Maybe you’ve always dreamed of starting your own company, or you’re already earning a little money from a hobby and want to turn it into a business. Perhaps you’re just fed up with working for someone else and want to be your own boss. Whatever your motivation, you want to start your own business in North Carolina, and you need to know how.
One of the first and most important decisions entrepreneurs face is what form their business should take. Should you operate as a Sole Proprietorship or a Limited Liability Company? Would becoming a Corporation or a General Partnership work best to protect your assets?
While this article provides a basic overview of types of businesses, the form your business takes has serious financial implications for you and your business, so you should consult a licensed North Carolina attorney with experience in business formation before making your final decision.
Perhaps the most straightforward way to organize your business is as a Sole Proprietorship. This means you are the owner, you keep the profits, and you pay the taxes. Some small business owners like the simplicity of this arrangement, but others worry about exposing their personal assets to liability if the business can’t pay its debts or faces a lawsuit.
Your North Carolina small business attorney can advise you based on the unique needs of your business whether a Sole Proprietorship will help you meet your goals or not.
“Inc.” Those three letters can make everything seem official, but does incorporation really make the best business sense for your company? Incorporating a business makes the business itself a separate legal entity, able to own property, subject to taxation, capable of filing suit or being sued by someone else.
Corporations are the most formal corporate structure and have the most legal requirements. Corporations must have a director, or board of directors, and officers who carry on the corporation’s business. Each corporation must abide by its by-laws, and failure to do so can create serious liability.
Forming your business as a corporation can provide advantages, but in order to ensure that your corporation meets all state and federal requirements, you should consult with a North Carolina attorney knowledgeable about business formation who can guide you through the process.
Limited Liability Corporation
A Limited Liability Corporation, or LLC, also exists as a separate entity from its creator, but most often with fewer legal requirements. Many small business owners find that the LLC corporate form gives them the flexibility they need to run their business independently while still protecting their personal assets.
However, forming an LLC does not always guarantee that your business liabilities cannot reach your personal assets. The owners and managers of Limited Liability Corporations must adhere to certain corporate formalities in order to preserve this protection, and your licensed attorney can advise you how to navigate these formalities based on your personal assets and the needs of your business.
Let Us Help You
North Carolina businesses can take many forms beyond just Sole Proprietorships, Corporations, and Limited Liability Corporations. If none of these forms seems like the right fit for your business, ask your attorney what other options you have. Each small business is unique and our team of attorneys experienced in small business and employment law can work with you to protect your assets and set your business up for success.