In North Carolina, the climate, economy, and low cost of living can make it the perfect state to open your dream business. One thing business owners don’t always start out with is legal know-how. At North State Law, we want you to understand the hidden legal risks that can shut down your North Carolina business overnight, and how to prevent them.
Creating and understanding your business plan is the first step in owning a business in the Tar Heel State, but there are many more steps that can protect you and your assets from litigation or legal disputes.
For the third year in a row, CNBC recognized North Carolina as the top state for business. Criteria included economy, infrastructure, workforce, business friendliness, quality of life, technology and innovation, education, cost of living, access to capital, and cost of doing business.
With economy, workforce, and business friendliness as North Carolina’s top three strengths, it’s no wonder any business would want to make this state their home. When you create a business, however, there are important steps you need to take to avoid legal pitfalls that could close your doors.
Hidden Legal Risks
While North Carolina is a great state to start your business, starting a business the right way helps you avoid shutdowns and keeps your business thriving and growing. Some of the advice that can save you heartache and headaches later:
- When opening a business in North Carolina, you should first separate business from personal finances. This protects your own assets if a client files a complaint against your company and makes for easier tax filing. You should open separate business and personal bank accounts, keep clear records, and separate expense categories.
- Maintaining legal licenses and keeping on top of any changes to them is essential to keeping your business operating. Operating without a legal license can result in fines or even closure. It can also open your business up to legal action, and in some cases, criminal charges.
- North Carolina has different business licensing and zoning regulations depending on the type of business. Hiring a business lawyer can protect your business and is a smart, professional move.
- If you have employees or plan to expand in the future, understanding employment and payroll taxes in North Carolina is vital. You are required to withhold an amount for both state and federal taxes, and if you fail to do so, or do so incorrectly, you can potentially be charged with fraud. Properly withholding taxes ensures your business remains in compliance.
- Understanding the importance of contracts with employees, clients, and vendors is imperative. Contracts should outline all details such as payments, deliverables, timelines, and other elements you agree to. This protects you from civil litigation.
- Insurance protects your business, and you need different kinds of insurance for different circumstances. You may need Workers’ Compensation insurance or Commercial Auto Insurance, and you may want General Liability, Professional Liability, or other coverage.
Hire a Business Lawyer
No matter the circumstance, hiring a North Carolina business lawyer may help you navigate the complex business laws, licensing, and insurance needs of your business. Knowing which are mandated and which are advisable can save you time, money, and a potential disaster. A skilled business lawyer can also draft contracts and ensure you are covered there as well.
FAQs
What Are Some Examples of Small Business Structures?
Some examples of small business structures:
- An LLC is a limited liability company, which can help protect your personal assets in the case of bankruptcy or litigation.
- Sole proprietorships give you sole control of your company, but do not allow you to separate your personal finances. You owe debts owned by your company.
- A partnership is a company owned by two people, with limited liability.
- A corporation is larger and can be for-profit.
How To Minimize Legal Risk in Business?
You can minimize legal risk in business in several ways. The better your business structure is, the stronger your protections are, and having a business lawyer advising you every step of the way minimizes risk.
A business lawyer can help solidify your business structure, fill out the appropriate licensure paperwork, maintain licensure, craft contracts, and identify the appropriate insurance for your business. This can help avoid pitfalls and ensure you have the protection and tax information you need.
What Are the Different Types of Intellectual Property in Business in North Carolina?
The different types of intellectual property in business in NC are trademarks, copyrights, service marks, patents, and trade secrets.
- Trademarks can protect words, symbols, or designs that identify your business or goods as yours
- Copyrights protect any form of authorship that results in a tangible medium
- Service marks can protect words, symbols, or designs that differentiate you from other providers
- Patents can protect inventions and discoveries
- Trade secrets are a form of intellectual property that is not known to competitors
Which Business License Do I Need in North Carolina?
North Carolina does not have a generic license to fit all businesses for compliance. Some businesses will require many state and local licenses or permits, while others may not.
The North Carolina Board of Licenses Database (NCBOLD) may list your business’s necessary licenses. However, you should also check local ordinances. At North State Law, our business attorneys help identify which licenses or permits your business may need to ensure you are in full compliance with local, state, and federal laws.
North State Law Can Protect Your Business
At North State Law, we handle licensure issues for our clients routinely. We can work with business owners to identify the right business structure to protect the business you worked so hard to build. Our business lawyers can create contracts that can ensure you are not left open to litigation or closure, and we can ensure you are handling the task of being an employer in a way that meets the legal requirements of North Carolina and the federal government.
Contact us today for a free discovery call and learn how we can help protect your business and you.
