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If an LLC is treated as a C Corporation for federal tax purposes and a corporate member has activities in this State in addition to its ownership interest in the LLC, the corporate member(s) is required to file a corporate income and franchise tax return.

To choose corporate tax treatment for your LLC, file IRS Form 2553. This requires the LLC to file a separate federal income tax return each year. Corporations are also taxed by North Carolina at a rate of 5 percent of annual income and must pay a franchise tax each year.

The North Carolina franchise tax does not apply to an organization if it is exempt from federal income tax, it is not organized for profit, or no profit inures to the benefit of any member, shareholder or other individual.

Every corporation doing business in North Carolina and every inactive corporation chartered or domesticated here must file an annual franchise and income tax return using the name reflected on the corporate charter if incorporated in this State, or on the certificate of authority if incorporated outside this State.

LLCs are classified by default as partnerships (or, in the case of single-member LLCs, as ?disregarded entities?), but you may choose to have your LLC classified as a corporation. If you make that decision, your LLC will be subject to franchise and corporate income taxes.

The franchise tax can be no less than $200 with no maximum except for a qualified holding company." Per the NC C-Corporation Instructions: "Franchise tax is computed by applying the rate of $1.50 per $1,000.00, and can be no less than $200." ?Note: No franchise tax is calculated on a final return.