WeVote
Log In

Bill

Bill

SB 351

Tax Department rule relating to consumers sales and service tax and use tax

2025 Regular Session Introduced by Jack Woodrum

The act provides a one-year state income tax deferral for new low‑income in-state businesses under five years old, and encourages and reports on using contractors under five years.

To Judiciary
#legislature--rulemaking
0
WeVote Research Nonpartisan
Bill Summary · SB 351

SB 351 — "Right to Start Act" (summary)

Status: Passed 1st Reading
Introduced: February 12, 2025
Primary subject areas: commerce, corporations, taxation, public contracting, small business

Purpose

The Right to Start Act is designed to ease early-stage tax and procurement barriers for newly formed in-state businesses. It (1) allows very young, low‑income companies to defer certain State income tax obligations for one year, and (2) encourages State purchasing to include contractors that have been operating for less than five years while requiring the Department of Administration to collect and report participation data.

Key provisions

  • Tax deferral for new, low‑income companies

    • A corporation (C corp) that has existed for less than five years and files a North Carolina return showing State net income under $5,000 may defer the full amount of State income tax due for that taxable year to the next taxable year. (Amends G.S. 105‑130.19.)
    • The same deferral rule is extended to taxed S corporations. (Adds subsection to G.S. 105‑131.1A.)
    • A companion provision applies broadly to other business entities (LLCs treated as corporations, partnerships, taxed partnerships): a business entity in existence less than five years with State net income under $5,000 may defer payment to the next taxable year. (Amends G.S. 105‑157.)

  • State contracting policy and reporting

    • State policy language is expanded to encourage (not mandate) the use of contractors that have been operating less than five years in State purchasing and State construction projects. (Amends G.S. 143‑48 and G.S. 143‑135.5.)
    • The Department of Administration (DoA) must compile and report data on State contracts awarded to contractors that have been in operation less than five years. The required analysis includes:
    • Number and total dollar amount of such contracts, with demographic and geographic breakdowns;
    • Percentage of contracts (by count and by dollar value) awarded to these younger contractors compared to all contracts.

Who is affected

  • Eligible small/new businesses: Corporations, S corporations, LLCs (if taxed as corporations), partnerships and other business entities in existence <5 years with State net income < $5,000. These firms may temporarily defer State income tax payments.
  • State agencies and procurement officers: Encouraged to increase consideration of young, in‑state contractors; DoA must collect, analyze, and report participation data.
  • State revenue administration: Department of Revenue will administer deferrals and any downstream tax collection actions.

Practical impact and considerations

  • Cash flow relief: Eligible startups could get one year of tax-payment relief, improving short‑term cash flow.
  • Revenue timing: The deferral shifts (but does not eliminate) tax receipts to the following year; short‑term revenue impacts depend on the number of eligible filers.
  • Procurement access: Encouragement (not requirement) may expand opportunities for newer businesses, but effectiveness depends on agency implementation and reporting insights required from DoA.
  • Administrative work: DoA gains reporting duties; Revenue and procurement offices may need to adjust processes to track and apply the deferral and to collect contract‑participation data.

Procedural/timeline notes

  • Text amends multiple existing North Carolina General Statutes (noted above). The bill as provided does not specify an explicit effective date in the excerpt; implementation timing will follow final enactment language.
  • Current status: Passed 1st reading (introduced Feb 12, 2025). Further committee actions and votes will determine final enactment.

If you want, I can extract the exact statutory text changes, outline draft fiscal effects, or prepare a short explainer aimed at startup founders on how to determine eligibility and claim the deferral.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.