Small business owners have a lot to juggle—especially in the early days of entrepreneurship. You’re finalizing your business plan, setting up shop, and learning as much as you can about your future customers’ needs. At the same time, you’re also responsible for navigating the legal aspects of starting a business, including your federal, state, and local licensing obligations.
North Carolina attorney and owner of The Creator’s Law Firm, Ticora Davis, advises business owners to invest time in meeting their legal requirements in the state and to think of the process as risk mitigation. “Paying attention to your licensing obligations upfront helps you avoid any pesky fees that can pop up along the line,” she says. “Making sure that you have the appropriate licenses actually reduces the risk of running a business.”
Here’s an overview of the types of business licenses in North Carolina and how to apply for them.
What is a business license?
A business license is a government-issued document that authorizes a company to perform specific activities in a particular jurisdiction. State, local, and federal governments can require a business to obtain one or more licenses to operate legally.
Businesses may also need permits, a specific type of business license intended to protect public health and safety. Local government agencies typically issue permits after an inspection.
Types of business licenses you need in North Carolina
North Carolina businesses may need state, local, and federal business licenses and permits. Your licensing requirements will depend on your exact location and business activities. Here’s an overview of North Carolina business license requirements:
Federal
Whether you need a federal license depends on your specific industry. The federal government requires many businesses operating in federally regulated industries (like agriculture, transportation, and alcoholic beverages) to obtain a license. The US Small Business Administration maintains a list of federally regulated industries and instructions on how to apply for required licenses.
State
North Carolina doesn’t have a general state business license requirement. Instead, it administers nearly 950 licenses for specific occupations and business activities. Most businesses will need at least one license to operate in the state, and many will be subject to several state requirements. Here’s an overview of state license types:
- Occupational licenses. Occupational and professional licenses certify an individual to perform a specific type of work. North Carolina licenses 319 different occupations and professions, including architects, physicians, attorneys, and cosmetologists.
- Business licenses. North Carolina licenses 498 types of businesses, including alcohol retailers, child care centers, and aquaculture operations. It also offers 80 hybrid business/occupational licenses.
- Certification of registration. Businesses leasing or selling goods or providing taxable services in North Carolina are required to obtain a certification of registration (also known as a seller’s permit or a sales and use tax number) from the North Carolina Department of Revenue. You’ll use this number to remit sales taxes to the state.
Local
North Carolina counties and cities can also require businesses to obtain local licenses and permits. Depending on your business’s location, you may need to obtain a general business license or a license or permit to engage in specific business activities. You’ll also need to comply with local zoning regulations. For example, you may need a home occupation permit to operate a business out of your house or an outdoor seating permit to set up tables in front of your coffee shop or restaurant.
How to apply for business licenses and permits in North Carolina
- Form and register your business
- Obtain an employer identification number
- Apply for federal licenses
- Apply for state licenses
- Apply for local licenses
- Maintain licensure
Maintaining necessary licenses can help you avoid fines or interruptions to your business activities. The first step is understanding which requirements apply to you.
Attorney Ticora Davis recommends that business owners start by reviewing online resources. “The North Carolina Secretary of State’s website has great resources for entrepreneurs and small business owners,” she says. She also recommends the Economic Development Partnership of North Carolina, a state agency that provides counseling, educational events, and other resources for small business owners in the state. “You can call them up for help determining if a license is required or not,” she says.
You can also consult federal sites like SBA.gov to get up to speed. Here’s how to identify your requirements and apply for the licenses you need:
1. Form and register your business
The first step is legally forming your business. If you plan to operate as a sole proprietorship or a general partnership, you aren’t required to register your business with the state. However, if you want to open a bank account and accept payments under your business’s name, complete an assumed business name form (also known as a “doing business as” or DBA).
If you plan to operate a corporation, limited liability company (LLC), or limited partnership, register your business with the North Carolina Secretary of State. Consult the Economic Development Partnership of North Carolina for specific registration instructions and required forms. You might also choose to file a DBA to use a name that’s different from your business’s legal name. An entity legally registered as Raleigh Aquatic Nutrition Incorporated, for example, might file a DBA to operate as “Frank’s Fantastic Food for Fish.”
2. Obtain an employer identification number
An employer identification number (EIN) is a federally issued number that the Internal Revenue Service (IRS) uses to identify your business. If you’re a sole proprietor or LLC owner and don’t plan to hire any employees, you aren’t legally required to obtain an EIN, but you can still apply for one to help you separate your personal and business finances. If you choose not to obtain an EIN, you’ll file your business and personal taxes using your Social Security number as your business’s federal tax ID.
Sole proprietorships with employees and all other types of business entities are required to obtain an EIN. You can apply online for free, and applications are typically processed within minutes.
3. Apply for federal licenses
Consult the US Small Business Administration website to determine if you need a federal business license, identify the relevant agency, and access online applications or downloadable forms.
4. Apply for state licenses
North Carolina offers a free consultation service to help business owners identify requirements and apply for applicable licenses. You can contact the Economic Development Partnership of North Carolina to speak with a small business adviser or access North Carolina’s Business and Occupational License Database to view individual license requirements and application instructions.
If you sell, rent, or lease tangible personal property in North Carolina or provide taxable services in the state, you’ll also need to apply for a sales and use tax number (also known as a seller’s permit). You can electronically register using the North Carolina Department of Revenue’s online business registration application or download and submit Form NC-BR (Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Other Taxes and Service Charge). Account ID numbers typically are issued instantly for online applications and within 20 business days for mailed submissions.
5. Apply for local licenses
The Economic Development Partnership of North Carolina can connect you with a small business adviser who will help you identify your local licensing and permitting requirements and navigate application processes. You can also visit your city’s website or contact your city or county clerk for information about requirements and application procedures.
6. Maintain licensure
Your compliance requirements don’t end with licensure. You’ll need to renew your licenses, adhere to all applicable regulations, and apply for new licenses or permits if your business activities change. Review state, local, and federal regulations relevant to your business type to ensure compliance with all applicable laws. You can also note renewal times and procedures for each license type and set calendar reminders so you don’t miss any renewal deadlines.
NC business license FAQ
Does North Carolina require a business license?
Businesses may need to obtain federal, state, and local licenses and permits. North Carolina offers free consultations through the Economic Development Partnership of North Carolina to help new business owners identify their requirements and apply for applicable licenses.
How much does it cost to get a business license in NC?
What are the steps you need to take to start a business in NC?
Here’s how to start a business in North Carolina:
1.Register your business (if required).
2. Obtain an employer identification number (EIN).
3. Obtain applicable business licenses.
4. Apply for a sales and use tax number.
5. Maintain licensure and regulatory compliance.
What do you need to file for a business license in North Carolina?
Required documents vary by license type. You may need to provide your business registration forms, sales and use tax number, employer identification number (EIN), and other supporting documents to satisfy your application requirements.
