How to Start a Business in North Carolina in 11 Easy Steps

Similar to the delicious Krispy Kreme doughnut (originating in Winston-Salem), certain ingredients make a state right for business.

Like a favorable tax climate, low living costs, an educated workforce, bustling cities, thriving urban areas, and high small business survival rates. 

NC has those ingredients and more:

• Ranking 1st in CNBC’s “America’s Top States for Doing Business”
• 6th in the Forbes list of “Best States to Start a Business”
• 4th in the US for small business first-year survival rate at 82.74%
• The lowest US corporate tax is 3%

And recent WalletHub report ranks Durham 5th, Charlotte 8th, Raleigh 11th, and Winston Salem 13th in their “Top Spots to Start a Business.” 

Ashley Cagle, Vice President at the Greater Raleigh Chamber of Commerce, said, “She isn’t surprised.”

Discover why and how to start a business in North Carolina in 11 easy steps. 

Step# 1. Fine-tune your business idea

James Clear (author of Atomic Habits) wrote, “Excitement is a better motivator than discipline.”

And he’s right. After all, who sticks at something they’re not interested in using discipline, not many! And unused gym memberships prove it!

But when you choose a business idea you’re passionate about, you’ll increase your odds of success because interest will motivate you to keep going when the going gets tough. 

How to develop a business idea: 

First, consider your interests, skills, available resources, and why you want to start a business in North Carolina. 

Next, narrow your ideas by focusing on what suits and motivates you.  

Once you have some ideas, ask yourself these questions:

• Can I bring a new product or service to this marketplace?
• Can I bring value to this niche to ensure people buy my brand?

And consider your community’s specific needs and interests because they are your target market. 

Popular North Carolina business ideas:

Certain businesses thrive in NC, from sweet potatoes to soybeans, microprocessors, and craft beer.

Food and accommodation services, manufacturing (especially furniture), and healthcare are the biggest employers, but 934,604 small businesses also support the economy.

Here are some examples: 

• Real estate agency
• Food truck
• Handyman business
• Event planning
• Home-based bakery
• Summer camp
• Haulage business

With an idea in mind, it’s time to test the water:

Validate your business idea:

Now is when you put your idea through the wringer to ensure it’s worth your investment. 

You’ll validate it during your business plan’s market research (coming up next) to get the answers to these crucial questions:

• Is there enough demand in NC to support your business?
• Who are your ideal customers (target market)?
• Are businesses already providing your idea in North Carolina, and can you compete?
• Why is your idea better than what’s already available?

Step #2: Create a business plan

You would only drive across the country if you planned your route, right?

Your business plan is your start-up’s GPS, guiding you throughout your journey. There are several parts to a business plan; the most important are:

Market research

Your market research identifies your ideal customers, reviews your competitors, and determines if your niche is growing or declining.

But it’s also crucial for developing your marketing plan as it identifies where your target audience shop for your business idea, enabling you to create marketing strategies that engage and convert them into customers.  

Marketing plan

A marketing plan uses your market research to develop strategies proven to attract, engage, convert, and keep your target audience.

Successful businesses often use multiple brand strategies, like a website, social media, paid, and traditional advertising techniques. Your marketing plan tells you where to invest your advertising dollars for the best ROI.

Financial plan

The financial part of your business plan helps confirm your idea is viable and convinces lenders to invest; it includes 4 financial statements with analysis:

• Income statement
• Cash flow projection
• Balance sheet
• Shareholders’ equity statement

For investment reasons, add a 5th financial projections statement outlining how much revenue you expect in a specific period and how you’ll earn it.

Choose a location

Durham, Charlotte, Raleigh, and Winston-Salem rank high in the Top Spots to Start a Business, so they’re all excellent locations. But your choice also depends on your niche and target audience’s demographics. 

• For instance, does your idea need a high consumer footfall to succeed, like retail or a restaurant?
• Or will you provide a service that suits a specific NC area code?

Once you choose a location, check the area’s demographics to ensure your business idea suits the locals, and there aren’t too many direct competitors.  

North Carolina zoning laws and regulations: 

Zoning laws determine which businesses can operate in specific areas; even home-based must comply.

Counties and cities throughout NC set zoning laws, and you call your local building or municipal planning department to learn more about your location’s regulations. 

And if you’re inclined to reading government papers, check out the NC zoning ordinance. 

Decide if you’re an online-only business

Is your business brick-and-mortar, online-only, or a mixture of both? Now is the time to decide because if you are online, you’ll need certain things to succeed, like:

• A website: Register your business name as a domain, build a website, and fill it with engaging content.
• Social media presence: Create profiles on target audience-relevant social media platforms like Twitter, Facebook, or Instagram.
• Supply and distribution plan: Contact product suppliers and delivery companies to arrange supplies and distribution
• Comply with online tax laws: Businesses selling tangible goods must register for Sales and Use tax with the North Carolina Department of Revenue for a Certificate of Registration.
• And comply with North Carolina-specific regulations regarding online business.

Brick-and-mortar businesses should also create an online presence by registering a Google profile to promote their brand. 

Step# 3. Choose a business name

Branding, memorability, domain, and trademark availability are the 4 things you should consider when choosing your business name.

For example:

• Branding: Your name must suit what you’re selling and your target audience.
• Memorable: You want people to remember it; punchy 2 to 3-syllable names that are easy to spell work best.
• Domain: You should use a business name that’s available as a domain so people find you online.
• Trademark: A trademark stops others from using your business name nationally.

Next, you must meet NC’s business name requirements.

North Carolina naming requirements:

LLCs, LLPs, and corporations submit a business name while filing their formation application with the NC Secretary of State’s Office. 

But there are some naming requirements:

• Your name must be unlike any other previously registered NC business name. Use the NC business name search tool to ensure it is.
• LLCs, LLPs, and corporations must include identifiers (like LLC or limited liability company, LLP or limited liability partnership, and Corp or corporation) in their business name.
• Certain words like bank, insurance, and accounting are prohibited. Nor can you use terms relative to government departments like the CIA or FBI. 

You can reserve an available business name in North Carolina by filing an application to reserve a Business Entity Name. 

Using a DBA in North Carolina:

A DBA (Doing Business As) allows you to trade using a name other than your own (handy for sole proprietorships and general partnerships) or your registered name for legal entities. 

The term for DBA in NC is an assumed name, and you register one by filing a Certificate of Assumed Name.

Step# 4. Choose a business structure 

A business structure describes the type of business entity you choose to start. Your choice determines your legal, tax, and financial liability obligations. There are many types of entities but some suit SMBs more than others.

The common business structures

• Sole proprietorship: Where an individual runs a non-separate entity,  keeps all profits and losses and is responsible for all liability.
• Partnership: Two or more individuals running a non-separate business entity. All profits, losses, and liabilities pass through to the partners relative to their percentage ownership.
• Limited liability company: LLCs can be single-member or multi-member and are separate legal entities that provide liability protection to their owners, known as members.
• S corporation: A separate legal entity with shareholders who buy stock in the business, receive limited liability protection, and pay tax using the pass-through structure.

Tax advantages of each option

Sole proprietorships, partnerships, LLCs, and S corporations suit small businesses because they use the pass-through tax system, which avoids corporation tax and passes all profits and losses to the owner/owners/members/ or shareholders.

The advantage is you avoid double taxation, instead paying income tax on your tax return at a rate relative to your earnings. 

Step# 5. Set up banking, credit cards, & accounting 

Using separate business banking, credit cards, and accounting helps simplify your bookkeeping duties. 

And maintain liability protection for legal entities like LLCs and S corporations. Because if a legal entity mixes business and personal accounts, it can be found guilty of breaking the corporate veil, putting the owner’s assets at risk should they be sued.

Business banking

To open a business bank account, you may need an EIN, which is one reason many sole proprietors and LLCs without employees get one. 

Others are:

• Business banking separates personal and business assets.
• Simplifies bookkeeping.
• Builds business credit history, which can help raise capital at a lower interest rate.

Business accounting

Your accountancy duties depend on your chosen entity and if you have employees. 

However most start-ups need business accounting to track their debits and credits and simplify quarterly and annual tax filings.

You can use accounting software that integrates with your business banking and credit accounts to balance your books and an accountant to help fulfill your tax duties. 

Step# 6. Get funding for your North Carolina business 

Your chosen business structure can determine how you’ll fund your start-up in North Carolina, for instance:

S corporations can raise capital by selling shares, and LLCs can get a small business loan, credit card, or overdraft.  

However, sole proprietors and general partnerships often need alternative ways to raise funds to start and run their businesses. 

Let’s look at your options:

• Bootstrapping: An approach where you self-fund your start-up and use its income to support growth.
• Friends and Family: Loans from those people close in your life, usually interest-free but always with conditions.
• Small Business Loans: Funding from traditional banks with interest and set repayment times. To get an SBL, you’ll need a business plan with a detailed financial section showing your credits, debits, and how you`ll repay.
• Small Business Grants: Non-repayable funding from government agencies (usually local) that supports business start-ups to encourage local development and employment.
• Crowdfunding: Fundraising campaigns via crowdfunding platforms where entrepreneurs post their business idea, and individuals donate to help them achieve their target.
• VCs and Angel Investors: Venture capitalists invest in a business idea for percentage ownership and control (like Shark Tank). Angel investors take percentage ownership but act as silent partners.

North Carolina grants and state incentives: 

Start-ups and existing businesses can apply for state grants and incentives to support their venture. 

Incentives can include lower taxes and other start-up costs, whereas grants are interest-free cash injections you don’t repay.  

Some NC resources:

• North Carolina Department of Commerce: NC incentive programs that support businesses to grow and improve their communities.
• Carolina Small Business Development Fund: Nonprofit financial institution that supports community development by providing capital and other help to small NC businesses.
• US Grants North Carolina: A list of NC small business grants.
• Edpnc: North Carolina performance-based incentive programs that help businesses locate in NC by lowering costs and reducing tax burdens.

North Carolina Small Business Administration (SBA):

The NC SBA branch supports small businesses, including SBA-backed loans with lower interest and longer repayment terms. 

North Carolina angel investors:

North Carolina Angel Investors: Find over 5000 NC angel investors seeking start-up investment opportunities.

Step #7. Get insured

When you start a business in North Carolina, you take on certain risks; one way to reduce them is by purchasing business insurance. Some insurance policies are optional; others are mandatory; here’s what you need to know. 

Common types of business insurance:

• General liability insurance: Covers damages to your client’s property and lawsuits resulting from injuries in your workplace (also called slip and fall insurance).
• Professional liability insurance: Necessary for professionals like financial consultants or accountants to protect against claims of negligence, errors, and omissions.
• Business interruption insurance: Covers lost income and expenses should you be unable to operate because of a natural disaster or illness.
• Commercial property insurance: Protects your place of work and equipment against theft or damage.
• Commercial auto insurance: Covers 3rd party liability claims, driver injury, and vehicle loss or damage.
• Umbrella insurance: Provides extra protection by covering expenses beyond your other policy limits.

North Carolina-specific insurance regulations:

NC employers must get 2 types of insurance.

1. Workers’ compensation: Any business employing 3 or more people (excluding yourself) must have worker’s compensation to cover disability benefits and medical costs of employees injured at work. 
2. Unemployment insurance: A state-provided insurance employers must pay to enable the state to assist workers who lose their job when not at fault. 

Step #8. Obtain permits & licenses

The Tar Heel State doesn’t have a single business license that ensures you comply with state requirements in all jurisdictions.

However, it has 700 plus state-issued regulatory occupational licenses and permits!

Whether you need one or more depends on your business type, industry, what services and products you sell, and your location.

Check the North Carolina Economic Development Partnership’s Business Licenses & Permits for state licenses. For local licenses and permits, contact your local county clerk’s office.

Federal income tax and North Carolina local tax:

Besides state tax, you’ll also have federal and local taxes to consider.

• Federal taxes: Most businesses pay the IRS federal income tax.
• Self-employment tax: Business owners pay a 15.3% tax on net earnings.
• North Carolina corporation tax: NC corporation tax is one of the lowest at just 2.5%.
• NC income tax: A flat rate of 5.25%.
• Sales tax: A reasonable 4.75%, but cities and counties may charge additional sales and use taxes.
• Franchise tax: Corporations and S corps must pay an annual franchise tax based on a percentage of their stock value.

North Carolina-specific regulations:

• Businesses selling goods in NC must register to collect sales tax with the North Carolina Department of Revenue: (DOR).
• Employers must register with the DOR for employer withholding tax.
• Certain professions require a professional and occupational license. Check the North Carolina Department of Commerce for confirmation.
• Employers must apply to the IRS for an Employer Identification Number (EIN) online or by mail.

Step# 9. Find your team 

Hiring your team is an exciting time. After all, these are the people who’ll help grow your business.

When hiring, you must comply with certain requirements at North Carolina and federal levels, such as:

But there’s more to finding your team than registration, reporting, and insurance. You need the right people for the job. 

• Register with the IRS for employee taxes.
• Report new hires to the North Carolina New Hire Directory.
• Register for withholding tax and unemployment insurance tax.
• Get worker’s compensation and pay unemployment insurance.

People are the backbone of the business

Lionel Messi (the world’s greatest soccer player) just joined Inter Miami.

The question is, why? 

Saudi Arabia offered him 1.5 billion dollars, and Europe is home to the Champions League. 

It could be because David Beckham is 10 years building his team, with an end goal of making MSL a leading soccer league. And knows he needs the right players to make it happen.

Messi is that player. And Beckham did whatever was necessary to get him. 

What’s this got to do with you?

Who you surround yourself with can make or break your business, from shopfront employees, product developers, and experienced accountants to fellow business owners providing start-up tips. 

Attracting the right people to your team (like Messi) is key. 

To help you, the NC Department of Health and Human Services provides a Job Candidate Trial Period business incentive. 

Comply with North Carolina Payroll regulations

North Carolina payroll regulations exist to ensure employers pay employees a fair and regular wage. In NC, they include:  

• You must pay employees at least the minimum wage of $7.25 an hour.
• Pay time and a half overtime on any hours worked over the standard 40 per week.

Once you have your team, you can use a payroll service to track hours, issue paychecks, and organize your bookkeeping for tax season.

Hire contractors:

My son’s school has a great motto – “If you want to go fast, go alone. If you want to go far, go together.”

And even if you are a one-person-show, you don’t have to operate alone because you can hire contractors for specific tasks, like an accountant on retainer for tax season or a freelance writer for your blog posts.

When hiring contractors, you must classify them correctly to avoid breaking NC employment laws. 

Step #10. Market & grow your business

In 2012, a small subscription-based razor company “Dollar Shave Club” launched a humorous marketing campaign that revolutionized the shaving industry.

Their innovative approach of a “dollar a month razor subscription delivered to your door” was so disruptive it gained one 3rd of all US razor sales and a $1 billion buyout by Unilever. 

Here’s how that can help you.

CEOs Mike and Mark had little cash, got some investment from a start-up incubator, and (here’s the point) used it to show their target audience how their affordable, high-quality product and service met all their needs.  

I love this example because it shows how small businesses can beat corporations by knowing their target audience and giving them what they want.

Here are some ways you could become the next Dollar Shave Club.

Invite customers to opt-in to a mailing list or newsletter

Some strategies play the long game; email marketing is the marathon of marketing and, when done right, the most profitable. 

Opt-in mailing lists/newsletters allow readers to provide their email addresses for whatever you offer, like a free mini course or ebook.

It’s a strategy you employ once you’ve built your website and your marketing plan is in place. 

Consider making special offers to attract your first customers

Special offers are great for attracting potential customers and enticing them to take action, such as saving money or enjoying extra benefits. 

Some strategies you could use to land your first sales include:

• Free shipping and returns
• Buy One Get One (BOGO)
• Flash sales
• Contests and giveaways
• Discounts
• Loyalty programs

Look for local businesses or brands to collaborate with

Go Pro sells cameras and Red Bull energy drinks, but together they create a world-leading lifestyle brand.

Okay, that’s high brand collaboration, but it works locally too. 

Look for businesses in your marketplace (non-direct competitors) whose reputation and style suit yours and whose customer base is beyond your target audience.

For example, a local bakery specializing in artisanal pastries could collaborate with a coffee shop known for its premium coffee blends and cross-promote to enhance their customer experience and benefit from each other’s customer base.

Invest in word of mouth (happy customers attract each other)

Have you ever told a friend about an extraordinary meal or outstanding service?

If so, that’s word-of-mouth marketing. And it’s the most powerful influencer because people believe what close friends and family recommend.

You encourage it by being better than your competitors at every opportunity and asking your customers to spread the word. 

Speaking of which:

Pay attention to online reviews; ask happy customers to review you

Customer reviews are vital for influencing people to choose your brand over your competitors.

You get them the same way as word-of-mouth marketing, by providing excellent products and outstanding service. And once you do, you must pay attention to them to ensure your business fulfills your target audience’s needs. 

Always ask the customers to leave reviews on your website, Google My Business page, and any other industry-relevant review sites. 

Create unique, helpful content to showcase your activity 

People need to see a brand around 8 to 10 times before they’ll trust it enough to use it; that’s why you use brand marketing.

But another way to gain trust is by providing helpful content that shows people you are an authority in your niche and want to help your ideal clients solve their problems. 

You can write or record your content; the key is putting it where your target audience will see it, such as using a website blog, social media platforms like TikTok or Instagram, and YouTube. 

Step# 11. Open the doors! 

Plan a successful launch event

A small business launch event is your chance to make a grand entrance into the business world. 

It’s your opportunity to showcase your products, services, and brand to potential customers, partners, and your local community through presentations that captivate your audience. 

Your launch event’s aim is to generate excitement, create brand awareness, and build relationships that fuel your start-up’s future growth and success. 

Conclusion

And that’s how to start a business in North Carolina in 11 easy steps.

Remember to comply with NC`s business regulations, get the right permits and licenses, choose an appropriate business name and location, and use our tips to promote your start-up. 

And if you need more help, check out our post “How to start a small business in 2024” and the below FAQs.

Good luck!

FAQ