LLC, corporation or sole proprietor for a lawn care company

For most North Carolina lawn crews, the LLC is the default

Most North Carolina lawn and landscape crews form an LLC. It separates business debts from the owner, costs $125 to form, and taxes like a sole proprietorship by default.

The sole proprietorship costs nothing to start but gives no separation. Your mower, your truck and your house all sit behind the business's debts. A corporation gives the separation too, but brings franchise tax and more paperwork.

The table sets out the state costs. The sections after it cover the parts a table cannot show.

$125The North Carolina Secretary of State charges $125 to file LLC articles of organization and $200 for each annual report. — North Carolina Secretary of State, retrieved 2026-09-27

How the IRS taxes each structure by default

A one-owner LLC is taxed like a sole proprietor unless it elects otherwise. A two-owner LLC is taxed as a partnership.

The IRS calls the one-owner LLC "disregarded." Its profit goes on your personal return, and self-employment tax applies. Two or more members default to a partnership return.

Either LLC can elect to be taxed as a corporation on Form 8832. The election cannot take effect more than 75 days before you file it. Talk to a tax preparer before electing. The election changes the state picture too.

The IRS treats a single-member LLC as a disregarded entity and a domestic LLC with two or more members as a partnership by default. — Internal Revenue Service, retrieved 2026-09-27

75 daysAn LLC may elect corporate classification on Form 8832, and the election cannot take effect more than 75 days before it is filed. — Internal Revenue Service, retrieved 2026-09-27

North Carolina franchise tax and the corporation

Corporations in North Carolina pay franchise tax with a $200 minimum. The rates the Department of Revenue publishes are set for C and S corporations.

For a C corporation, the rate is $1.50 per $1,000 of its tax base, capped at $500 on the first $1,000,000. An S corporation pays $200 on the first $1,000,000. Either way, the floor is $200.

So the corporation's cheap $25 annual report is not the whole bill. Add at least $200 of franchise tax and the yearly state cost passes the LLC's $200 report. If an LLC elects corporate taxation, ask a preparer how franchise tax then applies.

$200 minimumNorth Carolina's franchise tax is $1.50 per $1,000 of a C corporation's tax base, capped at $500 on the first $1,000,000, with a $200 minimum. — North Carolina Department of Revenue, retrieved 2026-09-27

$25A North Carolina business corporation files its annual report for $25 on paper. — North Carolina Secretary of State, retrieved 2026-09-27

What the landscape board asks of each structure

A sole proprietor trading under a personal name needs only the individual landscape license. An LLC or corporation needs a $100 company license on top.

The landscape board's FAQ spells this out. LLCs, corporations, partnerships and assumed trade names all need the corporate license. It can only follow an individual license.

This only matters once your jobs reach the $30,000 line. Below it, the landscape license is optional. The rules are in the landscape contractor license page.

$100The landscape board requires a $100 corporate license for LLCs, corporations, partnerships and assumed trade names, after an individual license. — NC Landscape Contractors' Licensing Board FAQ, retrieved 2026-09-27

Corporations count officers toward workers' compensation

In a North Carolina corporation, officers count toward the three-employee workers' compensation test. That can pull a small crew into coverage early.

The Industrial Commission's example is two officers and one employee. That company must carry coverage. Officers can exclude themselves from the policy, but the policy is still needed.

An LLC owner working alone is not counted the same way. The headcount rule is covered in bonds and insurance.

The NC Industrial Commission counts corporate officers toward the three-employee threshold, so two officers and one employee require coverage. — North Carolina Industrial Commission, retrieved 2026-09-27

State income tax on the profit

With a default LLC or a sole proprietorship, the profit is taxed on your North Carolina personal return. The individual rate is 3.99% for 2026.

A C corporation pays North Carolina corporate income tax itself. That rate is 2.00% for 2026. The owner then pays personal tax on anything paid out.

The lower corporate rate is not a reason on its own to incorporate. Money taken out gets taxed again. Run the numbers with a preparer against your real profit.

3.99%North Carolina's individual income tax rate is 3.99% for tax year 2026 and later. — North Carolina Department of Revenue, retrieved 2026-09-27

2.00%North Carolina's corporate income tax rate is 2.00% for tax year 2026. — North Carolina Department of Revenue, retrieved 2026-09-27

Decide, then file in the right order

Once you pick, file the entity before the licenses that name it. The pesticide license can run in parallel, because it is issued to you.

The setup guide gives the order from name search to bank account. If you want someone else to file, the formation-services page lists what each service publishes about its price. The state fee is $125 whichever route you take.

$125The North Carolina Secretary of State charges $125 to file articles of organization for an LLC. — North Carolina Secretary of State, retrieved 2026-09-27

Questions