North Carolina Corporation and Partnership Law Key Terms

Decipher state law regarding the different types of corporations and partnerships

By Trisha Schulz

When starting a new business, there are many details and decisions to make to get a business up and running. One of those decisions is which business structure you want to use for your company. North Carolina corporation and partnership law presents the requirements and functions of each business type. Legally, you'll need to weigh your options as each business structure has its own advantages regarding tax benefits and liability. Studying the following key terms may help you distinguish those differences.

North Carolina C corporation

Incorporation of your business makes it a C corporation. The C corporation status is the most common, as most large companies choose this business structure. The C corporation structure differs from others in that the business' legal identity remains separate from that of its owners, usually the shareholders.
Try: Review these answers to frequently asked questions from the North Carolina Department of the Secretary of State.

North Carolina S corporation

A sole proprietorship, or S corporation, is the most common business structure choice among small businesses. This company formation is similar to a C corporation; however, those running an S corporation can claim some of the tax advantages of a partnership business structure.
Try: Check out this step-by-step guide on becoming a sole proprietorship in North Carolina from the Citizen Media Law Project.

North Carolina limited liability partnership

In a limited liability partnership, the partners have very different roles. One partner is more hands-on, performing the daily business activities. This partner can be held liable. The other partner's role is similar to that of a business investor, putting up the necessary capital. In North Carolina, the law details a limited shield which significantly reduces limited liability protection compared to other states.
Try: Review the actual limited liability partnership statutes from the General Assembly of North Carolina.

North Carolina limited liability company

Filing as a limited liability company (LLC) provides some of the benefits of both a corporation and partnership. An LLC also gains tax benefits and is allowed management flexibility.
Try: LegalZoom.com offers specific information about how to form a limited liability company in North Carolina.

North Carolina professional corporation

For those businesses that deliver one type of service, consider forming a professional corporation. These types of corporations are usually regulated by professional associations and can choose the tax obligations of either an S or a C corporation. Law firms and accounting offices are examples of businesses that regularly file as professional corporations.
Try: Check out this BizFilings overview of what constitutes filing as a professional corporation.

North Carolina non-profit corporation

Businesses such as community health care centers, domestic violence shelters or child care facilities, may want to consider registering as a non-profit corporation. Choosing this business form, which places restrictions on profits, provides access to federal and state grants, as well as tax exemptions.
Try: The Company Corporation provides an overview of the benefits of a non-profit corporation.