Step-by-Step Guide: How to Register a Small Business in Wilmington, North Carolina and with the IRS
1. Choosing and Reserving a Small Business Name In NC
How to Choose a Small Business Name?
The name of your small business is the foundation of your brand and plays a significant role in growing your brand and consumer perceptions. Your small business name is usually the first element of your brand that customers will encounter. It is therefore essential that the name of your small business is memorable, original, relevant, distinctive, authentic, enduring, and resonates with your target audience. Also read the “Create and Build Up Your Brand when Starting A Small Business” section on the “Small Business Startup Success” page – click here.
How to Check and Reserve Your Small Business Name in North Carolina?
How to Make Sure that Your Small Business Name meets North Carolina naming guidelines?
Consider legalities and that satisfy North Carolina naming guidelines when choosing a small business name – click here.
How to Do a Business Name Search for North Carolina?
Determine if your desired small business name is available in North Carolina using the North Carolina Secretary of State search tool – click here.
How to Perform a Trademark Search?
The Trademark Electronic Search System (TESS) allows you to search the USPTO’s database of registered trademarks and prior pending applications to find marks that may prevent registration – click here.
How to Make sure That a Small Business Name is Internet Friendly?
It is always an excellent idea to check if a domain name is available for your business name or a variant thereof – click here. Most social media platforms need you to select an username for your small business. You can find out is your business name (or variant thereof) is available on the social media sites as a username.
How to Reserve a Business Name in North Carolina?
You can reserve a business name until you are prepared for the business formation process within North Carolina. File the “Application to Reserve a Business Entity Name” with the Secretary of State’s office by completing the “Application to Reserve a Business Entity Name” form – click here.
2. Choosing a Small Business Structure / Business Entity
Choosing a small business structure or business entity is one of the first steps to take when establishing a new small business in Wilmington, North Carolina. There are several basic legal business structures that are available to NC small business entrepreneurs including: Sole Proprietorship, General Partnership, Limited Liability Partnership (LLP), Corporation (C), S-Corporation, Limited Liability Company (LLC) and Non-Profit Organization.
It is very important that you choose the proper structure since it legally affects everything; from your personal liability if something goes wrong or your business fails to the way you file for taxes. Read our blog post “How to Choose a Small Business Structure / Legal Form in Wilmington, NC” – click here. If you are still not sure, consult with an attorney or CPA to help you choose the proper legal structure for your small business.
3. Deciding on Principal Office and Registered Office/Agent
What is the Principal Office of a Small Business?
The Principal Office (place of business) of your small business is the primary location where the business has its office. It is the office where you keep the business’s books and records, if you do not have a business office. The principal office could, but need not, be the same as where you do business (e.g. brick-and-mortar location). If your small business has a brick-and-mortar location go to our blog post “Choose the Startup Location for Your Small Business” – click here.
What is a Registered Agent/Office of a Small Business?
If you have a corporation, limited liability company (LLC), limited partnership, or limited liability partnership (LLP) operating in North Carolina, the law requires you to have a registered agent (RA). This pertains to an entity that is either set up in North Carolina (a domestic entity) or was formed in another state and does business in North Carolina (a foreign entity).
A small business owner designates a “registered agent” (or RA) that receives official legal documents, such as subpoenas, lawsuit paperwork, and other legal notices. A small business owner or employee can be the designated “in-house” registered agent (RA). Alternatively, the small business owner can hire an outside registered agent. The outside RA may be an individual person but is generally a company specializing in serving as a registered agent for many companies. An outside professional registered agent provides you with the peace of mind that your small business you stay compliant with the federal and North Carolina laws.
The registered office of a corporation is merely the business address of the registered agent. The registered agent must be a resident and so the registered office must have a street address in North Carolina. Besides the street address, your registered office may have a different mailing address.
4. State and Federal Registration of Your Small Business
How to Register a Small Business in the State of North Carolina?
Which Small Business Must Register in the State of North Carolina?
The following business entities need to register with the NC Secretary of State’s Office prior to conducting business in North Carolina: Business Corporations, Nonprofit Corporations, Limited Liability Companies (LLC), Limited Partnerships (LP), Limited Liability Partnerships (LLP or RLLP), and Limited Liability Limited Partnerships (LLLP).
Registering a Small Business and/or DBA
For your small business to be officially recognized in North Carolina, you must register with the North Carolina Secretary of State. Registering a business name is part of registering the business entity, like corporations and non-profits.
If you prefer to set up, for example, a sole proprietorship under a name other than your own, you can file a DBA (a “Doing Business As” name). A DBA allows you to run a business under a name (fictitious name) different from its legal name. This allows you to trademark your business name for extra legal protection. Existing corporations can register DBAs (trade name) under them. This results in one legal entity that has two or more different business trade names.
If your small business is a corporation, you will need “articles of incorporation” document, which includes your business name, purpose of business, corporate structure, stock details and other information about your company.
Visit the Register Your Business section of North Carolina Secretary of State website for detailed and guided instructions on how to register a small business – click here.
Also see Business Registration Checklist for North Carolina – click here.
How to Register a Small Business with the IRS?
Normally you should register your small business with the North Carolina Secretary of State before registering with the IRS and getting an employer ID number (EIN). You need your small business’s legal name and the date of business formation when registering a small business with the IRS.
You need a Federal Tax ID or Employer Identification Number (EIN) for most types of business entities. The Internal Revenue Service (IRS) uses it to track your tax responsibilities as outlined in the Internal Revenue Code (IRC). The IRS will tax your small business based on the type of business formation/entity. You also need an Employer Identification Number (EIN) to pay federal taxes, open a bank account, hire employees, and apply for business licenses and permits.
Your small business needs an IRS issued Federal Tax Id accept:
- You are the owner of a sole proprietorship without employees (apply for sole proprietorship tax ID)
- You are a single member LLC without employees (apply for LLC tax ID)
The easiest way to get a Federal Tax ID is to apply for an EIN online. To find out if you need an EIN and to apply for Federal Tax ID – click here.
How to Register a Small Business in NC for Unemployment?
Every new small business (with a few exceptions) must register with the North Carolina Department of Commerce’s Division of Employment Security – click here. Unemployment insurance (UI) tax is a business tax on a small business payroll paid by the employer. This tax allows the NC Department of Commerce’s Division of Employment Security to pay unemployment benefits to qualified unemployed workers.
How to Register a Small Business in NC for withholding, Sales, Use and Other Taxes?
The North Carolina Department of Revenue (NCDOR) collects withholding, sales, use and other taxes and a small business owner needs to register here. The most common state taxes are:
- Withholding tax: A small business owner must withhold withholding tax from employee wages and remit to the North Carolina Department of Revenue. All employees residing in NC are subject to NC withholding on their wages.
- Sales tax is a tax paid to North Carolina Department of Revenue for the retail sales of certain goods and services. Usually, the small business owner collects the tax from the consumer at the point of sale.
- Use tax is tax on the purchasing of taxable items outside North Carolina that will be consumed, used, or stored in NC and were not taxed in the state of purchase.