Selecting a Business Structure
The structure of a business affects taxation, legal and financial liability as well as decision-making authority. Before selecting a business structure, you should consult your attorney and/or accountant as each structure carries with it unique legal and tax consequences.
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. All profit or loss from a sole proprietorship belongs to the owner.
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. All partners typically are held legally responsible for their own actions and the actions of the other partners.
To file your Sole Proprietorship or General Partnership business name, download the Certificate of Assumed Name. Assumed Name forms are filed with the County Register of Deeds. There is no statewide name registration for Sole Proprietorships or General Partnerships, that is why you must file your name in each county you conduct business.
A corporation is a separate legal entity from the individuals who form it and its owners. Owners are generally protected from personal liability.
To establish a corporation, download the Articles of Incorporation.
A limited liability company or LLC is 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.
To form an LLC, download the Articles of Organization.
A limited liability partnership, or LLP has only general partners, but nonetheless affords protection from personal liability.
To form an LLP, download the Application for Registration of a LLP.
A limited partnership or LP may be formed by two or more individuals, partnerships or corporations. Limited partnerships have both general and limited partners. A limited partner is usually the investor. General partners are involved in operating and managing the business and are subject to unlimited liability for the acts and debts of the partnership.
To form an LP, download the Certificate of Domestic Limited Partnership.
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 from the Secretary of State:
Department of the Secretary of State
Corporations Division
PO Box 29622
Raleigh, NC 27626-0622
(919) 807-2225
Watch the Choosing The Form of Business Entity video compliments of NC LEAP with the NC Bar Association.