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Three Questions to Ask Before You Start a New Business

Three Questions to Ask Before You Start a New Business

Bradley Hunt| Everyone wants to be an entrepreneur. The idea of running your own business, not punching the clock, and not having to answer to a superior is what most people dream of. However, it is not as easy as it seems. To operate a successful business or company there are guidelines, procedures, and laws that you need to adhere to. Name selection, business structure, and licensing are important elements in starting any new business.

What Name Should I Choose?

A name is more than just a name when starting a new business. The name of your new business is the first thing customers will notice. We recommend coming up with several names in case your first (or second) choice is not available. New business owners don’t always consider that there are state and federal requirements to meet or that someone else may have already registered the name you wanted.

The North Carolina Secretary of State website offers guidelines for choosing a business name:

  • “An entity name shall not contain language stating or implying that the entity is organized for any purpose other than a purpose that is lawful and that is permitted by its formation documents. (i.e., Articles of Incorporation)
  • The name must be distinguishable upon the records of the Secretary of State from the name of any other entity on the business registry. By Administrative Code, the business entity suffix of the name (i.e., Inc., LLC) is not used to determine distinguishability on the records.
  • An entity name shall not contain words offensive to accepted standards of decency.”

From a practical perspective, you may not want to choose a name that is too long or hard to spell. Potential clients need to be able to find you. You will also want to ensure you can buy an acceptable website domain for your new business. Ideally, it will match the name exactly (or very closely).

How Should I Structure My Business?  

After considering your name, the next step is to figure out how to structure your business. Whether you’re running a business by yourself, with a partner or planning to incorporate, structuring your business has legal, reporting and tax implications. The most common business structures are:

  • Sole Proprietorship: a business that is owned and operated by an individual
  • General Partnership: a business operated by two or more individuals who share financial, legal, and labor responsibilities
  • Corporation: a business operated as a separate body directed by a board of directors
  • Nonprofit: tax-exempt organization in which no part of the organization’s income is allocated to officers or directors.
  • Limited Liability Company (LLC): a business acknowledging owners have no shared personal liability for debts and other legal liabilities within the company. This also includes Professional Limited Liability Companies (PLLCs) like doctors, engineers, or lawyers.

When it comes to starting a business, you will not know everything. Understanding the importance of business structure and knowing how each one might affect your business operation is important. Asking yourself these types of questions will save you money and time.

What Type of License Do I Need?

Obtaining the right license for your business depends on the type of business you will open. Not every business requires an official business license. Some may require a permit or even a certificate.

According to the U.S. Small Business Association, “Most small businesses need a combination of licenses and permits from both federal and state agencies. The requirements and fees vary based on your business activities, location, and government rules.”

These are described below:

  1. Business: a license, permit or certification required by State G.S. (General Statute)/Federal government for operation of business in the state
  2. Occupational: a license, permit or certification required by State G.S./Federal government for performing an occupation in state.
  3. Privilege: a license issued by the Department of Revenue required by State G.S. before a person may engage in a business, trade or profession for which a license is required.

As a business owner, it is your responsibility to be aware and knowledgeable of North Carolina policies and requirements.

Remember these are basic questions that all new business owners need to ask themselves before all the heavy lifting starts. You don’t want your business to fail before it has a chance to succeed.

Ready to start a business and need some legal help? Brinkley Walser Stoner attorneys are here to help with your legal needs; schedule your appointment today to speak with one of our experienced attorneys.