You’re not alone if you’re considering starting a North Carolina business. According to the Kauffman Index of Startup Activity, the Tar Heel State is one of the most popular places in the country to launch a company. While starting a business is not easy, many resources and support systems help entrepreneurs get their businesses off the ground. In this article, we’ll outline the key steps for how to start a business in NC.
How to Start a Business in NC
The first step in starting a business in North Carolina is to choose your business structure. Will your business be a sole proprietorship, partnership, limited liability company (LLC), or corporation? Each business structure has its pros and cons, so choosing the one that best suits your needs is essential.
Some of the pros and cons of each structure include:
Sole Proprietorship:
- Easy and inexpensive to set up
- You are the sole decision-maker
- Unlimited liability – you are personally responsible for all debts and liabilities of the business
Partnership:
- Two or more people can own the business
- Each partner shares in the profits, losses, and management of the business
- Partners have unlimited liability – each partner is personally responsible for all debts and liabilities of the business. If your partner makes a financial mistake causing the company to owe money, you are also responsible for the debt.
LLC:
- Provides limited liability protection for its owners
- Flexible management structure
- Can elect to be taxed as a corporation, partnership, or sole proprietorship
LLC with Federal S Corp Tax Designation:
- Limited liability protection for shareholders
- S corporations are not taxed at the corporate level, meaning any profits or losses are “passed through” to the individual shareholders and taxed on their personal income tax returns. You’ll file a Schedule K with the IRS each year.
C Corporation:
- Limited liability protection for shareholders
- More expensive and complex to set up than other structures
A quick meeting with your business attorney can help you determine the best structure for your business. You can lose money to taxes, liability suits, risky or poorly worded contracts, and profit losses without counsel. However, your business attorney can take you through every possible pitfall and ensure you move forward successfully!
Licensing & Permits in North Carolina
Once you’ve decided on your business structure, you’ll need to obtain the necessary licenses and permits. The North Carolina Department of Commerce’s Business License Information Center can help determine your required licenses and permits.
Depending on the type of business you’re starting, you may also need to register with the North Carolina Secretary of State’s office and obtain a federal Employer Identification Number (EIN).
Business Location Decisions
After obtaining your licenses and permits, it’s time to start thinking about your business location. Will you operate your business from home, lease office or retail space, or purchase commercial property?
There are several factors to consider when making this decision, including zoning regulations, the needs of your business, and your budget. Once you’ve found the perfect location for your business, it’s time to start thinking about how to finance your new venture.
Options for Financing Your New Business
The many ways to finance your new business include personal savings, loans from family and friends, credit cards, and bank loans. The Small Business Administration (SBA) also offers a variety of loan programs for small businesses.
Before you apply for financing, it’s essential to put together a strong business plan. Your business plan should include an executive summary, company description, market analysis, financial projections, and management team bios.
Creating Your Business Plan
The next step in starting your business is to write up agreements and contracts. If you’re forming a partnership or LLC, you’ll need to create a partnership agreement or operating agreement. This document outlines the roles and responsibilities of each partner or member of the LLC. It also sets forth how the LLC will distribute profits and losses among the owners.
A well-crafted business plan is essential for any new business. Your business plan is vital for securing financing, attracting investors, and providing direction for your new venture.
When creating your business plan, include an executive summary, company description, market analysis, financial projections, and management team bios. You can check out this handy guide, but also meet with your attorney to work out the basics of your plans. They have insider knowledge about what works best for a new business.
Set Up Your Business Account & Get the Word Out There
Once you’ve created your agreements and contracts, you’ll need to set up a bank account for your business. A separate business bank account will allow you to keep your personal and business finances separate- crucial when it comes time to pay taxes!
You’ll also need to promote your business. There are several ways to do this, including advertising, networking, and attending trade shows. Filming some live videos of your getting ready process on YouTube or Facebook can help build excitement as you create your business.
Hiring a marketing firm such as Whoosh Agency can get the word out there fast! In addition, marketing agencies know how to help you rank higher in searches online! Ranking higher in searches can build momentum for your venture’s future success.
Moving Forward
Starting a business in North Carolina is a big undertaking but can be immensely rewarding. And with the right support system in place, you can succeed.
Now that you know how to start a business in NC, it’s time to get started! Use this guide as a resource to navigate the process of starting your own business. With careful planning, experienced legal counsel, and sound execution, your business will be up and running in no time.
We Can Help
At Hopler, Wilms, and Hanna, our experienced business attorneys can help build and grow your business from a startup to a successfully operating company! We offer a full range of legal services to businesses of all sizes, including contract drafting and negotiation, business formation, employment law compliance, and more. Contact us today to schedule a consultation!` Find out how we can help you get started and thrive in the Tar Heel state!