How to start a business in North Carolina

Starting a business in North Carolina is a relatively intuitive process. While there are nuances depending on your business entity type, you can expect the steps to look something like this: 

1. Start with a business plan.
2. Select a business entity.
3. Choose a business name.
4. Register your business entity.
5. Apply for an EIN.
6. Open a business bank account.
7. Apply for required licenses and permits in North Carolina. 

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7 steps to start a business in North Carolina

1. Start with a business plan

In big cities like Raleigh and Charlotte, there are opportunities to secure venture capital funding. These cities also offer tax breaks to big corporate operations. Many rural counties in North Carolina offer attractive incentives, too. 

Addison Palanza, attorney at Atlantic Coast Law, points to Brunswick County, which just attracted an EV battery plant through business grants and tax reimbursements. 

Many rural areas are offering tax credits to reattract the manufacturing jobs their citizens held in previous decades. The decline in employment in this field began in the 1980s but continued through the first half of the last decade. 

“Brunswick County is a good example,” says Palanza. “It’s traditionally very rural. They are doing everything they can to encourage growth. If you have an idea for manufacturing and you can put together a business plan, you’re going to find funding and resources to help you excel. It’s making a difference. Brunswick is the fastest-growing county in the state.” 

As you write your business plan, be sure to include the following: 

• Executive summary. Include your mission statement, product or service, and basic information about your executive team and employees. 
• Company description. Highlight your strengths and the problems in the market that you’ll solve. 
• Market analysis. Outline your market research.
• An organizational chart. Describe what each member brings to the table.
• Description of your service or product. Include any R&D you may have completed.
• Marketing strategies. Include a section on how sales will be completed with tools like credit card processors, as well as how you’ll retain customers after the initial sale.
• Funding request. This may have to be tailored for each potential investor or grant application.
• Financial projections. Include forecasted income statements, balance sheets, cash flow statements and capital expenditure budgets. 
• An appendix with supporting documentation.

2. Select a business entity

There are four main types of business structures you can pursue. In North Carolina, you can also opt for a professional version of any of these structures. This may be required if you work in a field like medicine or law. 

“The professional designation indicates that the business has to abide by ethical regulations to protect the citizenry,” says Palanza.

ENTITY TYPE	PROS	CONS
Sole proprietorship	No need to register at the state level, but you will most likely need to register at the county level. Can deduct health insurance premiums.	No liability protection. Cannot have investors. Sole proprietors pay the employer and employee portion of FICA taxes.
LLC	Limited liability protection. Can deduct health insurance premiums on your taxes. No limitations on number or nationality of investors.	Investors are typically attracted to businesses with a C corp structure rather than an LLC. Owner(s) must pay the employer and employee portion of FICA taxes.
S Corp	Limited liability protection. Owner(s) can reduce FICA taxes by taking a portion of their profits as a dividend rather than salary. Not subject to double taxation like a C corp.	Cannot have foreign investors. Number of investors capped at 100. While you can deduct health insurance premiums, you can’t deduct other health care costs like you can with a C corp.
C Corp	Highest level of liability protection. More expansive health care deductions allowed for owner(s). Fringe benefits to employees are deductible. Most attractive business structure to investors — especially those with venture capital dollars — as there are no restrictions on the number or nationality of investors.	Heavier paperwork requirements and oversight, which makes the business more expensive to run. C corporations are subject to double taxation of profits.

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3. Choose a business name

Before you can start a business, you have to name your business. In North Carolina, your business name can’t contain “words offensive to accepted standards of decency.” 

That means no cussing or clever spelling to try to invoke a swear word. Your name also has to be distinguishable from any other existing business names. You can search existing business names using the North Carolina Secretary of State’s business registration search tool.

4. Register your business entity

If you’re starting an LLC, S corp or C corp, you will need to register your business at the state level. It costs $125 to file your articles of incorporation or organization on the Secretary of State’s website. 

Palanza’s clients are currently waiting three to five business days for their paperwork to be fully processed, but many choose to pay an additional $100 for processing within 24 hours or $200 to process the paperwork on the same day. 

If you plan on operating as a sole proprietorship, you do not need to register at the state level. However, you will need to register with your county — especially if you’re using an assumed name. You can contact your county’s Register of Deeds office for further information or seek assistance through the Economic Development Partnership.

5. Apply for an EIN

After you’ve received your registration paperwork back, you can apply for an EIN from the IRS. The process is free, quick and easy. You can apply online, and your EIN will be issued immediately at the end of the application as long as you have a Social Security number. 

In addition to your Social Security number, you will be asked to provide the following: 

• Business entity type.
• The business’ name and address.
• Date of formation.
• Product and service you provide. 
• Information about any current employees. 

6. Open a business bank account

With EIN in hand, you have everything you need to open a business bank account. Having a business bank account protects your liability status — if you mix your business and personal finances, you risk being personally liable for business debts. It’s also good practice to open a separate business credit card for the same reason. 

7. Apply for required licenses and permits in North Carolina

North Carolina has no general business license requirements. However, depending on your occupation, you may still need to seek licensing with the state. The NC Department of Commerce has a full list of all occupations that require licensing. 

For example, barber shops need to pay a $120 application fee and $50 licensing fee every year to stay in compliance, while companies that make manufactured homes must pay a $300 licensing fee every year and provide a $100,000 surety bond.

Licensing requirements in your county may go above and beyond state requirements. It’s a good idea to check in with your local chamber of commerce prior to opening your doors to ensure you’re meeting these requirements. 

Find the best company formation services for North Carolina: Best LLC services of 2023

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Via Northwest’s website

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Lowest published package price

$39

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