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Choosing a Business / Legal Structure

In establishing a new business in North Carolina, one of the first steps to consider is to determine what form of business / legal structure your company will operate under.

There are several basic business structures, or legal forms of organization, that a business may take in North Carolina.

Below are the basic business structures or legal forms of business organization:

  • Sole proprietorship
  • General Partnership
  • Corporation
  • S-Corporation
  • Limited Liability Company (LLC)
  • Limited Liability Partnership (LLP)

The structure of a business affects several important factors including:

  • Taxation
  • Decision-making authority
  • Legal & Financial Liability

Items to consider in making choices of business structure include:

  • Business activity; what type of business do you operate
  • Financial requirements of the business
  • Assessment of risk
  • Management control; what form of management will be used
  • Participation of others; will there be employees, investors, partners, etc.
  • Personal needs

It is important to remember to register your business name (Certificate of Assumed Name) in each county where you will do business; there is no statewide registration of business name for sole proprietorships or general partnerships.

Your local SBC can provide you with contact information and location of offices in your county where business will be conducted so that you may follow proper guidelines.

The SBC can also assist you with additional contact information for local municipality requirements and guidelines.

It is not necessary to file a Certificate of Assumed Name in a county where no place of business will be maintained or where the only business is “the sale of goods by sample, by traveling agents, or by mail.”

When a LLC, LLP, or Corporation is formed, these business structures are then registered with the state of North Carolina. This applies for both non-profit and for-profit entities.

These descriptions are in no way intended to be legal advice; they are provided for informational purposes only and are provided for your consideration.

Prior to selecting any legal form of business structure, it is advisable to seek the advice of an attorney and/or an accountant. These professionals can discuss with you the legal and tax consequences that are associated with each business structure.

Your local SBC Director can provide information on business structure and can offer assistance in locating legal service providers in your area.

Additional information can be located at the site of the Business Link North Carolina.

For detailed information and online filing articles of Incorporation through the NC Dept. of the Secretary of State Corporations Division.

For Frequently Asked Questions (FAQs) regarding business structure visit the NC Dept. of the Secretary of State Corporations FAQs.

Updated 4/18/2012 8:49:41 AM | B Johnson