Starting a small business in North Carolina often means registering with several federal, state, and local agencies. Let’s review common North Carolina business license registrations so your business starts off right.
Related: Guide to starting a business in North Carolina
Setting Up the Business
Before you can apply for business licenses, you should first establish the business structure. This decision impacts your legal responsibilities, taxes, and how much personal liability you might face. Here’s a brief explanation of each type of structure:
Sole proprietorship: This is the simplest form of business structure, where one person owns and runs everything. There’s no separation between the owner and the business, meaning the owner is personally responsible for all debts and legal actions against the business. Taxes are straightforward as the owner reports business income on their personal tax return.
General partnership: Similar to a sole proprietorship, but with two or more people running the business. Partners share profits and losses, and like sole proprietors, they are personally responsible for the business’s debts and legal issues. Partnerships also don’t pay taxes as a separate entity; instead, each partner includes their share of profits or losses in their personal tax filings.
Corporation: A corporation is a more complex entity that is separate from its owners, providing personal liability protection. Owners, known as shareholders, are not personally responsible for the corporation’s debts or legal problems. Corporations can raise money by selling stock and are taxed separately from their owners. This entity requires more requirements, like having board meetings and record-keeping.
Limited Liability Company (LLC): An LLC blends elements of sole proprietorships, partnerships, and corporations. Owners (members) have limited personal liability for business debts and actions. Like sole proprietorships and partnerships, an LLC can pass income directly to owners to avoid double taxation, a common issue with corporations. This structure offers flexibility in management and less strict requirements than a corporation.
Related: Comparison of Business Structures
What Licenses Do North Carolina Businesses Need?
With the business structure out of the way, we can begin looking at the different types of registrations businesses in North Carolina may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.
General Business License
There is no general state of North Carolina business license; however, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and the business’s activities. Below are a few cities that have licensing requirements.
- Charlotte: Certain businesses operating in the City of Charlotte are required to register with the Mecklenburg County Office of the Tax Collector. A few of these businesses include; prepared food & beverage, room occupancy, vehicle rental, and heavy equipment. Before starting a business in Charlotte, the Zoning Department will also need to be contacted to ensure the business meets the city zoning requirements. This includes both commercial businesses as well as home-based businesses.
- Raleigh: Businesses such as pushcart vendors, massage businesses, pawn brokers, those selling alcohol, and home-based businesses operating in Raleigh City limits will register their business with the City of Raleigh.
- Greensboro: Businesses operating taxis or selling alcohol within the city limits of Greensboro needs to obtain a Business Privilege License from the City Collections Division. A City of Greensboro Business License is required for peddlers, itinerant merchants, mobile food vendors, commercial solicitors, or massage businesses. There is no cost for the city Business License.
- Winston-Salem: A few types of businesses operating in Winston-Salem will need to apply for a Privilege License, such as those selling alcohol, door-to-door solicitors, taxis, pawnshops, fortune tellers, and tattoo artists. The license filing fee varies by business but is less than $40.
For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements.
Assumed Business Name Registration
While not a business license, it’s common for North Carolina sole proprietorships and partnerships to operate under a name that is different from the full name of the owner(s). In this case, they will need to register for a Certificate of Assumed Name (also known as a Doing Business As or DBA) with the Register of Deeds Office in the county where the business is located.
Building & Zoning Permits
Zoning Permit: North Carolina businesses should check for zoning restrictions from their local planning and zoning department in the municipality where the business will operate.
Building Permit: Building permits are required for new construction, additions, alterations, and repairs to ensure compliance with the North Carolina State Building Code. Permit applications are submitted to the local building department, and the process includes plan review and inspections.
Signage Permit: Signage permits in North Carolina are necessary to regulate business signs according to local ordinances, focusing on size, placement, and appearance to ensure public safety and community aesthetics. Business owners should apply for these permits at their local city or county planning or zoning office.
Sales & Use Tax Number
Businesses selling physical products, some digital products, providing certain services, and renting property need to register for a Sales & Use Tax Number (also called a Seller’s Permit) by filing Form NC-BR.
Sales Tax Certificate of Exemption
Businesses purchasing merchandise to resell will usually want to obtain a North Carolina Sales Tax Certificate of Exemption in order to not pay sales tax on merchandise that will be resold to customers.
Professional License
A variety of professions in the state are regulated and need to be registered before offering certain services. A few common occupations requiring licensing in North Carolina include; commercial fishermen, firearms trainers, fur dealers, barbers, and many more. Additional information, fees, and licensing requirements for professions are available from the North Carolina Department of Commerce.
In addition to professional licenses, businesses in various industries, such as food establishments, daycares, salvage dealers, and many others, require licensing.
Employer Identification Number (EIN)
Many businesses will register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of a Social Security Number for an individual.
Next Steps
These are some of the most common business licenses a new business in North Carolina will need to register for. Be advised that while it’s a good start, there are so many different licenses that may be needed, be sure to double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.
