Get Ready to Start Your Business
So you have an idea and are ready to start your small business but are unsure exactly how to get started. Perhaps you are looking for ways on how to make that idea into reality. Here you can find the beginning steps for creating a small business in the state of North Carolina and start on the road to success.
In North Carolina, small businesses make up the majority of new jobs in the state. They feature as an integral part of the state’s economy and in a few steps can be easily attained. Follow the steps below to help you get started.
What is a limited liability company?
The acronym LLC stands for limited liability company. Due to the business structure of an LLC it offers the personal liability protection of a corporation with a pass-through taxation of a sole proprietorship or partnership.
By forming an LLC for your business you are creating a great way to protect your personal Assets in the event of your business being sued. This is one of the most popular reasons that people will opt for an LLC.
An LLC can be owned by a single individual or can be owned by more than one person. An LLC with one member who is known as a single-member LLC if your LLC will have more than one owner it will be known as a multi-member LLC
1. Construct a business plan
This is where you will clearly outline your business directives and objectives and why your business will be a success. You can find examples of business plans online to assist you if you are unaccustomed with the process.
2. Structure your business and register your name
If you are to operate a business legally in the state of North Carolina then you will need to register. You will need to register the business type, be it nonprofit, private corporations, LLCs or others as well as a business name. You can find this information on the state of North Carolina’s government web pages.
3. Meet license requirements
Depending on your chosen small business type you may need to acquire specific licensing in order to operate legally. For example, if you were to open a small bar or lounge you would need to obtain a liquor license from the state of North Carolina . Make sure that you are strictly adhering to the county, state and federal requirements of any and all licensing.
4. Acquire the necessary tax information
To move forward with your small business you must register with the state and federal taxation departments. You can find this information on the state of North Carolina’s government web pages. Once you have your tax ID number then you can use this business tax information to determine your requirements.
5. Sources of financing for your small business
Oftentimes when starting a small business you may need financial aid to support your first year and possibly second year of operation. Things such as salaries for yourself and employees (should you have any ) , property rental , stock and supplies. You may wish to apply for a small business loan from a bank or other financial institution. Look for a loan with a reasonable interest rate and a short term reimbursement term to help reduce the cost.
6. Learn about employer reporting requirements and responsibilities
If you plan on having employees you will need to register as an employer as well as apply for federal and state withholding numbers. You will be required to have unemployment insurance as well as worker’s compensation insurance. You can find this information on the state of North Carolina’s government web pages.
North Carolina LLC Frequently Asked Questions
Your cost for starting an LLC will vary, why you ask? Firstly state fees will vary from state to state. You can expect to be paying somewhere between $50 and $500 to get the LLC formation up and running.
You will then have annual expenses for filings approx. $100 – $200 a year dependable on your state of registration.
A person or business that is nominated to receive all mail and to send legal documents on behalf of your company. In some states they are referred to as the agent for service of process. All LLC’s will require a registered agent regardless of state.
Firstly an operating agreement is not required in each and every state. However the value of ensuring you have an operating agreement is crucial for protection of the running of your company.
Also if you are a multi member LLC this agreement will outline each member’s responsibility to the LLC. Having an operating agreement in place is very important in the unfortunate event of a member dispute or lawsuit from a third party.
Articles of organization for your LLC refers to the legal document that you will submit to the state within which you are forming your LLC. This document will outline such items as your legal entity name, the purpose of the business and also the registered agent name and address.
These are also often referred to as the certificate of formation or certificate of organization.
One of the advantages and attractions of an LLC is called pass-through taxation. Meaning that the profits generated by the LLC will “pass-through” to its member/s.
Your accountant will issue each member with a K1 who then reports the additional income on their personal taxes.
Checking with your state is always advisable as although LLCs are pass-through entities, there are several types of state-level tax that may still apply to your LLC and should be researched.
Selling taxable goods or services, you will need to register for a seller’s permit and collect sales tax on behalf of your state.
Is your new company selling goods or services that will be taxed in your state? If so then you will need to register with the state so that you can pay your sales taxes that you will be collecting on each sale.
These again depend on your state and will be broken down into state and county fees that will be paid monthly or quarterly depending on your state of registration
The main benefits of an LLC and why it is a popular business entity are as follows.
An LLC offers the liability protection of a corporation with the benefit of pass-through taxation. In addition to this an LLC is affordable and very easy to maintain. Making it the most popular of business entities.
Short answer NO. However you are starting a business and like everything you need the right foundation in order to be successful.
You may well find it better to hire a professional firm or lawyer to form your LLC. Sometimes it’s best to stick to what you do best and let the pro’s do the rest.