Starting a Business in North Carolina
North Carolina has been one of the fastest growing states for business especially around the Charlotte metro-area. This area is known as the research triangle since it is home to 3 major research universities. They are the University of North Carolina, Duke University, and North Carolina State. It is no wonder that companies such as Bank of America, Lowes, and Duke Energy call it home. North Carolina has low unemployment due to a labor market where competition is fierce. The State has a reasonable tax and regulatory system complemented by low costs of doing business. Additionally, compared to some other surrounding states, the cost of living is very good. North Carolina businesses can benefit from a variety of incentive programs that set the stage for growth. The most common are incentives that are given through tax credits, Sales Tax Exemptions, grant/loan programs, and benefits to companies who reside inside a North Carolina Opportunity Zone.
STEPS TO STARTING A BUSINESS IN NORTH CAROLINAThe North Carolina Department of Revenue handles state level tax regulation. It puts in place policies so that sales tax administration can be handled efficiently and in a timely fashion. The North Carolina Secretary of State oversees business entity formations. After you have selected a name for your business and setup a company, you should take care of the actions that will allow you to remain compliant at the different levels of government. Registering online for a North Carolina Sales and Use Tax Permit will allow you to collect sales tax. With this permit you can remit the sales tax to the appropriate state agency. Another major tasking that you will need to handle is to lookup the correct Business Licenses that you need to conduct business. Once the above tasks have been completed, you can also check on the status of Form NC-BR: Business Registration Application, look up a North Carolina sales tax rate, and obtain an SST streamlined sales tax permit online if you make out of state sales. Below are some of the incentives programs offered to those companies who want to take advantage of them:
- North Carolina offers a tax abatement program to companies that have a qualified data center. Sales Tax abatements are given to any data center support equipment, computer software, and electricity that is used in daily operations. A minimum investment of $75 million is required to qualify for abatements. Data centers that have multiple tenants are also eligible.
- The Job Development Investment Grant program gives cash grants to new businesses, as well as those trying to expand. The grant is meant to help a company set-up or relocate to North Carolina. Requirements are based on factors such as the location of the facility, number of qualified jobs, and the average salary paid to those jobs. The amount of the grant is a percentage based amount of the total income tax withholding of the jobs.
- The North Carolina Opportunity Zone Program provides various tax benefits to incentivize businesses to relocate to economically distressed zones within North Carolina. Income earned from long term capital gains invested into the fund is excluded and there is also an increase in the basis for the capital gains reinvested into the fund. The objective is to lower taxes for businesses, stimulate investment, and bring growth to these distressed areas.
- The One NC Fund is a program that offers cash grants to certain businesses that are within the engineering and technology industries. Grants are given to offset the capital costs of a project such as building repairs and renovation equipment purchase and installation, and utility line maintenance and improvement.
- North Carolina Sales Tax Exemptions are given to any manufacturing company for equipment or machinery, including parts and components that are used in operations. Additionally, any repairs required for this machinery are generally exempt from sales and use tax. Raw materials and components of most manufactured products are also exempt from sales tax. Energy consumption such as fuel, electricity, and natural gas used at a manufacturing company is also exempt from sales and use tax. This is applicable to the current sales tax rate. A seller’s permit is needed for all exemptions.