How to Form a Business Entity in North Carolina

When starting a new business entity in North Carolina, there are several requirements you’ll need to follow, and some may be tricky to navigate. In this post we’ll break down the steps you need to take, and get you on your way to being your own boss.

In a previous blog, we discussed why choosing the right type of business entity is so important for new businesses and shared the pros and cons of the many different types of business entities recognized in North Carolina. You may want to review that to get the full context for this post.

Let’s assume you’ve decided the type of business you plan to open. Now you can start the process of actually forming the business entity. Your first step is going to be filing “Articles of Organization” with the Secretary of State for North Carolina. Their website offers you a number of tools, including a business name search so you can ensure you won’t have any competition with your new business’ brand name. This is also where you’ll register your business. You will then apply for a Tax Identification Number with the IRS and open a bank account for your business.

If you’re forming an LLC, you should prepare an operating agreement. If you are forming an S-Corp or a C-Corp, you should prepare your shareholder agreement and bylaws. Finally, you should buy insurance – at the very least, a commercial general liability policy is highly recommended!

Naming Your Business

North Carolina law states that any business that wants to use a name other than the name of its owners or the name under which it was formed must file a d/b/a. D/b/a stands for “doing business as” and is a “fictitious name” that you or your business will register with the state and use publicly.

Example: Kelly owns an inappropriate greeting card company named “Occasionally Appropriate, LLC.”  She uses the LLC’s name to advertise her cards. Now, she wants to expand her business into cutting hair, using the business name “Kelly’s Kute Kuts.”  Instead of forming an entirely new LLC for the haircutting business, Kelly can register a d/b/a called “Kelly’s Kute Kuts,” and her existing LLC can do business as both Occasionally Appropriate and Kelly’s Kute Kuts.

Starting a Business: General Tips, Tricks, and Advice

Before starting your business, make a pro forma document, which covers projected monthly revenues, expenses, and start-up costs, as well as a business plan.

In your business plan, you should include:

  • Company description
  • Market analysis (current market conditions, competitors, your “ideal customer,” strengths, weaknesses, etc.)
  • Organization & management
  • Services or products offered
  • Marketing & sales
  • Financial projections

When you finalize your business’s logo and company name, consider waiting until your business is established or you have plans for expansion before you spend the money to file a trademark application.

Every business needs a CPA, a lawyer, and an insurance agent. If a one-size-fits-all approach works for your business because you’re a simple, single-member LLC or single-shareholder corporation, perhaps LegalZoom or RocketLawyer may work for you for now. Keep in mind that as you grow, however, you are going to want an experienced, qualified team on your side with your business’s best interests in mind.

Questions about forming a business entity? Contact Matthew Villmer at Weaver, Bennett, and Bland for a free consultation.