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How to Set Up a New Business in North Carolina

Published By Janet Gershen-Siegel at April 8th, 2019

Starting a Business in North Carolina

A new business in North Carolina is not out of reach. So have you been wondering: how do I start a business in North Carolina? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in North Carolina during a recession?

New Business in North Carolina: Pros and Cons

Per a 2016 article by Business Insider, North Carolina is in the top twenty states to start a new business in. This is for the entire nation. There are also up and coming business centers. These are in cities like Asheville and Durham, Chapel Hill, and Winston.

It has solid numbers across about all factors. The rate of new business owners, its opportunity share of new business owners, and density of startup companies are all above average.

Also, the state’s business survival rate ranks among the nation’s ten best. There is also a somewhat cheaper cost of living.

Recent Upsurge

According to a 2018 Forbes article, North Carolina clocked in at number one! Forbes cited the state’s business costs and labor supply mainly, and its regulatory environment. Quality of life and growth prospects also ranked highly.

Start a New Business in North Carolina – North Carolina Top Industries

Per the Economic Development Partnership of North Carolina (EDPNC), the biggest industries in North Carolina are automotive, truck, and heavy machinery. Top industries are also aerospace and defense; and biotechnology and pharmaceuticals.

Even more top North Carolina industries are energy, business and financial services. Top industries are also corporate headquarters. North Carolina is home to Lowe’s and Bank of America, among others.

Yet more top industries are furniture and information technology. Also, top industries are food processing and manufacture, and textiles. Top industries in North Carolina are also plastics and chemicals.

North Carolina Business Ideas

Smart business owners can find new opportunities. Work with bigger industries in the state. Offer goods or services such as developing and distributing safety equipment.

Another option is trucking for any industry. More choices are also data and other computer support such as programming. Also, there’s always food service, among others.

Here is how to start a new business in North Carolina.

Start a New Business in North Carolina – North Carolina New Business Secretary of State Requirements

Register a Business Name

Check business name availability on the official North Carolina government website.

Corporations

Corporations must have unique names. Make sure a name is not already in use.

There are many databases, catalogs, and other records of corporations to search. Start by searching the database of corporations registered in the state of North Carolina. It is available at the North Carolina Secretary of State website.

Corporate Name Reservations

A business owner can reserve a certain corporate name if they do not plan to file Articles of Incorporation right away. However, a reservation is not necessary.  The fee is $30.00 and the name they submit will then be reserved for a period of 120 days. The application form is at Reserve a North Carolina Corporation on the North Carolina Secretary of State website.

Business Permits and Licenses

The Labor and Economic Analysis Division website keeps a useful pull down menu with all license info.

Local Permits and Licenses

So check with your local municipality, city or county office or website. See if there may be any local licensing or permit requirements.

For example, in Charlotte, go to the Licensing and Permitting page on the city of Charlotte website.

Start a New Business in North Carolina – Business Registration

Visit the North Carolina Business Registration page of the Department of Secretary of State. Or try the Economic Development Partnership of North Carolina.

Tax Registration

The North Carolina Department of Revenue breaks down everything you may need to register for taxes.

Start a New Business in North Carolina – Virtual Offices

Alliance offers North Carolina virtual business office space in Charlotte and Raleigh. So go to Regus for Asheville, Durham, Greensboro, and Winston-Salem. Also, go to DaVinci for Gastonia.

For Fayetteville, Greenville, and Wilmington, and other parts of the state, ask local business owners. Or try user groups for help in this area.

More options may be virtual business office space in nearby states. These are Georgia, South Carolina, Tennessee, and also Virginia.

Start a New Business in North Carolina – Establish Business Credit

Company credit is credit in a company’s name. It doesn’t attach to an owner’s consumer credit, not even if the owner is a sole proprietor and the sole employee of the small business.

Therefore, an entrepreneur’s business and personal credit scores can be very different.

The Advantages

Because company credit is independent from personal, it helps to protect a small business owner’s personal assets, in case of court action or business bankruptcy.

Also, with two separate credit scores, a business owner can get two separate cards from the same vendor. This effectively doubles buying power.

Another advantage is that even start-ups can do this. Visiting a bank for a business loan can be a formula for disappointment. But building small business credit, when done correctly, is a plan for success.

Personal credit scores depend on payments but also other factors like credit use percentages.

But for small business credit, the scores actually merely depend on if a business pays its invoices punctually.

Start a New Business in North Carolina Credit Suite

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

The Process

Establishing small business credit is a process, and it does not happen without effort. A business will need to proactively work to develop small business credit.

That being said, it can be done readily and quickly, and it is much speedier than developing personal credit scores.

Vendors are a big aspect of this process.

Doing the steps out of sequence will result in repetitive denials. No one can start at the top with small business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Start a New Business in North Carolina – Business Fundability

A small business has to be fundable to lending institutions and vendors.

For this reason, a business will need a professional-looking web site and email address. And it needs to have website hosting from a merchant like GoDaddy.

Additionally, company phone and fax numbers need to have a listing on 411.com.

Additionally, the company telephone number should be toll-free (800 exchange or similar).

A company will also need a bank account dedicated purely to it, and it has to have every one of the licenses essential for operating.

Start a New Business in North Carolina Credit Suite

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Dealing with the IRS

Visit the IRS website and acquire an EIN for the company. They’re free. Pick a business entity like corporation, LLC, etc.

A business can get started as a sole proprietor. But they will probably wish to switch to a variety of corporation or an LLC.

This is in order to lessen risk. And it will optimize tax benefits.

A business entity will matter when it pertains to taxes and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible.

Sole Proprietors Take Note

If you operate a company as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the small business name. As a result, you can wind up being personally liable for all small business debts.

And also, per the IRS, using this structure there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Avoid confusion and noticeably lower the chances of an Internal Revenue Service audit simultaneously.

Start a New Business in North Carolina – Starting Off the Business Credit Reporting Process

Start at the D&B website and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a company in their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s sites for the company. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.

By doing this, Experian and Equifax will have activity to report on.

Vendor Credit Tier Start a New Business in North Carolina Credit Suite

First, you ought to establish trade lines that report. This is also known as the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can begin to get credit in the retail and cash credit tiers.

These kinds of accounts tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are commonly Net 30, instead of revolving.

Therefore, if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts must be paid in full within 30 days. 60 accounts need to be paid fully within 60 days. Compared to with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you used.

To kick off your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting agencies. When that’s done, you can then make use of the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Helps

Not every vendor can help like true starter credit can. These are vendors that will grant an approval with very little effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than once to these vendors. So, this is to prove you are responsible and will pay timely.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then progress to the retail credit tier. These are companies like Office Depot and Staples.

Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the company’s EIN on these credit applications.

One instance is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or more.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are companies like BP and Conoco. Use this credit to purchase fuel, and to repair, and maintain vehicles. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or higher and a 411 business phone listing.

Shell might claim they want a certain amount of time in business or revenue. But if you already have sufficient vendor accounts, that won’t be necessary. And you can still get approval.

Start a Business in North Carolina Credit Suite

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Cash Credit Tier

Have you been sensibly managing the credit you’ve up to this point? Then progress to the cash credit tier. These are service providers like Visa and MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or more. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Additionally, they want you to have an established small business.

These are businesses such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are typically MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.

Start a New Business in North Carolina – Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and address any mistakes as soon as possible. Get in the habit of taking a look at credit reports and digging into the particulars, and not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: www.creditsuite.com/monitoring.

Update Your Record

Update the relevant information if there are mistakes or the relevant information is incomplete.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any problems in your records. Mistakes in your credit report(s) can be fixed. But the CRAs often want you to dispute in a particular way.

Disputes

Disputing credit report inaccuracies generally means you send a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always send copies and keep the originals.

Fixing credit report errors also means you precisely detail any charges you dispute. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

A Word about Building Business Credit

Always use credit responsibly! Don’t borrow beyond what you can pay back. Keep track of balances and deadlines for repayments. Paying off punctually and completely will do more to raise business credit scores than nearly anything else.

Establishing business credit pays off. Good business credit scores help a company get loans. Your lending institution knows the business can pay its financial obligations. They recognize the company is for real.

The small business’s EIN attaches to high scores and lenders won’t feel the need to ask for a personal guarantee.

Business credit is an asset which can help your business for many years to come.

Learn more here and get started toward opening a new business in North Carolina.

Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.

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