Small Business Taxes in Fayetteville
The Bottom Line
Section titled “The Bottom Line”As a Fayetteville small business owner, you may owe taxes to five different agencies that do not talk to each other:
- The IRS (federal income, self-employment, payroll)
- NC Department of Revenue (state income, sales tax, withholding)
- NC Division of Employment Security (unemployment insurance)
- Cumberland County (business equipment, real estate, prepared food, lodging)
- City of Fayetteville (city property tax, ABC permits)
This guide tells you what each one is, what it costs, when it’s due, and who to call when you get stuck.
Need Help Right Now?
Section titled “Need Help Right Now?”If something on this page is confusing or you’re behind on a filing, call before you guess:
| What you need | Who to call | Number |
|---|---|---|
| Federal taxes (IRS) | IRS Business Line | 1-800-829-4933 |
| NC income tax, sales tax | NCDOR | 1-877-252-3052 |
| NC unemployment | NC DES | 1-866-278-3822 |
| County property + equipment tax | Cumberland County Tax | 910-678-7507 |
| Prepared food / lodging tax | Cumberland County Finance | 910-678-7722 |
| City of Fayetteville | City Hall | 910-433-1160 |
| ABC / alcohol permits | NC ABC Commission | 919-779-0700 |
A free local resource: the Small Business & Technology Development Center (SBTDC) at Fayetteville State University offers no-cost counseling. Call 910-672-2683.
Plain-Language Glossary
Section titled “Plain-Language Glossary”Tax forms use words most people never hear elsewhere. Here’s what they mean:
- EIN — Employer Identification Number. The IRS’s ID number for your business. Free, takes 15 minutes online.
- Schedule C — The IRS form a sole proprietor uses to report business profit. Attaches to your personal Form 1040.
- Self-Employment Tax (SE Tax) — A 15.3% tax that covers Social Security and Medicare for self-employed people. Replaces what an employer would normally split with you.
- Estimated Quarterly Taxes — Four payments per year you make to the IRS because nobody is withholding tax from your business income.
- Sales and Use Tax — The tax you collect from customers and send to NCDOR.
- Withholding — Tax taken out of an employee’s paycheck and sent to the IRS or NCDOR.
- FICA — Social Security + Medicare tax on wages (7.65% from the employee, matched 7.65% by you as the employer).
- FUTA / SUTA — Federal and state unemployment insurance taxes the employer pays.
- Business Personal Property — Equipment, furniture, computers, tools, vehicles your business owns. Cumberland County taxes this every year separate from real estate.
- Privilege License — An old-style city business license. North Carolina repealed most of these in 2015, so you probably don’t need one.
Part 1: Federal Taxes (IRS)
Section titled “Part 1: Federal Taxes (IRS)”Income Tax — Your Business Structure Matters
Section titled “Income Tax — Your Business Structure Matters”| Structure | How you file | Tax rate |
|---|---|---|
| Sole proprietor | Schedule C with personal Form 1040 | Your personal rate |
| Single-member LLC | Same as sole proprietor (Schedule C) | Your personal rate |
| Partnership / multi-member LLC | Form 1065; partners get K-1 | Personal rate |
| S-Corporation | Form 1120-S; you get a K-1 + a salary | Personal rate |
| C-Corporation | Form 1120 (corp pays its own tax) | 21% federal |
Most Fayetteville small businesses are sole proprietors or single-member LLCs. Profit lands on your personal Form 1040 and is taxed at the same rate as a paycheck.
Due: April 15 of the following year. Six-month extension is available (Form 4868), but extending the filing does not extend the payment — you still owe the money in April.
Self-Employment Tax — 15.3%
Section titled “Self-Employment Tax — 15.3%”If you work for yourself, you owe 15.3% of your net business profit on top of income tax. This covers Social Security (12.4% on the first $184,500) plus Medicare (2.9% on everything).
Good news: You deduct half of this on your Form 1040, which lowers your income tax.
Estimated Quarterly Taxes (Form 1040-ES)
Section titled “Estimated Quarterly Taxes (Form 1040-ES)”Because nobody withholds tax from your business income, the IRS makes you pre-pay four times a year. Skip these and you can owe a penalty even if you pay everything by April.
Rule of thumb: If you expect to owe $1,000+ in federal tax, pay quarterly.
| Quarter | Income period | Due date |
|---|---|---|
| Q1 | Jan – Mar | April 15 |
| Q2 | Apr – May | June 15 |
| Q3 | Jun – Aug | September 15 |
| Q4 | Sep – Dec | January 15 (next year) |
Pay free at IRS Direct Pay — no account needed.
Payroll Taxes (If You Hire Employees)
Section titled “Payroll Taxes (If You Hire Employees)”Once you have an employee, you become a tax collector. This is the most paperwork-intensive part of running a business. Many owners hire a payroll service (Gusto, ADP, QuickBooks Payroll) to handle it for $40–$80/month.
FICA — You withhold 7.65% from each paycheck and match another 7.65% out of your pocket.
FUTA — You pay 0.6% on the first $7,000 of each employee’s wages (employer only, not deducted from pay).
Forms you’ll file:
- Form 941 — quarterly payroll return (due April 30, July 31, October 31, January 31)
- Form 940 — annual federal unemployment return (due January 31)
- W-2 — given to each employee by January 31
- W-3 — transmittal sent with W-2s to Social Security Administration
Get an EIN first: Apply free at irs.gov/ein. Takes 15 minutes.
1099-NEC — Paying Contractors
Section titled “1099-NEC — Paying Contractors”Pay any contractor (plumber, web designer, bookkeeper) $600 or more in a year? You must:
- Get a Form W-9 from them before paying
- Send them a 1099-NEC by January 31
- File a copy with the IRS by January 31
Part 2: North Carolina State Taxes (NCDOR)
Section titled “Part 2: North Carolina State Taxes (NCDOR)”NC Income Tax — 3.99% Flat
Section titled “NC Income Tax — 3.99% Flat”North Carolina’s flat rate for 2026 is 3.99% (down from 4.25% in 2025; scheduled to drop again in future years). Sole proprietors and LLCs report on Form D-400 using the same profit number from the federal Schedule C.
File online: eFile.ncdor.gov
NC Sales and Use Tax — 7% in Cumberland County
Section titled “NC Sales and Use Tax — 7% in Cumberland County”If you sell goods or certain services, you must collect sales tax and send it to NCDOR.
| Component | Rate |
|---|---|
| NC state base | 4.75% |
| Cumberland County local | 2.25% |
| Total | 7.00% |
What’s taxable: Retail goods, prepared food (8% total — see Part 4), digital products, repair and installation services.
Generally not taxable: Professional services like accounting, legal, consulting, hair styling.
Groceries: Unprepared food for home is 2% (no state portion).
Register first: Use Form NC-BR (or register online at eservices.dor.nc.gov/ncbusreg) before your first sale.
How often you file depends on how much tax you collect:
| Monthly tax collected | File |
|---|---|
| Under $100 | Quarterly |
| $100 – $20,000 | Monthly (due 20th) |
| Over $20,000 | Monthly with prepayment |
NC Withholding (For Employees)
Section titled “NC Withholding (For Employees)”You withhold NC income tax from wages and remit on Form NC-5. Same NC-BR registration covers this.
NC Unemployment Insurance — SUTA
Section titled “NC Unemployment Insurance — SUTA”| Rate | Wage base | |
|---|---|---|
| New employer (first year) | 1.0% | First $34,200 per employee |
| Experienced range | 0.06% – 5.76% | First $34,200 per employee |
Register at des.nc.gov/employers.
Part 3: Cumberland County Taxes — The Ones People Miss
Section titled “Part 3: Cumberland County Taxes — The Ones People Miss”Business Personal Property Tax — Due January 31 Every Year
Section titled “Business Personal Property Tax — Due January 31 Every Year”Every January, you must list everything your business owns: computers, desks, espresso machines, display cases, tools, vehicles, inventory. The county taxes it at the same rate as real estate.
| Detail | |
|---|---|
| Listing window | January 1 – January 31 |
| Extension | Request in writing by January 31 to extend to April 15 |
| Late penalty | 10% under NC law |
| Tax bills mailed | August |
| Tax due | September 1 (last day before interest: January 5) |
| 2026 rate | $0.499 per $100 of assessed value |
| Form | 2026 Business Listing Form (PDF) |
Example: $30,000 of equipment ≈ $150/year in tax.
Cumberland County Tax Administration 117 Dick Street, Room 527, Fayetteville, NC 28301 Phone: 910-678-7507 Hours: Monday – Friday, 8 a.m. – 5 p.m.
Real Property Tax (If You Own the Building)
Section titled “Real Property Tax (If You Own the Building)”| Jurisdiction | 2026 rate per $100 |
|---|---|
| Cumberland County | $0.499 |
| City of Fayetteville (if in city limits) | $0.4495 |
| Combined | ~$0.9485 |
Example: A $200,000 building in Fayetteville city limits ≈ $1,897/year.
If you have a mortgage, the lender often escrows real property tax. Confirm with your lender. Business personal property is never escrowed — that’s always on you.
Part 4: City of Fayetteville and Industry-Specific
Section titled “Part 4: City of Fayetteville and Industry-Specific”Privilege License — What’s Repealed, What Remains
Section titled “Privilege License — What’s Repealed, What Remains”NC eliminated most municipal privilege licenses on July 1, 2015. Fayetteville cannot charge you a general business license.
What still requires a license:
- ABC / Alcohol permits — issued by the NC ABC Commission, $400 per permit type, renewed annually May 1 – April 30. Apply at abc.nc.gov.
- Pawnbrokers, check cashers, loan agencies (rare).
You may still need city zoning approval or building inspection depending on your space — Fayetteville Inspections: 910-433-1542.
Prepared Food and Beverage Tax — 1% Extra
Section titled “Prepared Food and Beverage Tax — 1% Extra”Restaurants, coffee shops, caterers, food trucks: Cumberland County adds 1% on top of regular sales tax for any prepared food or drink (eat-in or takeout).
Effective rate on a meal: 8% (4.75% NC + 2.25% county + 1% prepared food).
This is administered by Cumberland County, not NCDOR. Register with Cumberland County Finance: 910-678-7722.
Lodging / Occupancy Tax — 6%
Section titled “Lodging / Occupancy Tax — 6%”Hotels, B&Bs, vacation rentals, Airbnb hosts: Cumberland County charges 6% on gross rental receipts. Register with County Finance at 910-678-7722.
Part 5: Common Scenarios
Section titled “Part 5: Common Scenarios””I’m opening a coffee shop on Hay Street”
Section titled “”I’m opening a coffee shop on Hay Street””You owe: federal income tax (Schedule C) • 15.3% SE tax • quarterly federal estimates • NC income tax 3.99% • 8% combined sales + prepared food tax on drinks and pastries • business personal property tax on espresso machines, furniture, fixtures every January • county + city real property tax if you own the space • $400 ABC permit if you serve beer/wine.
If you hire a barista: add Form 941 quarterly, FICA matching, FUTA, NC withholding (NC-5), SUTA at 1% the first year.
”I’m opening an accounting practice from home”
Section titled “”I’m opening an accounting practice from home””You owe: federal income tax • 15.3% SE tax • quarterly estimates • NC income tax 3.99%.
No sales tax — professional services are not taxed in NC.
Still required: business personal property listing every January (your computer, desk, printer, software).
You may qualify for the home office deduction (Form 8829) if you use a space exclusively and regularly for business.
”I’m an Etsy seller doing this part-time”
Section titled “”I’m an Etsy seller doing this part-time””You owe federal income tax + 15.3% SE tax if your net profit is $400 or more. Quarterly estimates if you’ll owe $1,000+ for the year.
Sales tax: Etsy collects and remits NC sales tax for you as a marketplace facilitator. You still register with NCDOR and file (often $0 due) so the state knows you exist.
Business personal property: still applies — list your camera, computer, packaging supplies.
”I bought a building for my shop”
Section titled “”I bought a building for my shop””You owe county real property tax ($0.499/$100), plus city tax ($0.4495/$100) if in city limits — billed in August, due by January 5.
A $250,000 building in city limits ≈ $2,371/year.
If your assessed value seems wrong after the 2025 county-wide revaluation, you can appeal to the Cumberland County Board of Equalization and Review. Call 910-678-7507.
You also still owe business personal property tax on everything inside the building.
Your First 90 Days — Checklist
Section titled “Your First 90 Days — Checklist”Do these in order. Each step builds on the one before it.
- Pick a business structure (sole prop, LLC, S-corp). Talk to a CPA if unsure.
- Apply for an EIN (free, 15 minutes): irs.gov/ein
- If forming an LLC or corp, register with NC Secretary of State: sosnc.gov
- Register with NCDOR (sales tax, withholding) using Form NC-BR
- Register with NC DES if hiring employees
- Apply for an ABC permit if selling alcohol
- Call Cumberland County Tax (910-678-7507) to set up your Business Personal Property account
- Register for prepared food tax (910-678-7722) if applicable
- Open a separate business checking account — never mix personal and business money
- Set aside 25–30% of every deposit for taxes until you know your real liability
- Make your first quarterly estimated tax payment by the next due date
Annual Tax Calendar
Section titled “Annual Tax Calendar”| Month | What to do | Form | Where |
|---|---|---|---|
| Jan 1 – 31 | List business personal property | County listing form | Cumberland County Tax |
| Jan 31 | Send W-2s to employees | W-2 | SSA + employee |
| Jan 31 | Send 1099-NEC to contractors | 1099-NEC | IRS + contractor |
| Jan 31 | File Form 940 (annual FUTA) | 940 | IRS |
| Jan 31 | File Q4 payroll return | 941 | IRS |
| April 15 | Q1 federal estimate | 1040-ES | IRS Direct Pay |
| April 15 | File prior-year federal return | 1040 + Sch C | IRS |
| April 15 | File prior-year NC return | D-400 | NCDOR |
| April 30 | Q1 payroll return | 941 | IRS |
| April 30 | Renew ABC permits | — | NC ABC |
| June 15 | Q2 federal estimate | 1040-ES | IRS |
| July 31 | Q2 payroll return | 941 | IRS |
| August | County property tax bills mailed | — | County |
| September 1 | County property tax due | — | County |
| September 15 | Q3 federal estimate | 1040-ES | IRS |
| October 31 | Q3 payroll return | 941 | IRS |
| December 31 | Last chance for current-year deductions | — | — |
| January 15 (next yr) | Q4 federal estimate | 1040-ES | IRS |
Last updated: April 2026. If you find a number that has changed, please email info@faydta.com so we can correct it for the next reader.