Starting a Business in North Carolina: Legal Essentials for Entrepreneurs

For aspiring entrepreneurs in Carteret, Craven, and Pamlico Counties, launching a new business represents both an exciting opportunity and a significant amount of work. 

Understanding the legal requirements for starting a business in North Carolina can help you establish a solid foundation and avoid costly mistakes. Here’s what you need to know to get your business off to the right start.

Choosing the Right Business Structure

One of the first and most important decisions you’ll make is selecting the appropriate legal structure for your business. The structure you choose affects everything from day-to-day operations to taxes and personal liability, making it important to match the structure to your specific circumstances and goals.

Most small businesses in North Carolina will fall under one of the following structures:

• Sole Proprietorship: The simplest structure where you and your business are legally the same entity. While easy to form, this structure provides no personal liability protection.
• General Partnership: Similar to a sole proprietorship but with multiple owners sharing responsibility and liability.
• Limited Liability Company (LLC): Offers personal asset protection while maintaining flexibility in management and taxation. North Carolina requires LLCs to file Articles of Organization with the Secretary of State.
• Corporation (S or C): Provides strong liability protection but requires more formalities, including articles of incorporation, bylaws, regular meetings, and detailed record-keeping.
  

Each structure has its advantages and considerations. Taking the time to evaluate which one best fits your business goals can save significant headaches down the road. Our attorneys can help you understand the best fit for your new venture, both now and in the future.

Registering Your Business Name

Before you start operating, you’ll need to register your business name with the appropriate North Carolina authorities. For sole proprietorships and partnerships operating under a name different from the owner’s legal name, you will need to file an Assumed Name Certificate (often called a DBA – “doing business as”) with the Register of Deeds in the county where you’ll conduct business, or the NC Secretary of State’s Office.  . 

For LLCs and corporations, name registration occurs when you file formation documents with the NC Secretary of State.

It’s wise to conduct a name search through the Secretary of State’s website to ensure your desired business name isn’t already in use before submitting any paperwork. This simple step can save significant time and expense in rebranding later.

Obtaining Necessary Licenses and Permits

Depending on your business type and location, you may need various licenses and permits to operate legally in North Carolina. While the state doesn’t have a general business license requirement, many local governments in Carteret, Craven, and Pamlico Counties require business licenses or privilege licenses for operations within their jurisdiction.

We recommend contacting your local county or city clerk’s office to determine the specific requirements for your area and business type. Compliance from the start helps you avoid potential fines and business disruptions.

Common permits and licenses to consider include:

• Local business licenses from your city or county
• Professional licenses from state regulatory boards for certain occupations
• Industry-specific permits (for restaurants, childcare facilities, construction, etc.)
• Zoning permits ensuring your location is approved for your type of business

Tax Registration and Compliance

Your new business will have various tax obligations at federal, state, and possibly local levels. Most businesses need to obtain an Employer Identification Number (EIN) from the IRS, which serves as your business’s federal tax ID number. You’ll also need to register with the North Carolina Department of Revenue for applicable state taxes, including sales tax if you’ll be selling goods or certain services.

If you plan to hire employees, you must register with the NC Division of Employment Security for unemployment insurance and understand your obligations regarding withholding taxes. 

Business Contracts and Agreements

Well-drafted legal documents form the foundation of a protected business. Having clear, comprehensive agreements in place from the beginning can save substantial time, money, and stress as your business grows.

Common business agreements typically include:

• Client/customer agreements outlining the terms of your products or services
• Vendor contracts establishing expectations with suppliers and service providers
• Employment and/or Confidentiality agreements defining relationships with employees and contractors
• Partnership or operating agreements documenting responsibilities and rights among owners

These documents help prevent misunderstandings and provide a framework for resolving disputes if they arise. Investing in professionally drafted agreements tailored to your specific business needs is one of the wisest investments a new business owner can make.

Planning for Growth and Compliance

As your business grows, regular legal check-ups help ensure ongoing compliance with changing regulations. It is also helpful to enlist the assistance of a CPA from the outset of the business, to stay compliant with tax rules, and to also plan for the future. Update licenses and permits as needed, review and revise contracts periodically, and stay informed about changes in regulations affecting your industry. Consider creating a business succession plan early, even if retirement seems distant. Proactive legal planning helps your business maintain stability through various transitions and challenges.

Get Professional Guidance

While this overview covers the essentials, each business’s situation is unique. Working with knowledgeable legal counsel and a Certified Public Accountant can help you navigate complexities specific to your business and help prevent costly legal or tax issues in the future.

At Schulz Stephenson Law, we understand the challenges facing new business owners in Eastern North Carolina. We provide practical guidance to help entrepreneurs establish and grow their businesses with confidence.

If you’re planning to start a business in Carteret, Craven, or Pamlico County, contact us for a consultation to discuss your specific needs and ensure your business begins on solid legal footing.