Sole proprietorships are a common business structure because they are relatively simple to set up, and provide for flexibility in management. Generally, business formation and registration is handled by the secretary of state's office, while local offices handle business name registration and local licensing. A sole proprietor does not have to register or file formation paperwork if the business is filed under the owner's name. There are specific filing requirements, however, for sole proprietorships doing business in the city of Charlotte, and for sole proprietorships that use an assumed name, hire employees or collect sales tax.
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If you plan to do business under your own name, you do not need to file formation paperwork or register with the state of North Carolina. A sole proprietorship is formed as soon as you start doing business as an individual. A sole proprietorship is essentially the alter ego of the business owner because the income and assets of the business are not distinguishable from the owner. The owner of a sole proprietorship remains personally liable for the debts and obligations of the business.
If you plan to do business under a name other than your own, you must file an Assumed Name Certificate with the Register of Deeds of Mecklenburg County. To find out if your preferred business name is available, you can use the office's online search, or search at the Register of Deeds' office. The form is available on the North Carolina Department of Commerce website. Once you complete the form and have it notarized, mail or hand deliver the assumed name document with the appropriate fee to the Register of Deeds.
All businesses operating in the city of Charlotte must apply for a Privilege License prior to beginning operations. The amount a sole proprietorship will pay for a privilege license is based on the estimated revenue or gross receipts of the business. Gross receipts tax, as well as potential additional taxes, such as those for hotels, retailers and other businesses, must be paid before the city will issue a Privilege License. Additionally, the Mecklenburg County Zoning Department will review license applications for approval, and some licenses may also be reviewed by the departments of environmental health, police, fire or building standards. You can find the Privilege License application on the county Tax Collection's website. The application must be submitted with the appropriate taxes to the tax collections department.
Department of Revenue Registration
If your sole proprietorship plans to collect sales tax or hire employees, you must register with the state Department of Revenue. To register, sole proprietors must submit a completed Business Registration Application, Form NC-BR. After the department reviews your application for the Sales and Use Tax Account, it will mail information and pre-printed forms to you. The department will also mail a Certificate of Registration that sole proprietors must display at their place of business. Alternatively, Individuals can visit the taxpayer service center in Charlotte to go through the registration process.
Business Personal Property
North Carolina law requires that sole proprietors in Charlotte list all businesses and professional personal property with the Mecklenbeurg County assessor. The required form is available on the Mecklenburg County Assessor's website. On the form, you must include all equipment, office furniture, company vehicles and other property used by the business. The form must be submitted annually to the Mecklenburg County Accessor by January 31.