Choosing the right structure for your North Carolina business

When setting up a new business, people in North Carolina must choose which structure to use, each of which has its own benefits and disadvantages.

There are numerous legalities involved with starting up a business in North Carolina. One important decision that would-be business owners must make is which business structure they will use. The choice they make will affect multiple aspects of their business, including their personal liability, tax responsibilities, ability raise money and other operations. In order to determine which business structure is best suited for their needs, it is helpful for people to understand the different types of business entities.

Sole proprietorship

Perhaps the most basic business structure is the sole proprietorship. This option establishes an unincorporated business that is completely owned and operated by one person. According to, the business owner in sole proprietorships has all of the managerial control, but also all of the liability for the business' financial obligations. This is because there is essentially no differentiation between the business and its owner.


The Small Business Association points out that a partnership is a single business that is owned by two or more people. The partners share the business' profits and losses, and they are personally liable for their company's financial obligations. Depending on their situations and needs, people may choose to establish a general partnership, a limited partnership or a joint venture. In relation to other business structure forms, partnerships afford owners more operational flexibility and tax efficiencies.


A corporation is a legal entity that is developed for the express purpose of conducting business. Unlike other structure options, this form separates companies from those who found them. Thus, it relieves the owners from their personal liabilities and certain tax obligations. Generally, there is more record-keeping and high formation costs with corporations than there are with other business structures.

Limited liability company

Also known as an LLC, limited liability companies are a type of hybrid business structure. They combine features of corporations and partnerships. reports that like with corporations, establishing an LLC removes the personal liability from the business owners. Since the business itself is not taxed, its profits are passed directly to the owners. So too, however, are the company's losses and tax responsibilities.

Seeking legal guidance

When people in North Carolina are looking to start up a business, there are a number of factors they must consider. With all of the options available, it can be challenging to know which one is right for their needs. Therefore, it may benefit those who are setting up a new business to consult with an attorney. A lawyer may help them determine the best option given their circumstances, as well as guide them through the legal process.