Corporate entities are formed for all sorts of reasons. For example, some corporations are formed in order to purchase real estate, some businesses are formed by entrepreneurs looking for new business opportunities and some corporations are formed to fulfill lifelong dreams, such as the opening of a restaurant. Whatever the many reasons corporations are formed, it is important that before operating as a business, the owner or owners of the new corporation take the proper steps to ensure that the corporation can be legally operated. Below are some things to consider when forming a business in New Jersey.
Determine corporate structure.
In New Jersey, individuals can form a number of different corporate entities, such as sole proprietorships, partnerships and corporations, including C-Corps., S-Corps. and Limited Liability Corporations (LLCs). Each of these entity types has certain advantages and disadvantages. Before selecting any particular type of entity for your business, it is important to speak with an attorney or accountant to determine what makes sense for you and your business goals.
Name Selection.
Since no two corporations can have the same name in New Jersey, it is important to conduct a New Jersey entity search before filing your business’s formation documents. In addition, it is a good practice to conduct a federal trademark for the business name you are considering. A trademark search will tell you whether a business in another state is already using your name. If that is the case, it would be wise to speak with an attorney to determine whether forming a business in your desired name could be problematic and whether another name should be considered. Beyond a trademark search, it is a good practice to conduct online searches for the name being proposed. If your name is going to be confused with an already established business, you may find it difficult to distinguish your brand name and to ensure your name ranks high in Internet searches.
Filing with the State of New Jersey.
Unless your business is a Sole Proprietorship or General Partnership, your new business will need to be registered with the State of New Jersey. Filing your corporation can be done online at the New Jersey Business portal and clicking the on the “Starting a Business” tab. Be mindful that there are filing fees for forming a new corporation in New Jersey. Beyond having to file with the State, most businesses will be required to obtain a federal Employee Identification Number (EIN) from the IRS. The EIN number is akin to a Social Security Number and allows a corporation to pay taxes and to file a tax return with the IRS and the State of New Jersey. The EIN will also allow the business owner to open a bank account and to obtain insurance in the name of the business.
Permits, Licenses and Certifications.
It is critical for business owners to determine what steps will be needed in order for the business to begin operation. Most notably, the State of New Jersey may condition the business’s operation on the owners obtaining a license or certification from the State. Without knowing whether your business will require a license or certification, you may incur significant costs to form a business only to learn that your business cannot legally operate. New Jersey’s state website has information on the licenses and certifications the State requires for certain businesses. In addition to State license requirements, business owners should be mindful of local regulations that may apply to their business. Therefore, it is important that before your business enters into any lease agreements with a landlord, the business owner contacts the municipality in which the business intends to operate to ensure that the type of business will be allowed within the municipality and to see whether any additional approvals will be necessary.
Insurance.
In New Jersey, if you have at least one employee, your business will be required to maintain unemployment insurance and to register with the Division of Employer Accounts, New Jersey Department of Labor and Workforce Development. Check with your attorney or the State’s website for more information on the insurance your business will require.
Forming a corporation and obtaining any required approvals is the first step for a newly formed business. Moving forward, business owners will have to consider a number of ongoing issues, such as the filing of annual reports, wage and hour laws and payroll taxes. The attorneys of Meyerson, Fox, Mancinelli & Conte, P.A. regularly assist employers and business owners with business formation issues and ongoing business matters. If you have a question about forming a business in New Jersey or operating an existing business in New Jersey, contact one of our business law attorneys today.
About the author: Andrew P. Bolson, Esq. is an attorney with Meyerson, Fox, Mancinelli & Conte, P.A. in Montvale, New Jersey. Andrew’s practice focuses on commercial and estate litigation, business law, real estate law, estate planning and privacy and Internet law.
