You’ve got a business idea – that’s a great start. But before you can open your doors, there’s some paperwork to handle.
Many new business owners aren’t sure which forms to file or which agencies to contact. This guide simplifies the North Carolina business registration process into clear, manageable steps. We’ll cover everything from choosing your business structure to obtaining necessary licenses, focusing on practical information to help you legally set up your company.
Related: Starting A Business In North Carolina Checklist
Step 1: Business Structure
The first step in registering a business in North Carolina is selecting a business structure. This structure is sometimes referred to as a business entity, which refers to how a business is legally organized to operate. There are four primary business entities: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). A brief description of each is below.
Related: Comparison of Business Structures
A sole proprietorship is an individual that decides to go into business. This is the easiest and least expensive of the four entities to set up, as there is no state filing. The ease of startup is a big selling point; however, a major downside to the sole proprietorship is that the owner is personally responsible for all debts and actions of the company. If the business is sued, the owner’s personal assets are potentially at risk. Another potential downside is that the owner will pay self-employment tax on all business profits, which may be more costly than some of the other business structures.
Related: How to Start a Sole Proprietorship in North Carolina
General partnerships consist of two or more people conducting a business together. Like the sole proprietorship, there is no formal state filing. Also, like the sole proprietorship, the partnership has unlimited liability. If the partnership were to be sued, the partner’s personal assets would be equally at risk. The partnership itself does not pay tax from business income. Instead, profits and losses are passed through to the owner’s personal tax return.
Related: What is a partnership?
A corporation is a business structure that is a separate entity from the individual owner(s). While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the major advantage is that the corporation provides personal asset protection for the owners should the business be sued. The downsides are the compliance requirements and administrative burdens of having a board of directors, annual meetings for directors and shareholders, appointing a North Carolina registered agent, filing the annual report, and more.
Related: How to Form a North Carolina Corporation
The Limited Liability Company (LLC) is a popular business structure because it provides the liability protection of a corporation with the sole proprietorship’s ease of operation. The Limited Liability Company does not have many of the same burdens a corporation has, plus it also has the greatest tax flexibility of the four entities.
Related: How to Form a North Carolina LLC
Step 2: Business Name
Registering a business name is the next step for many businesses after deciding on your business structure. Here’s an overview of naming considerations for different business structures in North Carolina:
Sole Proprietors and General Partnerships: You don’t need to register a business name if you’re operating under the name of the owner(s). However, if you want to use a different name, you’ll need to file for a North Carolina Assumed Business Name, also known as a Doing Business As or DBA. For example, John Smith, a plumber in Charlotte, might choose to operate under “Smith’s Expert Plumbing.” He would register this assumed name with the county Register of Deeds office where his business is located.
Before registering a Certificate of Assumed Name, the name must be verified that another business isn’t using it. To find out if the name you want to use is available, do a North Carolina business name search on the Secretary of State’s website.
Corporations and LLCs: These entities choose the legal name of the LLC when forming the entity. Registering for an additional assumed business name is an option; it isn’t required.
Step 3: Federal Employer Identification Number
A Federal Employer Identification Number (FEIN) is a unique nine-digit identifier assigned by the Internal Revenue Service (IRS) to businesses. Many companies require this number for tax and administrative purposes.
You need an EIN if:
- Your business has employees
- Your business is structured as a corporation, partnership, or multi-member LLC
Sole proprietorships and single-member LLCs without employees can use the owner’s Social Security number. However, these businesses may still obtain an EIN to avoid using personal identification on tax forms.
Obtaining an EIN is straightforward and cost-free. The quickest method is applying online through the IRS website, which typically takes just a few minutes. Alternatively, you can submit Form SS-4 by mail or fax, though this option requires more time.
Step 4: Professional Licensing
Several professions in North Carolina require specific licenses before practitioners can offer restricted services. The North Carolina Department of Commerce oversees most professional licensing, but some professions have dedicated licensing boards. For example:
- The North Carolina Board of Barber Examiners regulates barbers
- The North Carolina Wildlife Resources Commission licenses commercial fishermen and fur dealers
- The North Carolina Private Protective Services Board oversees firearms trainers
These are just a few examples among numerous regulated professions. Each licensing body has its own requirements, fees, and application processes. Check with the North Carolina Department of Commerce’s Business and Occupational License Database to determine if your profession requires a license and how to obtain it.
Step 5: State Business Registration
The North Carolina Business Registration Application is a unified form that allows businesses to register with multiple state agencies simultaneously. This streamlined process is designed for new and existing businesses that need to:
- Register for taxes with the North Carolina Department of Revenue
- Register with the Division of Employment Security for unemployment insurance tax
- Obtain a Sales and Use Tax Number
Who needs to use this application:
- Businesses collecting sales tax
- Employers with workers in North Carolina
- Businesses that will owe other state taxes
To register, visit the North Carolina Department of Revenue website and complete the online application.
Step 6: Resale Certificate
A North Carolina Sales Tax Certificate of Exemption, also known as a resale certificate, is valuable for businesses that purchase goods to resell. This certificate allows these businesses to buy inventory without paying sales tax, as they will collect sales tax from the end customer during the final sale.
Who needs a resale certificate:
- Retailers
- Wholesalers
- Manufacturers who sell their finished products
To obtain a Sales Tax Certificate of Exemption, businesses must first register for a Sales and Use Tax Number through the North Carolina Business Registration Application. Once registered, you can apply for the exemption certificate through the North Carolina Department of Revenue’s website or by submitting Form E-595E.
Step 7: Local Business Licenses
While there isn’t a general state business license in North Carolina, many cities and counties require local business licenses, which vary depending on the location and type of business. Here are some common examples:
- General Business License: Often issued by a city or county’s Finance Department or Business Services office. These licenses apply to a wide range of businesses operating within the jurisdiction. For example, the City of Asheville requires most businesses to obtain an annual Privilege License from their Revenue Division.
- Contractor License: Usually overseen by a city or county’s Inspections or Development Services Department. These licenses are for construction professionals working on local projects. The City of Charlotte requires contractors to obtain a Contractor’s Privilege License from their Finance Department.
- Food Service License: Typically issued by the county Health Department. These licenses are for restaurants, food trucks, and other food service businesses. For example, Wake County requires food service establishments to obtain a Food Service Permit from their Environmental Services Department.
- Alcohol License: Often managed by the city or county Alcoholic Beverage Control (ABC) Board, in addition to state requirements. These licenses are for businesses selling or serving alcohol. The City of Wilmington requires businesses selling alcohol to obtain a local ABC Permit from their Finance Department.
Many cities in North Carolina have their own specific licensing requirements, so it’s important to check with your local government offices for precise information about the licenses needed for your business.
Step 8: Local Building & Zoning Permits
Before finalizing a property purchase or lease for your business, it’s important to understand and comply with local building and zoning regulations. These rules ensure proper land use and building safety. Here are key aspects to consider:
Zoning Regulations: Zoning laws dictate how property in specific areas can be used. They determine where different types of businesses can operate. Check with your local Planning or Zoning Department to confirm that your intended business use is permitted at your chosen location. This applies to commercial properties and sometimes home-based businesses.
Building Permits: If you plan to construct a new building or modify an existing one, you’ll likely need building permits. These ensure that construction meets local safety standards.
Certificate of Occupancy: Many municipalities require a Certificate of Occupancy before a business can operate in a building. This document certifies that the structure is safe and complies with local codes.
Sign Permits: If you’re planning to install business signage, you may need a separate permit. Sign regulations often control size, placement, and lighting.
Your local Building or Development Services Department typically handles these permits and can provide specific information about your area’s requirements.
For only $99, you can save a lot of time and know your business complies with local, state, and federal requirements.
