There is a lot of paperwork and planning involved in the establishment of a new business in North Carolina. Aspiring business owners need to explore their business model and evaluate local markets to better ensure that they can generate a profit. They also need to consider how to efficiently operate their new company and how to minimize liability through insurance and regulatory compliance.
One of the most important steps in the business formation process involves choosing the best business entity type to suit a new company’s needs. Once an entity type has been chosen, a new business owner will likely need to file the paperwork with the state to establish their company and secure the right to operate within the state’s borders. There different business types that entrepreneurs can create, and choosing the right one will be important as individuals and investors seek to set themselves up for success. These are the most common business types used in North Carolina.
Sole proprietorships and general partnerships
People often try to keep their businesses as simple as possible in the earliest stages, so they may operate their companies as sole proprietorships or basic general partnerships. The primary concern with this simple approach is that it may leave entrepreneurs and their partners open to personal liability.
Limited liability companies and partnerships
When someone wants to start a formal business that shields them from personal liability and offers certain tax benefits, they may choose to start a limited liability company (LLC) or a professional corporation. Those who want to operate a partnership may start a limited partnership or a limited liability partnership (RLLP).
Formal corporations
The state recognizes several different types of structured corporate entities. Starting S-corporations or c-corporations can be a viable option for someone who is anticipating rapid growth if they have numerous investors and board members participating in the organization from its earliest days.
Non-profit entities
Occasionally, entrepreneurs want to provide a service or generate change in their community rather than to generate revenue. A non-profit corporation can limit liability and generate certain tax benefits for an organization.
It can be difficult to select the right entity, and entrepreneurs need to be careful to avoid mistakes during the formation process. Carefully considering every option and being precise with business formation paperwork is important for the protection of those who are starting a new business entity. Working with an experienced attorney can help to mitigate the likelihood of missteps and better ensure that a new enterprise is set up for success.