North Carolina Business Tax

There are several types of taxes that businesses are required to file in America. Federal taxes are applicable across all 50 states, followed by state business taxes, which vary from one state to another. Whether you start a domestic entity or a foreign company, taxes are considered to be mandatory annual requirements. Similarly, the North Carolina business taxes are applicable to entities formed and operating within the state. The tax rates in NC will be different from that of other states and you may need a North Carolina business tax calculator to enable tax planning, accounting, and bookkeeping.

What taxes do businesses pay in North Carolina?

North Carolina has been attracting entrepreneurs and investors due to its pro-business environment. The North Carolina business tax climate is also considered to be favorable and has one of the lowest corporate income taxes in the nation. The state has a lower corporate income tax compared to Colorado (4.6%), South Carolina (5%), Florida (5.5%), and New York (7.3%), among others. You can form different types of domestic and foreign entities in North Carolina including a limited liability Company, a sole proprietorship, a C-Corporation, a partnership, and an S-Corporation. Each entity type will have a different tax status in this state. Your company may be required to file a single type of state taxes or multiple business taxes and you may need a North Carolina business tax calculator to determine the amount of taxes due. Let’s try to understand the different types of taxes applicable to new and existing businesses in this state.

North Carolina income tax

There are different categories for North Carolina business taxes and one of them is income tax. There are two types of income taxes that may be applicable to businesses which include:

• Individual income tax – This type of tax has to be filed by individual taxpayers. Some entity structures require an individual income tax return to be filed like a sole proprietorship or a limited liability company. You can use the individual income tax estimator provided by the North Carolina Department of Revenue to calculate your annual tax return.
• Corporate income tax – The corporate income tax is levied on the net taxable income of all North Carolina corporations – both domestic and foreign. The tax rate is flat 2.50 percent for all entities. You can use a North Carolina business tax Calculator to determine your corporation’s payable taxes. It is important to note that certain corporations that have been organized under Chapter 55A will be exempt from corporate income taxes.

Employer taxes

One of the North Carolina business tax classifications is employer taxes. This tax can be applied to businesses that have employed a skilled, semi-skilled, or unskilled workforce. The tax rate for all employers is determined using an experience rating formula. This formula is based on economic conditions and hence the tax rate can vary from 0.060% to 5.760%. The base rate for employer taxes in a given year is determined by the solvency of the Unemployment Insurance Trust Fund. The employer taxes can be applicable as North Carolina LLC taxes as well as any other entity based in the state.

Franchise or Privilege tax

The franchise tax is also known as a privilege tax. This tax is placed on various entities for the privilege of conducting business in North Carolina. The North Carolina franchise tax typically applies to C-Corporations and S-Corporations. The tax rate varies depending on the entity type. For example, the rate for a C-Corporation is $1.50 (one dollar and fifty cents) per $1,000 (one thousand dollars). The minimum franchise tax can also vary according to tax year, and will also be different for Holding Companies. You will need to use a North Carolina business tax Calculator to derive the amount of taxes payable.

North Carolina sales and use tax

One of the important taxes apart from the North Carolina franchise tax is the sales and use tax. 2020 North Carolina General Statutes, Chapter 105 – Taxation, Article 5 governs this tax in the state. This form of North Carolina Corporation taxes is applicable for any entity that sells tangible personal property, pursuant to NC Gen Stat § 105-164.4 (2020). This type of property is defined as any personal property that can be weighed, seen, felt, measured, or can be perceptible to the senses.

Excise tax

Excise tax, unlike North Carolina franchise tax, is applicable only for selling or using specific products, services, or property. This type of North Carolina LLC tax includes several types of taxes like the Alcoholic Beverages Tax, Piped Natural Gas Tax, and Tobacco Products Tax among others. Let’s look at an example to understand this.

Example: If you are planning to sell alcoholic beverages in North Carolina then excise tax will be applicable. This type of North Carolina business tax is levied on all alcoholic beverages including wine, which is sold in the state as well as those shipped into this state. The excise tax rate will vary according to the nature of business like the tax rate on liquor will be different from that of a brewery or winery.

Are you thinking of forming a new business in North Carolina?

How North Carolina Businesses are Taxed

Once you form a new business in North Carolina, you will need to maintain compliance with all annual state requirements. Flint taxes one of the major annual requirements. The type of North Carolina business tax that your company is required to file will depend on the company’s type of entity structure. Your business may be required to file more than one form of state or local business taxes. Let us look at the different types of entities and their tax obligations in this state.

Taxes for an LLC

If you are planning to register a limited liability company in North Carolina then for tax purposes, it will be considered a pass-through entity. This simply means that instead of filing North Carolina business tax or corporate tax, you will be required to file a personal income tax at a rate of 4.75 percent. This is because, for a pass-through entity, the business income passes through to the owners and other members. There are several other North Carolina LLC taxes that you may be required to file depending on the business activity and other aspects of the business.

Taxes for a C Corporation

If you plan to incorporate in North Carolina then you will be required to file corporate taxes and the North Carolina franchise tax. The good news is that the current tax rate for corporate taxes is one of the lowest in the nation at 2.5 percent. The franchise tax has a variable rate with a minimum franchise tax of $200 for those C Corporations whose tax years started on or after January 1, 2017. The current tax rate is $1.50 per $1,000.

• Withholding Tax – If your company has employees then you must file this tax return.
• Employment Security tax – This is also known as payroll tax and the tax rate would be 1.20 percent in the first 2 years. This tax has to be paid quarterly.
• Privilege tax on machinery – If you are in the manufacturing industry or any industry that requires the use of specific machinery then this tax would be applicable. This tax rate is 1% of the sales price.
• Sales and Use tax – These important North Carolina Corporation taxes are applicable if you fulfill certain criteria such as selling tangible personal property through retail, facilitating accommodation rental, and selling taxable service contracts among others.

Taxes for S Corporation

If you’ve started an LLC or a C-Corporation and have chosen to elect S-Corporation tax status, then as a benefit, you will not be subjected to corporate income taxes. An S-Corporation is a pass-through entity like an LLC. Therefore, instead of filing North Carolina Corporation taxes, each member or owner would be required to file personal income taxes.

Taxes for a Sole Proprietorship

If you form a sole proprietorship in North Carolina then you will need to report your profits by filing individual income tax returns. You can file this electronically (eServices) or by mail. You will be required to file the return if the Federal gross income exceeds $12,750. Apart from this, depending on the type of activity, you may be required to file North Carolina business tax in the form of withholding tax, sales and use tax, and property tax among others.

Taxes for Partnerships

If you form a partnership company in North Carolina then the applicable taxes would be similar to that of taxes for sole proprietorships or North Carolina LLC taxes. Partners will be required to file individual tax returns based on the income they have earned through the business. If you are selling specific products or services then you will be required to file sales and use tax. You may also be required to file property tax, withholding tax, and occupational license tax among others.

Ready to Incorporate your North Carolina Company?

North Carolina provides just the right business environment for entrepreneurs and first-time business owners. You can choose to form different types of entities right from partnership firm to a limited liability company, sole proprietorship, C-Corporation, and S-Corporation. Whatever the entity type, you will need to ensure that the company is compliant with all annual requirements including the North Carolina business tax. IncParadise can provide meaningful assistance where taxes and annual requirements are concerned.

North Carolina Foreign Qualification

The state of North Carolina has a stable economy with manufacturing, trade, transportation, food services, and IT witnessing a growth of more than 3 percent annually. The state also has a strong transportation infrastructure that connects it to the rest of the United States, as well as globally. This along with a pro-business climate, the availability of loans and grants, access to business incentive programs, and a skilled workforce are the state’s economic highlights. The state is also the 14th largest exporter in the nation. These factors play a key role in attracting investors as well as entrepreneurs to move their business through a foreign qualification in North Carolina.

What is a North Carolina foreign qualification?

If you are already operating an LLC or corporation in any state in the USA and want to expand your operations to North Carolina, then one of the best options is a foreign qualification. This process is also known as North Carolina foreign business registration and will ensure you can operate the same company in both states without having to register a new business or domestic entity in North Carolina. When you apply for a foreign qualification in North Carolina, you will be able to operate your company in your home state (incorporation or registration state), as well as the new state (North Carolina).

Example: You have formed a domestic corporation in Indiana by filing Articles of Incorporation. Indiana will be considered as your home state or jurisdiction for the purpose of foreign qualification. You need to move your business or expand to North Carolina. One option will be to close your Indiana Corporation and start a new corporation in North Carolina. If you don’t want to close your existing business then you can apply for NC foreign corporation registration. This process will provide you with the authority to transact business in this state.

Doing business in North Carolina

When a limited liability company, Business Corporation, or any other form of entity is planning to operate in any state other than their home state, they are required to apply for foreign qualification. The word operation here is very important and it stands for “doing business” in North Carolina. Each state in the USA has a list of activities that are considered to be “doing business” in their state. You will need to apply for a NC foreign corporation registration or LLC registration if you engage in specific activities within the state. According to the office of the NC Secretary of State, the activities that do not constitute as doing business in North Carolina are:

• Maintaining, engaging, or defending any lawsuit, legal action, or administrative proceeding in the state
• Holding any meetings of the company officials, members, partners, directors, or shareholders
• Maintaining a business bank account or borrowing funds in North Carolina
• Maintaining an agency or office to facilitate exchanges, transfers, and the registration of its securities
• Appointing and maintaining trustees towards its securities
• Procuring or soliciting orders through employees, mail, or agents
• Acquiring or creating debt like investing in loans with or without any security

NC Foreign Qualification Process

If you already own a corporation or LLC in another state and want to expand your operations to North Carolina then you will require the proper authority to transact business in this state. The NC foreign corporation registration and registration for a foreign LLC are governed by the 2020 North Carolina General Statutes. The process for a North Carolina foreign business registration and operating a foreign LLC or corporation in the state encompasses three important requirements which include the company name, a registered agent, and the authority to transact business in the state.

North Carolina Foreign Corporation Registration

Every corporation that’s been formed in any other state but wants to operate in North Carolina will have to undergo the process for a foreign qualification. The process of a NC foreign corporation registration will help you to operate your company in the state without having to incorporate or form a new entity. The process for obtaining this authority is as follows:

• Business or Fictitious Name – The first step towards a NC foreign corporation registration is to register a business name. The name of a foreign corporation should include words and abbreviations like “corporation,” “incorporated,” “inc.,” or “corp.,” and must be exactly as it appears on file in the state of incorporation (home state). If the name is not available for use in North Carolina as it is similar to another name in the business database, then such an entity will be required to use a fictitious name pursuant to NC Gen Stat § 55D-22 (2020). Fictitious names are also known as assumed names and have to be registered with the County Register of Deeds. You will have to file the North Carolina Assumed Name Certificate along with a fee of $26. To register the fictitious name, you need to conduct a North Carolina foreign entity search also known as DBA name search.
• Registered Agent – Several state-based requirements need to be fulfilled for a NC foreign corporation registration. One of the most important requirements is hiring a registered agent in the state. According to the 2020 North Carolina General Statutes, NC Gen Stat § 55-15-07 (2020), a foreign corporation will not be authorized to transact business in this state if they don’t maintain a registered agent. We at IncParadise are one of the top North Carolina registered agents and have helped several domestic and foreign entities to incorporate in this state.
• Certificate of Authority – The most important step towards a North Carolina foreign business registration is to file the Application for the Certificate of Authority (Form B-09) pursuant to NC Gen Stat § 55-15-03 (2020). This application has to be filed with the Office of the Secretary of State along with a filing fee of $250. The process of NC foreign corporation registration will also require you to submit a Certificate of Existence (or document of similar import) that has been authenticated by the Secretary of State from the state of incorporation. The Certificate of Existence, also known as a certificate of good standing, must be the original document when submitted, and should not be more than six months old.

Do you want to register a foreign Corporation in North Carolina?

North Carolina Foreign LLC registration

If you’ve already formed an LLC in another state and want to expand your business to North Carolina, then you will need to apply for a NC LLC foreign registration. This is also known as the foreign qualification process and will help you to conduct business in the state. When you undergo the process for a foreign qualification, you will not have to go through the domestic entity formation or new business registration for a limited-liability company. The North Carolina foreign business registration for an LLC is governed by the 2020 North Carolina General Statutes, Chapter 57D – North Carolina Limited Liability Company Act, Article 7 – Foreign LLCs. The process to register a NC foreign LLC is as follows:

• Business Name – One of the foremost requirements for NC LLC foreign registration is a business name. There are two methods for a business name registration in the state. One is to register the existing name of the LLC including words and abbreviations like “limited liability company”, “L.L.C.” or “LLC”. This method is applicable only if the existing name is available in North Carolina when you conduct a North Carolina foreign entity search. If the name is unavailable, then the second option is to choose an assumed or fictitious name. You will need to conduct a fictitious name search as well, and if the name is available then you can register the name with the County Register of Deeds. You will have to file the North Carolina Assumed Name Certificate along with a fee of $26.
• Registered Agent – One of the important aspects of any North Carolina foreign business registration or new business formation is the service of process. This is executed by a registered agent in the said state. According to NC Gen Stat § 57D-7-06 (2020), a foreign limited liability company has to continuously maintain a registered agent in the state. A reliable registered agent service like IncParadise, will not only fulfill the service of process requirements in North Carolina but will also assist with the NC LLC foreign registration and other business compliances like filing annual reports.
• Certificate of Authority – The final step in the NC LLC foreign registration process is to file the paperwork for authority to transact business in this state. You will be required to file the application for a certificate of authority for a limited liability company (Form L-09) pursuant to NC Gen Stat § 57D-7-03 (2020). It has to be submitted to the Department of the Secretary of State, Business Registration Division along with a fee of $250. As a part of the North Carolina foreign business registration process, you will be required to submit a Certificate of Existence also known as a Certificate of Good Standing acquired from the state of formation or home jurisdiction. The certificate has to be submitted in original and should be less than six months old.

Want to form a foreign LLC in North Carolina?

Need Any Assistance in Applying for North Carolina Foreign Qualification?

North Carolina is one of the top states when it comes to business climate, diverse industries, and a skilled workforce. The state offers several opportunities and incentives for startups and domestic and foreign entities. You can expand your business to this state using the process of foreign qualification in North Carolina. As one of the leading registered agents in NC, IncParadise can assist you with the process of a foreign qualification.

Doing Business As or DBA in North Carolina

North Carolina is home to over 994,576 small businesses including sole proprietorships, LLC, and partnerships among others. Whatever the company structure, you will require a business name to register and operate the company. You may choose to use your name (owner’s legal name) like James Walter LLC or use a “Doing Business As” (DBA) name like Walter’s Kitchen & Cafe. If you want to apply for a North Carolina DBA online then it is important to ensure compliance with the requirements as governed by 2020 North Carolina General Statutes, Chapter 66 – Commerce and Business, Article 14A – Assumed Business Name Act. If you are wondering “how do I look up a DBA in NC“, there is a process for this search, but first, it is important to understand when and why a company or an individual should use an assumed name.

What is DBA in North Carolina?

A business name helps define your business and creates an identity amongst the customers, investors, and competitors. There are three types of business names that any company can choose and they are:

• Business owners’ names like Susan Holding Inc.
• Abstract or standard company name like Babbling Brew LLC
• Assumed name or DBA like Jake’s Pie

When do you need a DBA?

A wide variety of businesses can opt for filing a DBA in North Carolina. There are several reasons why a company chooses an assumed name or a fictitious name. The underlying reasons could be many but they are mostly driven by the several benefits that one can leverage when they apply for a North Carolina assumed name certificate. Let’s look at some of the common reasons or benefits:

• Complexity and expenses – One of the reasons for choosing a DBA, especially by sole proprietors is to avoid the complex processes and related expenses. This is because when you file an NC DBA online application, you will be able to use a business name without actually having to create a formal LLC or corporation.
• Operate separate businesses – If you want to operate several businesses, especially an LLC or a corporation then ideally you would be required to incorporate or register each of those companies. This is where filing a DBA in North Carolina is beneficial for creating your company without actually registering a new legal entity.
• The easiest way to choose a name – There are different processes for new businesses including the reservation or registration of a business name, which varies from one state to another. When you file an NC DBA online application, the process becomes quite easy with much less paperwork as opposed to the traditional business name reservation. You can use a DBA to open a business bank account.

Filing DBA in North Carolina for an LLC and Corporation

A DBA (doing business as) is known as an assumed name in the state of North Carolina. If you are planning to form an LLC, a sole proprietorship, or even a corporation, then you will need to apply for a business name reservation or registration. Instead, you can simply apply for a North Carolina DBA online. This assumed name will be the DBA or trade name for the said company. There is a specific process to apply for and obtain a North Carolina assumed name certificate, especially for a business corporation or an LLC. The process and fee will also be different from that of the standard business name reservation process and fee.

Do North Carolina DBA Name Search

If you’ve decided to adopt an assumed name for your LLC or corporation, then you need to ensure the name is compliant with DBA laws as well as other state laws. The question most businesses are faced with is “How do I look up a DBA in NC“, and the answer is simple. All you have to do is conduct a DBA name search. This is also known as an Assumed Business Name Search and is facilitated by the website of the NC Secretary of State. It is important to note that you can apply for a North Carolina DBA online only if the search reveals the availability of the said name or if the name is not in use. You can search using only the name or a mix of several options. The options for conducting a DBA search are:

• Name/Number – If you are wondering “How do I look up a DBA in NC” then you can search using any of the following:
  • Assumed name
  • Name of the owner
  • SOSID (Secretary of State ID) number
• Start date/End date – This is used to check assumed names that are already registered.
• Counties to Search – This is used to look up a DBA in a specific county like Brunswick or Cumberland, or you can opt for an all-county search as well.

Example: Searching by the assumed name is most common for new businesses. If your name is James and you want to conduct a search using the name “James” then it will bring up 3591 records. If you want to search using James in specific counties like Brunswick and Columbus then the search will reveal 84 records. Now, if you search for “James Pharmacy” in all counties then you will find that the said DBA exists. If you change it to “James drugstore” and search again then it shows no records. This means the assumed name is available.

File North Carolina Assumed Name Certificate

Once you conduct a DBA search and if your chosen name is available then the next step is to file the North Carolina assumed name certificate. The 2020 North Carolina General Statutes, Article 14A – Assumed Business Name Act, NC Gen Stat § 66-71.4 (2020) states that if you want to engage in business in North Carolina under an assumed business name, then you will need to register a DBA with the office of the Register of Deeds of the county in which you will be operating your business. This law is applicable for both domestic and foreign companies.

Example: If you want to conduct your business in Wake County, NC then filing a DBA in North Carolina will take place in this county. You will need to file the Assumed Business Name Certificate pursuant to NCGS §66-71.5 with the office of the Wake County Register of Deeds. The fee for filing a DBA in North Carolina is $26.

• Wake County Register of Deeds
  Attention: Recording
  P.O. Box 1897
  Raleigh, NC 27602

Register your North Carolina DBA with ease!

Managing North Carolina DBA

Once you file an NC DBA online application or file an assumed name certificate, then it will ensure that you can conduct your business within the said county or state. Each county in North Carolina has its own rules and regulations pertaining to a DBA or assumed name. These laws are also applicable for a renewal, changing, or canceling of the assumed name in the jurisdiction where the certificate was filed. Let’s look at the various processes applicable for managing North Carolina DBA in the future.

How to renew North Carolina DBA?

Filing a DBA in North Carolina can be done only with the Register of Deeds of the county in which you want to operate your business. There is no requirement for renewal in the counties.

How to change a North Carolina DBA?

After filing a North Carolina assumed name certificate, you may want to make amendments. Amendment to the certificate is governed by NC Gen Stat § 66-71.7 (2020) and should be filed within 60 days after any changes in the information provided in the assumed business name certificate have taken place. The amendment form can be used for changing assumed business names or other purposes like changing the nature of the business or even the street address of the principal place of business. The amendment fee is $26 in most counties. The amendment form may be different for each county.

How to cancel a North Carolina DBA?

Once you have filed the NC DBA online application, you will be able to operate your business under the said assumed name. At any given point in time, if you want to cancel or withdraw the DBA name then it’s possible through a different process. The process is known as a Withdrawal of an assumed business name and is governed by NC Gen Stat § 66-71.8 (2020). You will be required to file Withdrawal of Assumed Name Certificate along with a fee of $26. The application has to be filed with the Register of Deeds in the county your business is based in.

Need Any Assistance in Filing North Carolina DBA?

The process to apply for a North Carolina DBA online requires you to provide complete and accurate information while being compliant with federal trademark laws and county laws. The process of conducting an assumed name search and adhering to county laws can be quite confusing. IncParadise can gladly assist you with this process. We have expertise and knowledge regarding the North Carolina state and county regulations concerning DBAs and new businesses.

Sole Proprietorship in North Carolina

A sole proprietorship business is the easiest entity type that you can establish. The state of North Carolina not only has a pro-business environment but also supports a favorable legal and regulatory climate. Low overall business costs and the availability of qualified talent are also responsible for making this one of the top states for new business. Once you file a sole proprietorship in NC, you will gain access to several state incentive programs that can aid in the long-term growth and expansion of your business.

What is a sole proprietorship in North Carolina?

A sole proprietorship in North Carolina is also known as a sole trader and is considered an unincorporated business. As a result, there will be zero or minimal government regulations, and for this reason is favored by small business owners, individuals, consultants, and anyone seeking self-employment. If you plan to file a sole proprietorship in NC then you will need to consider several details based on the state business laws including preparing a business plan and applying for the necessary licenses and permits. This type of individual entrepreneurship can be formed and operated online, offline, or can be home-based.

Important features of a sole proprietorship in North Carolina

Sole proprietorships are considered to be one of the most common entity structures in the United States and can be operated by a single owner. If you want to know how to start a sole proprietorship in NC then first you will need to identify the advantages and disadvantages of this type of entity structure to help you operate it better. This type of entity structure has several features that can be beneficial to the owner. Let’s take a look at some of the important features.

• Simple and cost-effective – This type of business structure doesn’t require complex paperwork like a corporation, nor do you need to register it with the NC Secretary of State. Since there is no registration process to file a sole proprietorship in NC, there are zero or minimal startup or initial costs.
• Start from anywhere – Another great advantage of a sole proprietorship is that it can be started from anywhere. You don’t have to own, lease, or rent commercial space or a traditional brick & mortar office. You can easily operate it from co-working spaces and even from your residence. This also ensures less capital requirements.
• Simpler tax structure – When you search sole proprietorship in North Carolina taxes, you will find that this entity type has one of the simplest tax structures. You will not be required to file any separate tax returns for your business. Instead, you will need to report the income earned by the company on your personal tax return
• Decision-making – One of the greatest features of a sole proprietorship is that the owner is responsible for making all of the business-related decisions. This ensures that there is no third party or any other internal or external interference, involvement, or influence in the day-to-day operations of the company.
• No sharing of Profits – When you file a sole proprietorship in NC, the profits earned by the company will go to the sole proprietor or the owner. Unlike some of the other entity structures such as corporations and LLCs, the profit or income earned will not be split amongst shareholders, members, or partners.

Are you ready to start a sole proprietorship in North Carolina?

Steps to Start Sole Proprietorship in North Carolina

If you want to start a new business but don’t want any partners or want to remain self-employed, then it is time to file for a sole proprietorship in NC. The state of North Carolina has different requirements for this type of business and as the owner you will be required to fulfill them. You will also need to focus on several other responsibilities for the business like banking accounts, the North Carolina assumed name certificate, and reporting and paying state taxes. Let us take a detailed look into each process that is crucial for the sustenance, successful operations, and growth of the business.

1. Prepare a business plan

If you’re wondering how to start a sole proprietorship in NC then the first step would be to prepare a strong business plan. A business plan is also known as an operational plan that takes into consideration a wide variety of factors like the market, the target audience, the location, and the finances among others. The importance of this type of plan lies in the fact that it will help provide direction for the company to meet its short-term and long-term objectives. If you’ve chosen to start a sole proprietorship in North Carolina then your business plan should include the following:

• Mission Statement (Statement Of Purpose)
• Description of the company or business
• Customer demographics
• Competition
• Products or Services
• Marketing Plan
• Insurance
• Record Keeping
• SWOT Analysis
• Distribution, Promotion, and Pricing
• Financial goals and projections

2. Choose a North Carolina business name

A business name is the identity of the company and the single most important detail for any form of business. If you want to start a sole proprietorship in North Carolina, you will need to choose a unique business name. It is important to carefully consider a name as it will be used in all types of business collateral, banking, domain name, website, and branding. Here are some tips that will help you with choosing the right name for your sole proprietorship:

• Following North Carolina’s naming guidelines is important when choosing a business name
• The state may also have a list of names that you are prohibited from using
• Never choose a name that is similar to that of a competitor
• Keep the name as simple as possible
• The name should be easy to pronounce and spell
• The name you choose should not have any trademark infringement
• Ensure that the business name is web-friendly
• It should be consistent with your product, services, or brand

3. File Assumed business name

There are certain state and legal requirements associated with a sole proprietorship, which you will need to fulfill. One such requirement is that of an assumed name also known as a DBA (Doing Business As). Not every business is required to apply for a DBA. You only need to apply for a North Carolina assumed name certificate if you don’t want to conduct business under your own name. Let’s look at an example to understand how the assumed name works.

For example: If an individual named Walter Betty wants to start a sole proprietorship in North Carolina as a coffee store then can simply use his own name ‘Walter Betty Coffee’. If he wants to name it Walter’s Coffee and wants to do business under this name then he will need to apply for a North Carolina assumed name certificate pursuant to NC Gen Stat § 66-71.2 (2020). After creating this name, he needs to conduct an Assumed Business Name search to check its availability. If the DBA name is available then he can apply for a DBA.

Thinking of starting a sole proprietorship in North Carolina?

4. Get EIN

An Employer Identification Number (EIN) is also known as the Federal Employer Identification Number (FEIN). This unique number is considered to be a valid tax ID number and is assigned to businesses by the Internal Revenue Service (IRS). If you start a sole proprietorship in North Carolina then you will have to file taxes on your personal tax returns. This is possible using a Social Security number (SSN), but there are certain scenarios in which a sole proprietorship firm may be required to apply for and obtain an EIN. Instances in which your firm will have to apply for EIN according to the IRS include:

• If you have hired employees in your sole proprietorship firm
• If you have a Keogh plan (tax-deferred pension plan) or a Solo 401(k) retirement plan
• If you buy or inherit an existing company
• If you change the entity structure from sole proprietorship to LLC or corporation

5. Obtain necessary licenses and permits

Once you start a sole proprietorship in North Carolina, one of the foremost requirements is to acquire a business license. North Carolina doesn’t have a general business license for all businesses but there are industry specific licenses. It is essential for sole proprietors to check state-level requirements as well as county requirements where licensing and permits are concerned. When you search sole proprietorship in North Carolina for licenses, it will reveal occupational permits and professional licenses. You may also require local zoning and building permits. If you feel the process to identify the right business license is complex then our Business License Research Report service can help you. This is a detailed research report that contains a list of filing instructions, supporting document requirements, and fees for all business licenses and permits for your sole proprietorship business in NC.

6. Open a bank account for your North Carolina business

Once you file a sole proprietorship in NC and obtain necessary licenses and permits, you will be able to transact in the state. One problem that many sole proprietors face is the inability to maintain proper accounts. This confusion happens when personal banking accounts are used for business transactions. Therefore, it is very important to keep your personal gain separate from the revenue generated by the company. The importance of a business bank account lies in the fact that it will keep all business finances separate. It will help by keeping accounting records organized thus ensuring that you can file your tax return easily.

7. Report and pay taxes

One of the important facets of how to start a sole proprietorship in NC is filing taxes. This is an annual requirement for all forms of businesses. The taxes for a sole proprietorship firm will be different from that of any other business structure. Since this type of company is operated by an individual, the owner will have to report their income earned using their personal tax return. You will be required to report all income earned during a year using the Individual Estimated Income Tax Form NC-40. The tax rate is flat 4.75% of North Carolina Taxable Income. When you file a sole proprietorship in NC, you may be required to collect state sales taxes if your company is selling goods or products in the state. You can visit the website of North Carolina Department of Revenue (NCDOR) for more information on other applicable taxes.

Ready to Start a Sole Proprietorship Business in North Carolina

A sole proprietorship is one of the easiest business structures to form, and you can establish it quickly due to the minimal documentation requirements. It is considered an unincorporated entity and hence you will not be required to follow any registration processes with the office of the Secretary of State. If you are wondering how to start a sole proprietorship in NC then IncParadise can provide assistance and help you start your company in the state.

Business License in North Carolina

The registration of a company transforms the business into a legal entity but it doesn’t provide the permission to transact. Every business in any state in the USA is required to obtain some form of license or permit that will allow them to transact in a specific state, location, or area. So, if you start a company in North Carolina, you will need to obtain a North Carolina business license.

Who needs a North Carolina business license?

There is a reason why business licenses exist, they happen to play an important role. Licenses ensure the compliance of a business with all requirements related to operations such as the cleanliness of restaurants, the safety of new drugs, and environmental safety among others. A North Carolina business license is required by most businesses operating in the state including home-based companies and small startups. Legal entities such as limited liability companies or corporations will also need to obtain a NC business license or permit.

What business license do I need in North Carolina?

North Carolina is a favorite destination among entrepreneurs due to its pro-business climate. The state has a robust infrastructure and a skilled workforce to meet the needs of a wide variety of industries. You can start a company in this state with ease, but to make it operational you will need proper licenses and permits. A North Carolina business license search will help you to identify the right type of license.

North Carolina Business Licenses for Specific Occupations and Professions

One of the most important types of North Carolina business licenses are those associated with specific professions and occupations. An occupation is any activity undertaken by an individual to earn their livelihood such as teaching, advertising, or lawyers. An occupation can be a profession or a business. Profession refers to an activity that requires qualification, training, and skills like a Certified Paralegal or a Certified Public Accountant (CPA). If you have started a business in a specific industry or occupation then you will need to obtain a NC business license and permits for that occupation as well as a professional license connected to the said occupation. Let’s look at an example to understand this.

Example: If you start a tax accounting firm then you will need to apply for a CPA firm registration, which has to be renewed each year. This is a type of license to operate the firm and the registration is done with the Licensing Section, NC State Board of CPA Examiners. In order to operate this firm, you need to hire Certified Public Accountants (CPAs) or should possess a North Carolina CPA Certificate also known as the Certified Public Accountant (CPA) license. You will have to obtain a NC business license for a CPA from NC Board of Certified Public Accountant Examiners (CPA). The license fee will be $100 and the renewal fee is $60.

Other North Carolina Business Licenses

Apart from the occupation or professional licenses, the state of North Carolina has classified licenses based on the specific business activities and the location of the company. You can conduct a North Carolina business license search using your business activity such as selling products or services. Let’s look at the various other applicable licenses and permits in the state.

Seller’s permit (Certificate of Registration)

The seller’s permit is a type of North Carolina business license that is required by businesses or individuals involved in different sales activities within the state. The activities that determine the need for a sellers permit include:

• If you sell tangible personal property through retail
• Selling specific digital property like digital audiovisual work or a magazine
• Providing taxable services
• Operating a business that involves apparel and linen rental, dry cleaning, and other similar businesses
• Leasing or renting any taxable tangible personal property
• If you provide the ability to rent an accommodation as it generates gross receipts
• Retailers of service contracts
• Imposing admission charges to entertainment activities

Local North Carolina business licensing and permits

One of the important licensing requirements for businesses planning to transact in North Carolina is obtaining proper NC business licenses and permits in the necessary counties and cities. The type of license, applicable fees, and local ordinances will vary according to the city or county the company is based in. You will need to conduct a North Carolina business license search to identify the right permits in your county. Let’s look at an example to understand how this works.

Example: You are planning to start a food establishment or food related business in North Carolina. The physical address of your company is in Carteret County, NC. A retail food service in the county also classified as food service establishments include restaurants, food stands, drink stands, meat markets, and commissaries among others. In order to operate in the county, you will need to complete and submit the Food Service Establishment Application. This detailed application has to be submitted with the Carteret County Health Department, Environmental Health Division. You will also be required to submit a non-refundable plan review fee along with the application. The food service facility should be compliant with the design standards as listed in 15A NCAC 18A.2600.

North Carolina home-based business license

Home-based businesses are becoming quite popular due to many reasons such as low startup costs and lower operational costs. If you are planning to start a work-from-home then it may be subject to some of the North Carolina business laws, as well as state licensing regulations. Most home-based businesses are typically partnership or sole proprietorship firms. The question is what type of NC business license and permits application process will be required for the same. One of the important aspects is that home businesses are categorized under occupational licenses and therefore will depend on the area of expertise. There are certain areas to focus on such as:

• Conduct a North Carolina business license search for occupational and professional licenses
• You should be aware of local zoning regulations and obtain the necessary clearances
• You may require local licenses from the city or county where you are based
• The license required may also vary according to the business activity

Example: If you start a home-based business in Durham County or City of Durham, NC then you will be required to apply for a Home Occupation Permit. Your home-based business should be compliant with the requirements as mentioned in the Home Occupation Summary Regulations, Unified Development Ordinance Section 5.4.4. Similarly, if you start a home-based business in the City of Raleigh then according to the City’s Unified Development Ordinance (UDO) Section 6.7.3.D or Section 6.7.3.E, there are two types of home-based businesses. These are Home Occupation (located within a residential dwelling) and Live-Work (commercial use contained within a residential structure). You will have to apply for a NC business license and permits based on the type of home-based business.

Need any Assistance in Obtaining Your North Carolina Business License?

If you are planning to start a new business in the state of North Carolina then it is important to obtain the necessary licenses and permits in the state and the cities or counties. The type of NC business license and permits you need will vary according to the location of your company, the type of occupation, and the primary activity. The North Carolina business license search, license or permit application, fees, and renewal processes will also vary according to the type of license and city.

North Carolina Business Entity Search

The process to register a business in North Carolina is dependent on the type of structure you choose. The first step prior to registering or incorporating is known as the business name reservation. You can choose a name for your company, but before applying for the name reservation, you will need to conduct a North Carolina business name search. This is a process that will help you ensure the availability of your chosen name. The search will reveal if any other company is using the same name in the state or not.

• You should choose a name that is easy to pronounce and remember like Jimmy’s Kitchen
• There are plenty of business name generators available online for you to use
• The business name should be chosen keeping in mind any possible future business expansions
• Try not to pick a name that is similar to the name of a competitor
• Ensure your chosen name doesn’t lead to trademark infringement
• Business names should always be consistent with the brand and convey the purpose
• Try to create a name that is web-friendly

What is a North Carolina business name search?

Every state in the US has a specific website that makes it easy to look up various entity information. The options available for this type of entity search will vary from one state to another. In some states, you will only need a name or part of a name to search the business name availability, while some other states may require a business registration number or filing number. Some states even allow multiple types of entity searches. You can conduct a North Carolina business name search through the secretary of state’s website.

Example: You want to establish a new company in North Carolina. The said business is a Software company based out of Morrisville, NC. You want to name it “OpenAnalytics Technologies”. Once you have chosen this name then the next step is to conduct a North Carolina business name availability search on the website of the Secretary of State. When you conduct the search, it brings up a similar company name – OpenAnalytics Technologies, LLC. The company has active status. This means you will not be able to use this name. Now if you change the name to “Open Analytics Technology” and conduct the North Carolina business name search again then it will show the availability of the said name.

Naming your North Carolina LLC

If you’ve decided to form a limited liability company in North Carolina, then it’s time to choose a name. This will be the official professional name of your LLC and will be considered the legal name as well. You will need to reserve this name after conducting a NC LLC name search and will be mentioned in the Articles of Organization. You can get help from AI-powered business name generators or look for company name ideas online. A business name will be the primary identity of your limited liability company and hence it will carry a lot of weight. Now, let’s look at two important aspects to consider when it comes to naming your limited liability company.

General LLC naming rules

One of the most important details to research when naming your company is the North Carolina business name rules and regulations. The naming and reservation of an LLC are governed by 2020 North Carolina General Statutes, Chapter 57D – North Carolina Limited Liability Company Act – Article 2 and 2020 North Carolina General Statutes – Chapter 55D. The general rules for an LLC name are:

• The name should have words like Limited Liability Company or abbreviations like LLC or L.L.C.
• It may also contain a combination of words and abbreviations like “ltd. liability co.”, “limited liability co.”, or “ltd. liability company” pursuant to NC Gen Stat § 55D-20 (2020)
• This name should be distinguishable from any other name in the database of the Secretary of State. This can be checked by conducting a NC LLC name search.
• There are “Word Prohibitions” that you need to check before confirming a name. The state prohibits the use of words such as bank, realtor, banking, and trust among others.
• You need to also check the administrative code as well as the restricted list of words and phrases for specific industries or professions

Search an LLC name availability on the North Carolina Secretary of State’s website

Once you have successfully conceived a name for your LLC based on the state naming guidelines, the next step is to conduct the NC LLC name search. The Secretary of State offers an online option to conduct a name availability search. The search options available are to look for a name that starts with a specific word, exact word, and SOSID (Secretary of State ID number).

• Search by the company name starting with a specific word – This is the most common form of North Carolina business name availability search. This search can be used by both domestic and foreign entities. You can search for a name that starts with a specific word. Let’s look at an example to understand this process.

  Example: You want to start an LLC using the name Jimmy. Now if you use the “start with” option for a NC LLC name search then the word Jimmy will bring up 366 records of active and inactive businesses. You can check the database and form a name like Jimmy Allen LLC and it will show such a name being available.

• Search for a company using an exact word – The second option is to conduct a NC LLC name search using an exact word. Let’s look at an example to understand how this works.

  Example: If your chosen name is “Software Automation Consulting” and you conduct a NC LLC name search in the state database using this exact name. The database search will bring up information pertaining to an LLC that is currently active and based in Cary, NC. Now, if you make small changes to the name and search using Software AC or Software Advanced consulting then the North Carolina business entity search reveals that such a name is available for reservation.

Do you want to form an LLC in North Carolina?

Naming your North Carolina Corporation

If you’ve chosen to incorporate a new business in the state of North Carolina then you must begin by choosing a name for your corporation. Once a name is selected, it will be considered the legal name of your company. It is important to note that you will have to reserve the business name before filing the Articles of Incorporation. It is important to conduct a NC Corporation name search as a first step in the name reservation process. Let’s look at the various aspects to consider when naming your new corporation.

General Corporation naming rules

The North Carolina business name rules and regulations are different for different entity structures. It is important to follow the state guidelines, otherwise, there is a high probability of the name being rejected. The naming of a corporation is governed by the 2020 North Carolina General Statutes – Chapter 55D. The general rules for a business name are:

• The name should contain words like “incorporated”, “corporation”, “company”, or “limited”, or abbreviations like “inc.”, “corp.”, “ltd.”., or “co.” pursuant to NC Gen Stat § 55D-20 (2020)
• The name should be unique and distinguishable from the name of any other company in the database of the Secretary of State. This can be fulfilled by conducting a NC Corporation name search.
• You need to also check the restricted word list for specific industries or professions
• North Carolina has “Word Prohibitions”, which is a list of names that a corporation can use only under special circumstances. The state prohibits the use of words such as realtor, bank, banking, and trust among others.

Search for a Corporation name availability on the North Carolina Secretary of State’s website

Once you have finalized a name for your corporation, the next step is to conduct NC Corporation name search. The website of the Secretary of State offers an online solution to conduct a North Carolina business entity search. The entity search online can be carried out by using a specific word, an exact word or phrase, and SOSID (Secretary of State ID number).

• Search by a company name that starts with a specific word – This is the most common form of NC Corporation name search. This search can be used by both domestic and foreign corporations. You can search for a name that starts with a specific word. Let’s look at an example to understand this process

  Example: If you want to start a corporation using the name Flynn. Now if you use the “start with” option for the word Flynn then the North Carolina business entity search will bring up records of 91 active and inactive businesses that start with Flynn. You can refer to this database as a way of helping you identify the right name or a name that is available for reservation.

• Search by a company name using an exact word – The second option is to conduct a NC Corporation name search using an exact word or phrase. Let’s look at an example to understand how this works.

  Example: Your chosen name is “Flynn, Inc.” and you conduct a North Carolina business name availability search in the state database using this exact name or phrase. The search will bring up information pertaining to a domestic corporation that is currently active and based in Charlotte, NC. This means your chosen name is not available. Now if you change the name a little and conduct another search using the new name, which is Flynn Brothers Inc., then such a name is available for reservation.

Are you thinking of registering a Corporation in North Carolina?

Need any Assistance in North Carolina Business Name Search?

Every business is dependent on customers online and offline. Some businesses are dependent on vendors and business partners. Whomever the target audience may be, a business name is useful for creating just the right impact. Similarly, first impressions are equally important when it comes to attracting investors. A North Carolina business name availability search will ensure your chosen name is available and that you can reserve it. The entire process of a North Carolina business name search may look complex, if you begin to feel overwhelmed IncParadise can provide meaningful assistance.