General Information
One of the first steps in establishing a business is determining the appropriate structure (sole proprietorship, general partnership, corporation, S-corporation, limited liability company, limited partnership, or limited liability partnership). The structure of a business affects taxation, legal and financial liability and decision-making authority. Your decision should be influenced by the business activity, financial requirements, risk assessment, management control, and participation of others, as well as personal needs.
This section describes the basic business structures or forms of organization. The descriptions are for informational purposes only and are not intended to be, nor should you rely on them as legal advice. Before selecting a business structure, you should consult your attorney and/or accountant as each structure carries with it unique legal and tax consequences.
Regardless of your structure, it is not necessary to file a Certificate of Assumed Name form in a county where no place of business is maintained and where your only business is the sale of goods by sample, by traveling agents or by mail. There is no statewide name registration for sole proprietorships or general partnerships – that’s why you must register your business name in each county where you will do business.
Business Structures
A sole proprietorship is a business that is owned and operated by an individual. The owner is personally and legally responsible for his or her actions, including any actions taken on behalf of or in the name of the business. All profit or loss from a sole proprietorship belongs to the owner.
This type of organization is relatively simple to form and operate. No formal action is required by law to establish a sole proprietorship. Certificate of assumed name forms for sole proprietorships must be signed by the individual owner. Proper name registration and certain permits and licenses may be required.
A general partnership is formed by two or more persons who agree to contribute money, labor, and/or skill to a business and to share its profits, losses, and management. For partnerships, including LLPs, the certificate of assumed name form must be signed by each partner. All partners typically are held legally responsible for their own actions and the actions of the other partners, including actions taken on behalf of or in the name of the partnership.
Formal written documents are not required by law for most partnerships. However, it is sound practice for partners in a business to have a written agreement covering their intent and expectations on basic issues, such as whether the partners will take or reinvest profit. Such agreements should be prepared by an attorney. As with a sole proprietorship, proper name registration and certain permits and licenses may be required.
All Certificate of Assumed Name forms are filed with the county Register of Deeds Office where you will be conducting business. This includes transfer and/or withdrawal of Certificate of Assumed Name forms for sole proprietorship, general partnership, corporation and limited liability company. You may download the Certificate of Assumed Name form from the Forms Section of our website.
A corporation, though formed by individuals, is a distinct entity that has a legal status or existence separate from both the individuals who may form it and its owners. Think of a corporation as an artificial entity or "person." Owners of a corporation, called shareholders, are generally protected from personal liability since their personal property is not at risk for any business liability.
Businesses incorporated and organized under North Carolina law are required to file Articles of Incorporation with the Corporations Division of the Department of the Secretary of State. Corporations must file a Certificate of Assumed Name with the Register of Deeds in the county where business will be conducted if using a name other than the name filed with the Secretary of State. You should engage an attorney to address and properly handle all essential details. Proper name registration and certain permits and licenses may be required. Visit the Corporations Division of the Secretary of State for general information and to download forms.
S-corporation status is determined by the Federal Government and pertains to tax treatment. Restrictions for an S-corporation are outlined in IRS publication 334, Tax Guide for a Small Business. Call the IRS at (800) 829-3676 to request forms or download them from the IRS website.
A limited liability company, or LLC, is an unincorporated association, legally distinct and separate from its owners. An LLC offers its owners both limited personal liability for actions of the business and special tax treatment that may prevent what has been called "double taxation" of the owners’ income.
The formation of an LLC is accomplished by filing Articles of Organization with the Corporations Division of the Department of the Secretary of State. LLCs must file a Certificate of Assumed Name with the Register of Deeds in the county where business will be conducted if using a name other than the name filed with the Secretary of State. Proper name registration and certain permits and licenses may be required. Visit the Corporations Division of the Secretary of State for general information and to download forms.
A limited partnership may be formed by two or more individuals, partnerships, corporations or other associations. Limited partnerships have both general and limited partners. A limited partner generally plays only one role in the business, that of an investor. Accordingly, a limited partner’s liability for the actions and debts of the partnership is usually limited to the extent or value of his investment. In contrast, general partners are involved in operating and managing the business and are subject to unlimited liability for the acts and debts of the partnership.
The formation of a limited partnership is accomplished by executing a Certificate of Limited Partnership and recording it with the Corporations Division of the Department of the Secretary of State. Limited partnerships must also have a Certificate of Assumed Name filed with the Register of Deeds Office in each county where business will be conducted under any name other than the name filed with the Secretary of State. Proper name registration and certain permits and licenses may be required. Visit the Corporations Division of the Secretary of State for general information and to download forms.
A limited liability partnership, or LLP, is a type of partnership that has only general partners, but nonetheless affords protection from personal liability to those partners who are not personally involved in or personally responsible for acts that result in liability. Businesses providing professional services, such as law firms, are often structured as LLPs. A LLP is created by filing an application for registration with the Corporations Division of the Department of the Secretary of State. Proper name registration and certain permits and licenses may be required. Visit the Corporations Division of the Secretary of State for general information and to download forms.
Professional corporations and professional LLCs are filed with the Corporations Division of the Department of the Secretary of State. To determine whether a particular corporation is such a "professional corporation," it is necessary to examine the requirements of NCGS 55B-2(5).
Information on filing corporations, LLCs, LLPs, and limited partnerships is available by telephone, letter, over the counter or online from:
Department of the Secretary of State
Corporations Division
PO Box 29622
Raleigh, NC 27626-0622
(919) 807-2225
Toll-free: (888) 246-7636 (leave message)