How to start a business in North Carolina [Updated 2023]

North Carolina has ranked number one on CNBC’s Top States for Business list for two years running. It has the country’s lowest corporate income tax rate at 2.5%, which is set to dwindle to 2.25% by 2025, and electricity costs 23% below the national average. The southern state’s pro-business climate has helped make the Raleigh-Durham metro area one of the fastest-growing cities in the country.

With its talented workforce, low costs, and a slew of business incentive programs throughout its 100 counties, North Carolina is fertile ground for entrepreneurs who want to start and grow a business. But once you’ve crafted a business plan, what are the state-specific rules for setting up shop? Read on for a step-by-step guide on how to structure your business, access working capital, and hire employees to hit the ground running. 

1. Name your business

Once you've settled on a business idea, the first step toward making it a reality is landing on a name. You want it to be catchy and descriptive, but you need it to adhere to North Carolina regulations set by the office of the Secretary of State. While the naming protocol varies depending on your planned business structure (see step #3) here are the main steps to keep in mind:

• Search for your intended name on the North Carolina Secretary of State office's Business Registry to check availability.
• If you plan to use a different business name from your legal or registered name, search the appropriate county's Register of Deeds to check availability, and then submit a Certificate of Assumed Name with that local office. This is also known as a Doing Business As (DBA) name. 
• Search the Secretary of State's Trademark Registration tool to check whether your name was previously trademarked in North Carolina. Then collect at least three samples of the trademark's use and fill out a registration application. This comes with a $75 filing fee. 

Once your business name is certified, you should consider also registering a web domain and social media accounts under the same name. 

2. Explore your funding options

For help with startup costs and gaining quick access to working capital, you should consider different options for local, state, and federal small business loans and grants. The Economic Development Partnership of North Carolina (EDPNC) website lists resources for state-specific funding options. Types of financing worth considering include:

• Lending programs with the North Carolina Rural Center.
• A crowdfunding initiative that allows North Carolina investors to buy equity from local small business owners (more information available at the Secretary of State's office).
• Grants, loans, and investments through the North Carolina Community Development Initiative.
• Small business loans and startup services through the Carolina Small Business Development Fund, which primarily helps businesses in underserved markets. 
• Funding programs sponsored by the Small Business Administration (SBA), which also provides counseling, certifications, and disaster relief for emerging companies. The SBA has offices in Charlotte, Asheville, Raleigh, and Wilmington. Learn more about the SBA's North Carolina-focused funding programs on their website. 

Keep in mind that some grants and small business loans are tailored to specific types of businesses in specific regions. For instance, the North Carolina Small Business and Technology Development Center provides funds for tech businesses in the state's Piedmont Triad Region (which includes Greensboro and Winston-Salem). 

You can also seek out different types of small business loans from traditional banks and online lenders. But if you aren't solvent yet and don't meet the eligibility criteria for a bank loan, you can also consider zero-debt financing options like angel investments, bootstrapping, and crowdfunding. 

3. Decide on your business structure 

North Carolina recognizes several business structures, all of which set forth different tax requirements, liability protections, and decision-making powers. To help pick the best business entity structure for your needs, here's a quick run-through of how the most common types stack up:

4. Register your business in North Carolina

Sole proprietorships and general partnerships both register businesses within their county. The other business structures register with the North Carolina Secretary of State. 

Here's a quick breakdown of how business registration works:

5. Decide on a registered agent

North Carolina state law requires businesses to list a registered agent for LLCs, corporations, and limited partnerships. The business designates this individual to collect documents on behalf of the business. They are then responsible for notifying the business owner of any lawsuits, notices, and official processes. 

You can be your own registered agent in North Carolina, so long as you keep a physical office within state boundaries. You can also appoint a professional agent through a third-party service, which will charge annual fees starting at around $50 and can help with compliance monitoring, document scanning, and tax notifications. If you want round-the-clock customer service and same-day document delivery, expect to pay more. 

6. Apply for an Employer Identification Number

All US-based businesses need an Employer Identification Number (EIN) before they can hire and pay employees. An EIN is often required for applying for bank accounts and loans. You also need it to pay taxes and run payroll for employees. The IRS administers EINs; North Carolina businesses can apply for one by submitting Form SS-4. 

7. Get up to speed with Business Tax Credits

North Carolina has such a surging business climate in part because of its incentive programs for both new and mature businesses, which relieve tax burdens and lessen operational costs in the state. Available incentives include everything from cash-back programs to sales and property tax exemptions. 

Available tax credits include (but aren’t limited to):

• Historic Preservation Tax Credit: Offers a 10% to 15% state tax credit for rehabilitating historic buildings that produce income. 
• Work Opportunity Tax Credit: A federal program that provides a $1,200 to $9,600 tax credit for employers who hire eligible workers who face employment barriers, such as food stamp recipients, formerly incarcerated people hired within a year of their release, and residents receiving long-term unemployment benefits. More information is available via North Carolina’s Department of Commerce. 
• Tax exemptions for manufacturing: North Carolina offers several sales and use tax exemptions for mill machinery, raw materials, and electricity consumption during manufacturing processes. North Carolina laws don’t impose property taxes on inventories owned by manufacturers. 

For a full list of North Carolina’s business incentive programs, and more information on eligibility criteria, visit the EDPNC’s incentives page. The North Carolina Department of Revenue also publishes information on tax credits for investing in renewable energy, low-income housing, and more.

8. Stay on top of filing requirements and taxes

North Carolina requires entities to regularly file tax and other business documents with the state government. Exact requirements vary depending on business structure, but you’ll typically have to file:

• Sales and use taxes
• Employee withholding taxes
• Corporate income and franchise taxes
• Federal taxes
• Taxes on equipment

The North Carolina Department of Revenue files extra taxes for alcohol and beverages, tobacco products, and motor carriers. 

North Carolina LLCs, corporations, and limited partnerships need to file annual reports to either update or confirm information with the Secretary of State, including names of company officials, office locations, and details about your registered agent. 

• LLCs: Need to file the report by April 15th every year. Filing fees are $200 by mail or $203 online. 
• Corporations and limited partnerships: Submit annual reports midway through the fourth month of their fiscal year. Filing fees for corporations are $25 by mail and $23 online. Fees are $200 and $203, respectively, for limited partnerships. More information is available on the Secretary of State’s website. 

Sole proprietors don’t need to file annual reports, and can instead usually report business income on their personal tax return. 

9. Find a payroll solution

Hiring workers for your new North Carolina business requires a payroll solution up to the task of monitoring compliance. That means distinguishing employees from independent contractors to avoid misclassification penalties, adhering to overtime laws (time-and-a-half after 40 hours in a workweek), and administering statutory benefits. Bear in mind that North Carolina’s Department of Labor publishes its own Occupational Safety and Health standards. The state also requires businesses with three or more employees to offer workers’ compensation insurance. 

The same payroll solution also needs to pay all workers both promptly and accurately. And it helps to offload the administrative burden to instead focus on growing your workforce. Rippling, for instance, has a Time & Attendance feature that tracks employee hours and can notify you when an employee reaches overtime (or is getting close to it). Once it’s time to run payroll, you can sync approved hours, click “Submit,” and have Rippling automatically calculate net pay and withhold applicable taxes.

Even if you’re venturing beyond the North Carolina talent pool into a new state, country, or continent, Rippling can streamline global hiring by:

• Paying all your workers—hourly, salaried, and contractors, in different tax jurisdictions and in different currencies—in a single pay run.
• Managing people, systems, and employee data from a single source of truth.

10. Support and scale your growing business with Rippling

As your business grows, you’ll have more administrative HR burdens to consider. One of the biggest favors you can do for your team is implementing an HRIS (Human Resource Information System). The software solution acts as the bedrock of a company’s people management practices, simplifying onboarding, payroll, and benefits to free up time and resources for strategic projects, and eventually help you grow your business globally. 

Within a single, integrated system, Rippling has an HRIS that can:

• Hire, pay, and manage your employees and contractors—whether they’re based in Charlotte, North Carolina, Sydney, Australia—or anywhere in between.
• Preemptively monitor local, state, and federal compliance issues and advise how to avoid infractions.
• Administer all benefits—whether health insurance, 401(k), remote work stipends, and more—from a single source of truth.
• Track and update recruiting data across every step of the hiring lifecycle. 
• Run customized reports to help with workforce planning and other HR processes.

FAQs about setting up a business in North Carolina

Do I need a business license in North Carolina?

Most businesses need some form of licensing to legally operate within North Carolina. There’s no one-size-fits-all certificate; the state has nearly 1,000 different licenses and permits depending on the type of business, listed on the state’s Department of Commerce website. To winnow down your requirements, contact one of the EDPNC’s small business advisors. 

Do I need a business bank account when launching a business in North Carolina?

While you aren’t legally required to open a business bank account in North Carolina, you’re always better off separating business finances and personal expenses. This protects your personal assets and makes paperwork easier to produce for tax authorities. Business bank accounts are also typically required for applying for different small business loans from banks, like a business line of credit or business credit card. 

Also keep in mind that if you have employees, you need a business bank account to run payroll for your workforce. 

Do I need to get business insurance?

North Carolina business owners with three or more employees need to administer workers’ compensation insurance (with some exceptions). State law also requires car insurance if your business requires vehicles for commercial use. 

While not always required, you should look into other insurance packages that protect your business, including:

• Unemployment insurance
• General liability protection
• Commercial property insurance
• Professional liability insurance

What is the corporate tax rate in North Carolina

North Carolina has a 2.5% corporate income tax rate, which is the lowest in the country. The individual income tax rate is 4.75%. 

Keep in mind that if you hire employees, you have to register to withhold state income taxes from their paychecks.

Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.