North Carolina keeps the paperwork cheap. Organizing an LLC costs $125, the state charges $350 once per issuer for the Rule 506 notice, there is no publication requirement, and LLCs taxed as partnerships owe no franchise tax. A fund LLC that only trades its own securities portfolio usually does not even file a North Carolina partnership return.
The adviser side is where North Carolina demands attention. The state never adopted the NASAA model private fund adviser exemption, so being a federal exempt reporting adviser does not excuse state registration. A North Carolina manager either registers with the Securities Division or fits one of the narrow statutory carve outs in N.C.G.S. 78C-16(a). Most small managers look to 78C-16(a)(4): fewer than 15 clients and no public holding out.
This guide covers the state costs, the filings, the adviser analysis, and the tax rules that matter to a fund, with the statute behind each requirement.
Five steps to launch in North Carolina
Generate Documents
Free on HedgiaEvery fund needs an offering circular, operating agreements for the management company and the fund, and subscription documents. Hedgia generates all of them free, whether or not you launch on the platform. Your counsel reviews; exemption decisions stay with you.
Create LLCs
A standard structure uses two North Carolina LLCs: a management company and the fund itself. Articles of organization cost $125 per LLC with the Secretary of State. The posted standard processing time is 15 to 20 business days as of August 2026, and online filings run faster. Hedgia forms both LLCs and obtains the EINs.
Create Accounts
After your first sale, SEC Form D is due within 15 days. North Carolina requires its own notice for Rule 506 offerings: Form D plus a consent to service of process, filed through the NASAA Electronic Filing Depository with a $350 fee paid once per issuer, due within 15 days of the first sale in the state. Hedgia prepares and submits both at your direction and sets up banking through Axos Bank.
Invite Investors
Under Rule 506(b) you can raise from unlimited accredited investors and up to 35 non-accredited purchasers per offering, with no general solicitation. Hedgia runs investor onboarding: accreditation questionnaires, subscription signing, and wire tracking.
Start Your Fund
Once funded, you trade and Hedgia handles administration: NAV, fee calculations, K-1 prep, and investor reporting. Keep the $200 annual report current for each LLC every April 15.
* $89/month includes 3 manager seats. Additional seats $30/month each. Plus 0.2% of AUM above $1 million, capped.
North Carolina requirements at a glance
The law behind each requirement
Rule 506(b): the federal exemption your offering runs on
Rule 506(b) is an exemption from Securities Act registration, and it is how most small funds raise. Sell to unlimited accredited investors and up to 35 non-accredited purchasers per offering, with no general solicitation.
- •Unlimited accredited investors; up to 35 non-accredited purchasers per offering, each of whom must be sophisticated
- •No general solicitation or advertising
- •File SEC Form D within 15 days of the first sale
- •Securities sold under Rule 506 are covered securities under Securities Act Section 18(b)(4)(F), so states cannot impose registration or merit review on them
North Carolina's Rule 506 notice filing: $350, once per issuer
Because Rule 506 securities are federally covered, North Carolina's role is limited to a notice filing, a fee, and a consent to service of process. The notice is not a state exemption and not a registration; the state approves nothing.
- •File SEC Form D plus a consent to service of process on the Administrator's form, no later than 15 days after the first sale in North Carolina
- •$350 fee, paid once per issuer; filed electronically through the NASAA Electronic Filing Depository, the only method the Securities Division's FAQ lists for Rule 506 filings
- •Amendments are filed only if the change affects the offering in North Carolina, and amending costs nothing
- •The Administrator may suspend the offer and sale of a covered security for failure to comply with a condition under the section (N.C.G.S. 78A-31(d))
Adviser registration is the default: no private fund exemption here
N.C.G.S. 78C-16(a) makes it unlawful to transact business in North Carolina as an investment adviser without registering unless a statutory carve out applies. North Carolina never adopted the NASAA model private fund adviser exemption; the term private fund appears nowhere in the state's chapter 06 adviser rules.
- •Federal exempt reporting adviser status under Advisers Act Section 203(m) does not by itself excuse North Carolina registration
- •Registration runs through IARD; the Securities Division's FAQ lists a $300 initial and annual renewal fee for advisers and $75 for adviser representatives
- •Every registration expires December 31 each year unless renewed (N.C.G.S. 78C-16(c))
- •Carve outs: 78C-16(a)(2) for advisers whose only North Carolina clients are institutional, and 78C-16(a)(3) for out of state advisers with 5 or fewer North Carolina resident clients in the preceding 12 months
The 78C-16(a)(4) carve out most small managers rely on
78C-16(a)(4) exempts an adviser who had fewer than 15 clients in the preceding 12 months, does not hold himself or herself out generally to the public as an investment adviser, and does not advise a registered investment company or business development company. It has no place of business condition, so a manager based in North Carolina can use it.
- •Fewer than 15 clients in the preceding 12 months
- •No holding out generally to the public; 18 NCAC 06A .1701(6) defines holding out broadly to cover advertising, announcing, or making known by any means that one will provide advisory services
- •North Carolina statute and rules do not say whether a fund entity counts as one client; confirm that reading with counsel or the Securities Division before relying on it
- •No North Carolina authority addresses whether general solicitation in a 506(c) offering counts as holding out, so treat 506(c) marketing as an open question for counsel
Section 3(c)(1): staying outside the Investment Company Act
Section 3(c)(1) is an exclusion from the definition of investment company, not an exemption. A fund whose outstanding securities are beneficially owned by not more than 100 persons, and which is not making and does not propose to make a public offering, is not an investment company at all.
- •No more than 100 beneficial owners of the fund's outstanding securities
- •No public offering, which pairs naturally with Rule 506(b)
- •Staying excluded avoids the registration, governance, and leverage rules that apply to registered investment companies
North Carolina tax rules that matter to a fund
The fund itself is usually not doing business in North Carolina
A partnership whose only activity is as an investment partnership is not considered to be doing business in the state and files no North Carolina partnership return. The rule covers a partnership that is not a securities dealer under IRC section 475(c)(1) and earns income exclusively from buying, holding, and selling securities for its own account. A fund LLC that only trades its own portfolio typically fits. The management company earns fees for services, so it does not (17 NCAC 06B .3503).
Nonresident partners trigger entity level payment, with a form to lift it
A partnership doing business in North Carolina must compute and pay state tax on each nonresident partner's share. A nonresident partner that is a corporation, partnership, trust, estate, or tax exempt entity can lift that duty through Form NC-NPA, completed annually by the partner and filed by the partnership by the return due date including extensions. Nonresident individuals cannot use it; the partnership pays for them (N.C.G.S. 105-154(d); 2024 Form D-403A instructions).
No franchise tax on LLCs taxed as partnerships
North Carolina franchise tax reaches corporations, and an LLC is excluded unless it elects corporate taxation, so both fund and management LLCs taxed as partnerships owe none (N.C.G.S. 105-114(b)(2)). One edge case: under N.C.G.S. 105-114.1, a corporation or affiliated group owning more than 50 percent of a noncorporate LLC's capital interests includes that percentage of the LLC's net worth in its own franchise base, unless the LLC's asset book value never exceeded $150,000 during the year. This rarely touches a new fund.
Flat individual income tax, stepping down
North Carolina taxes individuals at a flat 4.25 percent for tax year 2025, dropping to 3.99 percent for tax years after 2025, with possible further trigger based reductions beginning 2027 under Session Law 2023-134. Partnership income flows through at the same rate. A Taxed Partnership election, the state's pass through entity tax, has existed since tax years beginning in 2022, though it cannot cover partners that are themselves corporations or partnerships (N.C.G.S. 105-153.7).
Cheap to file in, strict on advisers
The mechanics of a North Carolina launch cost $600 in state fees: $125 for each of the two LLCs and $350 once per issuer for the Rule 506 notice. There is no publication requirement, no franchise tax on partnership taxed LLCs, and a fund that only trades its own securities files no state partnership return. Ongoing state cost is a $200 annual report per LLC each April 15.
The adviser analysis is the part that deserves counsel time. With no private fund adviser exemption on the books, a North Carolina manager who falls outside 78C-16(a)(4) registers with the Securities Division, and the statute leaves real questions open, including how clients are counted. Confirm your footing before the first sale, not after.
Hedgia forms both LLCs, obtains the EINs, generates the fund documents free, prepares and submits Form D and the North Carolina notice at your direction, sets up banking through Axos Bank, and runs investor onboarding, NAV, fees, K-1 prep, and reporting. Registration and exemption decisions remain yours, with your counsel.
North Carolina Department of the Secretary of State, Securities Division