General Business Formation FAQs
General Business Formation FAQs
- What are the benefits of starting my own business?
Starting your own business will give you a great amount of flexibility. Being your own boss allows you to structure your working hours as well as your workload however you see fit. Running your own business also grants you flexibility in structuring the way the entity will be taxed for federal income tax purposes.
- What are the different types of business entities?
There are several business types to choose from, including the sole proprietorship, general partnership, limited liability partnership, professional association, limited liability company, business corporation and non-profit corporation. Each of these entities is structured in different ways, providing the owner with different benefits and obligations. It is important to work closely with an advisor who can help you choose the right business form that will meet your specific needs.
- What factors should be considered when choosing my business’s entity?
Although there are many important things to think about when choosing a business form, some of the main considerations include your preference of tax treatment, your plan to capitalize the business, whether you plan to issue stock and trade it publicly, how you plan to structure the management of your business, and issues surrounding the liability of the business owners.
- How do I determine whether my business will make money?
The first step is to do some research on the existing market to determine if there is a need for your services or products at the current time. If so, it is also important to consider whether consumers can support your business by spending money on your product or service. Lastly, consider whether you have enough money or financing to run your business effectively, without subjecting yourself and others to bankruptcy if the proposed business does not work out as planned.
- What are the risks of starting my own business?
Operating a business requires money; therefore, you may be required to take out personal loans in order to capitalize your new business. Also, owning a business of your own can subject you to a great amount of liability, depending on which business entity you choose.
- How do I choose a name for my business?
Generally, North Carolina law requires that the name of a business entity be distinguishable from other entities currently transacting business or conducting affairs within the state. You may apply, however, to use a name already existing within the records of the Secretary of State’s office if 1) the other party who has previously registered the name consents in writing to your using the name and submits a form to change its own name upon the Secretary’s records, or 2) you deliver a certified copy of the final judgment of a court which establishes your right to use the name to the Secretary of State’s office. Also, the type of structure you choose to run your business may affect the name of the business. For example, a limited liability company may require you to add “LLC” on the end.
- Do I have to register my business name?
Yes. If you are forming a registered entity (LLC, Inc., certain partnerships), you need to register your business and business name with the office of the Secretary of State of North Carolina, and it must be distinguishable from other existing business names. Once registered, the name is reserved for your exclusive use until dissolution. If your business operates as an unregistered entity (e.g. sole prop.) or under any name other than its registered one, then you will need to record assumed name certificates in each county in which you do business. It must list the name under which you do business.
8. What is a Registered Agent and do I need one?
Every company registered to do business in North Carolina is required to have a “registered agent” with an office location with the state. The registered agent is responsible for accepting official notices from the Secretary of State and service of process in the event that the business is sued. Having a registered agent ensures proper notices are received and that the business owner’s personal privacy is protected. NC Planning does provide Registered Agent services if you are in need of one. We make sure all documentation is forwarded to you within a reasonable time.
NC Planning’s attorneys are licensed to practice law in NC. The information herein is not legal advice and does not create an attorney/client relationship. The information is in the form of legal education and is intended to provide general information about the matter. The above is not, nor is it intended to be, legal advice. Oftentimes there are significant and important facts and timelines that if known could significantly change necessary course of action. NC Planning strongly advises an individual with questions to confer with an attorney in their state in order to ensure proper advice is received.