Corporate
& Business
How
do I choose a name for my business?
ANSWER:
Generally, North Carolina law requires that the name of a
business entity be distinguishable from other entities
currently transacting business or conducting affairs within
the state. You may apply, however, to use a name already existing within
the records of the Secretary of State’s office if 1) the
other party who has previously reserved or registered the name
consents in writing to your using the name and submits a form
to change its own name upon the Secretary’s records or 2)
you deliver a certified copy of the final judgment of a court
which establishes your right to use the name to the Secretary
of State’s office.
Also,
the type of structure you choose to run your business will
affect the name of the business. For example, the name of a corporation must contain the word
“incorporated” “corporation” or similar abbreviations,
whereas a limited liability company’s name must include
“limited liability company,” “LLC,” etc.
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Do I have to register my
business name?
ANSWER: Yes.
Your business name must be registered with the office
of the Secretary of State of North Carolina and it must be
distinguishable from other existing business names.
Once registered, the name is reserved for your
exclusive use until the end of the year in which it became
effective. After
getting the name registered, an entity may renew it yearly.
After your business name becomes effective, the entity
becomes authorized to transact business or conduct affairs
within the state of North Carolina.
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What factors should be
considered in choosing the type of business form for my
business?
ANSWER: Although
there are many important things to think about when choosing a
business form, some of the main considerations include your
preference of tax treatment, your plan to capitalize the
business, whether you plan to issue stock and trade it
publicly, how you plan to structure the management of your
business, and issues surrounding the liability of the business
owners, among other things.
It is
very important to plan your business and to work closely with
someone who can help you choose the business form that will
meet your needs.
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What are the benefits of
starting my own business?
ANSWER: Starting
your own business will give you a great amount of flexibility.
Being your own boss allows you to structure your
working hours as well as your workload however you see fit.
Running your own business also grants you flexibility
in structuring the way in which the entity will be taxed for
federal income tax purposes.
Corporations, sole proprietorships and partnerships
receive different tax treatment under federal law.
Depending on the type of tax treatment you wish to
enjoy, your business can be structured accordingly.
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What are the risks of
starting my own business?
ANSWER: Along with the
flexibility of starting your own business comes a great deal
of responsibility. Operating
a business requires money, therefore, you may be required to
take out personal loans in order to capitalize your new
business. Also,
owning a business of your own can subject you to a great
amount of liability. For
example, you may be responsible for tortious acts committed by
your employees while they are working within the course and
scope of their employment for you.
Also, running a sole proprietorship or being the
general partner in a general partnership can subject you to an
unlimited amount of liability for any business losses.
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How do I
determine whether my business will make money?
ANSWER: The first step is to do
research to determine whether the existing market has a need
for your service or product at the current time.
If so, it is also important to consider whether and if
consumers can support your business by spending money on your
product or service. Lastly,
consider whether you have enough money or financing to run
your business effectively, without subjecting yourself and
others to bankruptcy if the proposed business does not work
out as planned.
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What are the different types
of business forms to choose from?
ANSWER: There are several
business types to choose from, including sole proprietorship,
general partnership,
limited liability partnership, professional association,
limited liability company, corporation and non-profit
corporation. Each
of these forms is structured in different ways which provide a
business owner with different benefits and obligations.
It is important to
work closely with someone who can help you choose the
business form that will meet your specific needs.
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What
is a partnership and how do I form one?
ANSWER: A
partnership is a business owned by two or more people that has
not filed papers to become a corporation or a limited
liability company (LLC). You do not have to complete any
paperwork to create your partnership -- the arrangement begins
as soon as you start a business with another person.
Although
the law does not require it, many partners work out the
details of how they will manage their business in a written
partnership agreement. If you do not create a written
agreement, the partnership laws of your state will govern your
partnership.
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Are there special rules for
partnerships?
ANSWER: Generally, the affairs
of a partnership are governed by Articles 2 and 3 of Chapter
59 of the North Carolina General Statutes (Revised Uniform
Partnership Act - RUPA).
These rules are only default provisions, however, and
only apply if the partnership has not set out its own
governing rules. Partners
can dictate most aspects of their partnership through their
partnership agreement. This
agreement will then govern any disputes which arise during the
tenure of the partnership.
In the event that a specific situation arises which was
not contemplated within the partnership agreement, the default
rules of the RUPA will govern the situation.
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Is a written partnership
agreement necessary for all partnerships?
ANSWER: It
is not a legal requirement to have a written partnership
agreement for a general partnership.
It is wise, though, to create a written agreement that
sets out the expectations for each of the partners.
In the event that there is no written agreement, the
statutory laws of the state will be used to govern the
partnership.
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