Starting a business isn't easy, but it's a rewarding and empowering experience. If you're a new small business owner in North Carolina, though, it might be difficult to know where to start. It takes more than simply having a great idea. You need to put in the hard work and research and obtain all the necessary legal requirements.
There's a lot to consider for your startup, from a catchy name and branding details to how your business will be structured. This article will walk you through the steps you need to take to launch your new business in the state of North Carolina and the important factors to keep in mind as you get started.
Starting a Small Business in North Carolina
As a new business owner, there's a lot of advanced work to do to set yourself up for success. Here is a step-by-step guide to get you ready to launch your small North Carolina business.
Come Up With a Business Idea
Before anything else, you need to come up with a business idea. Maybe you already have a business opportunity that you think will work for you. If you don't have an idea, though, and want to get into the business world, you'll need to figure out where you might be able to make an impact.
Look at your personal interests and skill set and then meditate on your local community. What's missing? What niche is there to fill? What do you think you might be able to do better?
Select a Business Structure
The business structure you select for your new company will affect every facet of how you operate. This includes the amount of personal financial liability you want to shoulder, how you want your company to be taxed, and how you plan to seek funding for your ideas. Do your research and decide which legal entity works best for your business idea, as well as for liability and tax purposes.
There are four main business structures you'll choose from: a sole proprietorship, a partnership, a Limited Liability Company (LLC), or a corporation. If you're a charitable organization, you'll also consider a nonprofit structure.
- Sole proprietorship: This type of business is operated by one person who takes on all of the entity's liability. As the sole owner, you're also responsible for handling all income tax. You can also opt to operate your business under your own name or a separate business name.
- Partnership: A partnership involves more than one business owner liable for the company's debts and taxation.
- Limited Liability Company: An LLC is owned by its members and operated by designated managers. Owner liability is limited to capital contributions and taxes either flow through to its members or the company is taxed as a C-corp. Articles of Organization must be filed when registering LLCs.
- Corporation: Corporations are owned by their shareholders, who buy into the company, and run by a board of directors. Owner liability is limited to capital contributions and Articles of Incorporation must be filed when the company is registered. Whether you opt for an S-corp or a C-corp will determine how you file your taxes. As a C-corporation, the corporation is taxed with the shareholders receiving dividends. As an S-corporation, all the taxes flow through the shareholders.
- Nonprofit: This structure is ideal for organizations with a mission or purpose that revolves around a social cause, acts in the public interest, and is granted a tax-exempt status. In North Carolina, you must operate under your Articles of Incorporation and bylaws.
Name Your Business
Next, you need to come up with the ideal name for your business. Your business name needs to be memorable and convey what your company is all about. It should be something potential customers look at and understand immediately.
Then, there are legal requirements for your business name. In North Carolina, there are certain names you can't use depending on which business structure you select. You can review a list of prohibited or restricted words here.
In some cases, certain types of businesses require you to include certain words. For instance, if you're starting a limited liability company, your business name needs to include the words "limited liability company" or an appropriate abbreviation, either "LLC" or "L.L.C." Corporate names must include specific names, as well, such as "corporation," "incorporated," "company," or "limited," or abbreviations for those words.
After selecting a business name, you need to check to see if it's available for use. Check the Register of Deeds office in your county and nearby counties to check for similar assumed names or partnerships.
Also, check with city and chamber of commerce directories to make sure similarly named companies don't already exist. Check the name against statewide and federal trademark registration lists, as well.
Basically, you want to make sure you've come up with a wholly unique name for legal and marketing purposes.
Write a Business Plan
With all the key components of your business – idea, name, and legal structure – lined up, you're ready to write your business plan. This is the most important document you'll need to lead your business to success.
This document will serve as the backbone for your company. It should include an executive summary explaining who you are as a business, as well as a more in-depth description of your small business.
Other key components of your business plan are a market analysis, organizational structure (including ownership and management), funding, a full list of services and products offered by your company, your marketing and sales strategies, your business location and contact information, and financial projections.
Not only will your business plan be useful as a reference internally but you'll find that those outside your company (including investors, banks, grantees, and clients) might request to review it, as well.
Register Your Business
In North Carolina, you'll register your business through the secretary of state website and pay the filing fee. You must fill out all appropriate paperwork to conduct business in the state.
If you're operating as a sole proprietor or general partnership, you'll also need to file an assumed name certificate with the Register of Deeds office in the county where your main business office is located.
Other legal documents, including Articles of Incorporation or Organization and your Registration of Partnership, should also be filed through the secretary of state's office.
The costs associated with registering your business vary depending on what you're doing. Among typical costs are: $125 to file your Articles of Incorporation and Articles of Organization, $26 to apply for an assumed name, and $60 to register your nonprofit organization.
Calculate Your Startup Costs
As you launch your business, you should determine the startup costs needed to be successful in building your brand. What expenses does your new business have? Expenses to consider include rent, utilities, salaries, product materials, marketing and market research, a website, and communications.
Where will this funding come from? Do you plan to fund your startup yourself? Will you take out a small business loan through the U.S. Small Business Administration (SBA) or a bank, or use a line of credit from a credit card or through another lender? Do you hope to attract investors or shareholders?
Also, determine your break-even point so you know when you'll start making a profit.
Obtain the Proper Permits and Licenses
While there's no single business license issued by the state of North Carolina, you might need to obtain local licenses and permits. Check the legal requirements for the city or county where you live. For instance, Raleigh could have very different licensing requirements than Asheville.
Also, depending on which field you're in, there are hundreds of business and occupational licenses in North Carolina. Before you can start doing business, make sure you have all the correct permits and licenses in hand.
Open a Business Bank Account
Create a separate business bank account for your new company, even if you're operating as a sole proprietor. A bank account designated for your business activities will make it easy to track your income and expenses.
Get a Tax ID Number
To pay your federal and statewide business taxes, you'll need to set up tax ID numbers. You'll need to apply for a federal Employer Identification Number through the IRS, as well as an identification number through the North Carolina Department of Revenue when you register your company with the state. These identifying numbers are especially necessary if you have employees. If you're a sole proprietor with no employees, you can use your personal social security number to run your business.
Market Your Business
Once all of your legal requirements have been met with the state, you're ready to do business. But how do you find new clients?
Write a clear marketing strategy to promote your company and conduct market research to determine your audience. Then, figure out the best ways to reach this target market.
Create a website for your company and establish yourself as an expert in your field. Write blogs on subjects related to your area of expertise. Get on social media to engage with followers on a more casual level and pull in new clients from there. If you're a business serving your local community, find ways to reach people locally. Consider advertising in local media outlets and doing targeted promotions on social media. And don't forget the old-fashioned way: in-person networking. Find local networking organizations and chambers of commerce to join.
Consider hiring a marketing team or contract a marketing consultant to help your business grow.
Rely on Skynova to Grow Your New Business in North Carolina
Skynova is here to support the success of small businesses. As a new business owner in North Carolina, it's important to organize your bookkeeping from day one. We're here to streamline your accounting with our all-in-one business resource that makes it easy for you to manage your finances.
Our platform creates the documents you need to easily keep accurate records of all of your business dealings so you can see where your money is going and where it's coming from. Handle everything from invoicing clients to sending purchase orders, receipts, packing slips, estimates and bids, and proposals.
Our software is easy to use, too. All you need to do is plug in the information you want to organize and we'll do the rest.
Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always consult with a business consultant or state resources, like Business Link North Carolina (BLNC), to ensure you're meeting the legal requirements to operate in North Carolina.