits “pass through” to members based on ownership percentage
- Each member reports their share on their personal tax return
- Members pay tax at their individual income tax rates
What this means for you: Unlike corporations, your business profits are only taxed once, which typically saves money.
Time-Saving Tip: If you’re uncertain about your LLC’s tax classification, a tax professional can review your LLC’s tax setup in 30 minutes and help you choose the most tax-efficient option.
Tax Classification Options
While pass-through taxation is the default, your North Carolina LLC can choose alternative tax treatments:
Default LLC Tax Status:
- Single-member LLC: Taxed as a sole proprietorship
- Multi-member LLC: Taxed as a partnership
Optional Tax Classifications:
- S Corporation: Can reduce self-employment taxes by paying “reasonable salaries”
- C Corporation: LLC pays corporate tax on profits, members pay personal tax on distributions (creates double taxation)
North Carolina Pass-Through Entity Tax Option:
- Optional tax that allows LLCs taxed as partnerships or S Corps to pay tax at the entity level
- Can help overcome the $10,000 SALT deduction limitation
- Must be elected annually
- Election is irrevocable once made for the year
Not sure which tax classification is right for your business? Schedule a free consultation with 1-800Accountant.
Federal Tax Obligations
Income Tax
As a North Carolina LLC owner, you’ll report your share of business profits on your personal tax return using:
- Form 1040 + Schedule C (single-member LLCs)
- Form 1040 + Schedule E + Schedule K-1 (multi-member LLCs)
Federal income tax rates range from 10% to 37% based on your tax bracket (actual brackets will depend on inflation adjustments and any tax law changes).
Simply Put: Whatever money your business makes (after expenses) gets added to your personal tax return, just like income from a job.
Self-Employment Tax
LLC members actively involved in the business must pay self-employment tax of 15.3% (covering Social Security and Medicare) on their share of LLC profits.
Key points:
- Applies to net earnings of $400 or more
- Calculated on Schedule SE
- You can deduct 50% of the self-employment tax as an “above-the-line” deduction, which lowers your adjusted gross income
What happens if I miss this payment? The IRS charges penalties of 0.5% per month plus interest. However, first-time mistakes can often qualify for penalty abatement if you have a clean compliance history.
Employment Taxes
If your LLC has employees, you must:
- Withhold federal income tax
- Pay and withhold FICA taxes (7.65% each for employer and employee)
- Pay federal unemployment tax (FUTA)
- File quarterly employment tax returns (Form 941)
- Provide W-2 forms annually
Estimated completion time: 2-3 hours per quarter (significantly less with payroll software or professional help)
Estimated Tax Payments
Because no tax is withheld from your LLC profits, you’ll likely need to make quarterly estimated tax payments using Form 1040-ES. These payments cover both income and self-employment taxes on your share of the business income. Missing deadlines or underpaying can lead to IRS penalties, even if you pay in full later.
Working with an accountant can help ensure accurate calculations, on-time payments, and a smarter overall tax strategy.
Key deadlines:
- April 15
- June 16
- September 15
- January 15
Pro Tip: Set calendar reminders 15 days before each deadline. This gives you time to prepare without the last-minute rush that leads to mistakes.
North Carolina State Taxes
North Carolina Income Tax
North Carolina has a flat personal income tax rate of 4.5% that applies to your LLC’s profits on your personal return. This rate is scheduled to decrease to 4.25% for tax year 2025.
Filing requirements:
- Use North Carolina Form D-400
- Due April 15, 2025
- North Carolina follows federal adjusted gross income as a starting point
Bottom Line: For every $1,000 your LLC earns, you can expect to pay about $45 in North Carolina state income tax (in addition to federal taxes).
North Carolina Pass-Through Entity Tax
This optional tax can benefit many North Carolina LLC owners, if the LLC is taxed as an S corp:
- Tax rate: 4.5% (set to decrease to 4.25% in 2025)
- Paid by your LLC instead of individual members
- Members receive a tax credit on their personal returns
- Helps bypass the $10,000 SALT deduction limitation
- Must elect annually by filing Form D-403 by April 15, 2025
- Applies only to the current tax year and cannot be revoked
Real Savings Example: For an LLC with $200,000 in profits, the pass-through entity tax could save owners up to $8,500 in federal taxes by working around the SALT deduction cap.
North Carolina Corporate & Franchise Tax
If your LLC is taxed as a C corp in North Carolina, it will need to pay both the state’s corporate income tax and a franchise tax based on its net worth.
Filing requirements:
- Corporate income tax: 2.5% of taxable income
- Franchise tax: $1.50 per $1,000 of net worth (minimum $200)
- Due April 15, 2025
- Use North Carolina Form CD-405
Note: If your LLC is taxed as an S corporation, it will only need to pay the franchise tax. This can be filed and paid online with the North Carolina Department of Revenue (NCDOR).
Sales and Use Tax
If your North Carolina LLC sells physical products or certain services:
- Collect sales tax at the combined state and local rate (4.75%-7.5%)
- Register for a sales tax permit through the NC Department of Revenue
- File and pay monthly or quarterly, depending on your assigned filing frequency
60-Second Check: Do I Need to Collect Sales Tax?
- Do you sell physical products in North Carolina? → If yes, collect tax
- Do you sell digital products? → Generally not taxable
- Do you provide services? → Most services are exempt
- Do you sell online to North Carolina customers? → If yes, collect tax
Services typically exempt from sales tax include:
- Professional services (legal, accounting)
- Personal services (haircuts, fitness training)
- Medical services
Products typically subject to sales tax include:
- Tangible personal property
- Prepared food
- Some digital products
Payroll Taxes
If you have employees in North Carolina, you will be responsible for two types of payroll taxes.
Unemployment Insurance (UI) Tax
- Register through the NC Division of Employment Security
- Rate is 1.0% for new employers (0.06%–5.76% afterwards)
- Due quarterly
Withholding Tax
- Register through the NC Department of Revenue
- Use state tax tables to determine how much to withhold from each employee
- Due monthly, quarterly, or semiweekly (determined by the NCDOR)
Annual Report Filing
While not a tax, your North Carolina LLC must file an annual report to stay in good standing with the state.
- Due April 15 each year
- $200 filing fee
- Filed with the North Carolina Secretary of State
- Late filings can lead to administrative dissolution
Calendar Alert: Set a reminder for April 1 to ensure you don’t miss this easy but required filing.
Local Tax Considerations
City Income Taxes
North Carolina allows counties to impose local sales and use taxes on top of the state’s base rate, which can affect how much your LLC must collect and remit.
Examples of combined sales tax rates:
- Wake County: 7.25%
- Mecklenburg County: 7.25%
- Durham County: 7.5%
- See current sales tax rates by county
Filing requirements:
- Both state and local sales taxes are reported together on Form E-500
- You do not need to file separate returns for each county
- You must report sales by location using the correct county codes
Property Taxes
If your LLC owns real property or business equipment in North Carolina:
- Rates vary by locality
- Assessed annually
- May qualify for various exemptions based on business type
- Personal property tax may apply to business equipment
Tax Calendar and Filing Tips
Key Deadlines for North Carolina LLCs
January:
- January 15: Final estimated tax payment for previous year
- January 31: Issue W-2s/1099s to employees/contractors
- January 31: Fourth quarter federal payroll tax payment due
- January 31: Fourth quarter NC UI tax due
April:
- April 15: Personal tax returns due
- April 15: Federal income and self-employment tax returns due
- April 15: First quarter estimated tax payment due
- April 15: NC Corporate Income & Franchise Tax return due
- April 15: NC Annual Report due
- April 15: Deadline to elect pass-through entity tax
- April 30: First quarter payroll tax payment due (state and federal)
June:
- June 16: Second quarter estimated tax due
July:
- July 31: Second quarter payroll tax payment due (state and federal)
September:
- September 15: Third quarter estimated tax payment due
October:
- October 31: Third quarter payroll tax payment due (state and federal)
Record-Keeping Checklist
Keep these records for at least 7 years:
- Business income records (invoices, receipts)
- Expense receipts and documentation
- Bank and credit card statements
- Asset purchase and improvement records
- Vehicle mileage logs
- Home office documentation
- Payroll records
- Previous tax returns
Tax Strategies for North Carolina LLCs
S Corporation Election Benefits
Converting your LLC to an S Corporation for tax purposes can save on self-employment taxes:
- File Form 2553 with the IRS
- Pay yourself a “reasonable salary” subject to employment taxes
- Take remaining profits as distributions exempt from self-employment tax
Example: An LLC making $100,000 in profit pays 15.3% self-employment tax on the entire amount. As an S Corp, if $60,000 is a reasonable salary and $40,000 is taken as distributions, only the $60,000 is subject to employment taxes.
Potential Savings: In this example, you’d save about $6,120 in self-employment taxes.
Pass-Through Entity Tax Election
Consider electing North Carolina’s Pass-Through Entity Tax if:
- You’re affected by the $10,000 SALT deduction cap
- You expect your LLC to generate significant pass-through income
- All members agree to the election
Business Expense Deductions
Common deductions North Carolina LLC owners often overlook:
- Home office deduction
- Business mileage (70¢ per mile for 2025)
- Health insurance premiums
- Retirement plan contributions
- Professional development expenses
- Business meals (50% deductible)
Forms and Resources
Federal Tax Forms
- Schedule C: Profit or Loss From Business (sole proprietors)
- Form 1065: U.S. Return of Partnership Income
- Schedule K-1: Partner’s Share of Income, Deductions, Credits
- Form 1120-S: U.S. Income Tax Return for an S Corporation
- Form 2553: Election by a Small Business Corporation (S Corp)
- Form 8832: Entity Classification Election
North Carolina Tax Forms
- Form D-400: North Carolina Individual Income Tax Return
- Form D-403: North Carolina Pass-Through Entity Tax Return
- Form CD-405: North Carolina Corporate & Franchise Tax Return
- Form E-500: North Carolina Sales and Use Tax Return
Helpful Resources
North Carolina LLC Taxes FAQs
In general, limited liability companies (LLCs) in North Carolina do not pay income tax themselves. Instead, the LLC members report their share of the LLC income on their personal tax returns. LLCs that have employees must also file North Carolina employer taxes and withholding taxes.
Yes. In North Carolina, LLCs pay $200 when they file their annual report with the Secretary of State. This fee is due annually by April 15, starting the year following your LLC’s formation.
Generally speaking, North Carolina is considered a favorable state to start an LLC due to its flat 4.5% income tax rate, clear regulatory requirements, and strong liability protection for business owners.
Learn more with our guide to starting a North Carolina LLC.
Yes, North Carolina allows single-member LLCs. A single-member LLC is a company owned and managed by one person. It has the same benefits and disadvantages as a multi-member LLC but is taxed as a disregarded entity by default (instead of a multi-member LLC).
For a closer look at how LLCs are taxed, see our LLC Taxes guide.
Need Professional Help? While this guide covers the essentials, tax laws are complex and constantly changing. Schedule a free consultation with 1-800Accountant to ensure your North Carolina LLC remains fully compliant while minimizing your tax burden.