Starting a corporation in the state of New Jersey comes with various benefits. Some of those benefits include the Grow New Jersey Assistance Program, which is targeted at startup companies in the state. This program allows New Jersey corporations to benefit from possible tax credits on job retention and creation.
The following step-by-step guide will show you how to start a corporation in New Jersey.
1. Select a name for your corporation
Every business entity in the state of New, irrespective of business structure, will need to name their business. The business name also needs to comply with state requirements.
General corporate name guidelines
When deciding on a New Jersey corporation name, keep the following guidelines in mind:
- Your New Jersey corporation name should not suggest that it is organized for any other purposes other than what is stated in the Articles of Incorporation or Certificate of Incorporation
- If you plan on using certain restricted words in your corporation’s name, you need prior approval. Some of the restricted words include: blind, bank, banking, cities, cemetery, express mail, Little League, handicapped and more
- The New Jersey corporation name should be different from any other business name in the state.
- Your business name must contain one of the following words Corporation, Inc., Corp., company, CO, Inc., Ltd
The New Jersey state statute provides additional guidance and direction when choosing your New Jersey corporation name.
If you’re planning on growing your new business or going national, then a trademark is in order. Trademarking your New Jersey corporation name will protect it from intellectual property theft and misuse. Additionally, a trademark helps your business stand out from the competition.
To legally claim your rights to your brand, you may register a trademark on both the federal and state levels. To register a trademark in the state of New Jersey, complete the TMSM-01 Form and submit it to the NJ Division of Revenue.
An entity name is the legal name of your New Jersey corporation. This is the name that you use to complete your company’s bylaws, as well as the Articles of Incorporation and any other state documents.
DBA (Doing-business-as) name
A DBA is an acronym for a (doing business as) name referred to as a trade or alternate name in the state of New Jersey. The DBA allows you to operate under a different name aside from the entity name. While this process won’t protect your personal assets, it will allow you to conduct business under an alternative name.
The first step in registering a DBA is ensuring that the DBA you’re contemplating is indeed available. You can do this by searching the New Jersey Division of Revenue and Enterprise Services’ website.
Thereafter, complete the Alternate Name Form and file it with the New Jersey Business Charter Amendments Service. If you prefer to download the Form, complete and have it mailed or delivered in person, you may hand-deliver it to the following office address:
NJ Division of Revenue
33 West State Street, 5th Fl.
Trenton, NJ 08608
Or mail it to the below mailing address:
NJ Division of Revenue
P.O. Box 308
Trenton, NJ 08646
2. Nominate a registered agent
Registered agents go by many names, such as resident and statutory agents. However, they all fulfill the same role. Statutory agents are required to receive or accept service of process, as well as government correspondence on behalf of your New Jersey corporation.
You may nominate an individual to be your organization’s statutory agent; however, they must meet a few requirements such as:
- The statutory agent must remain available during usual business hours to accept the service of process or government correspondence
- The statutory agent must have a New Jersey address
- The statutory agent must be of legal age
- The New Jersey statutory agent must consent to the appointment
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3. Appoint initial directors at the organizational meeting
An organizational meeting must be called to appoint initial directors and complete a few other tasks such as creating and approving bylaws, determining your corporation’s share structure, and executing an incorporator’s statement.
During this organizational meeting, you’ll need to appoint initial directors or a Board of Directors. However, at a minimum, you need to have at least one director to oversee the operations of your New Jersey corporation.
This corporate director will oversee the operations of the organization until the first shareholder meeting. Additionally, a corporate director is tasked with the adoption, amendment, and repeal of bylaws, as well as, the election, supervision, and removal of corporate officers.
4. File Articles of Incorporation
Your New Jersey corporation is only legally formed once the Articles of Incorporation or Certificate of Incorporation is filed with the state’s office. This document verifies the existence of your corporation, and you must file the articles with the Division of Revenue and Enterprise Services.
Some of the basics that your New Jersey Certificate of Incorporation must include are:
- Your New Jersey corporation’s name
- Your New Jersey corporation’s statement of purpose
- The number of authorized shares your New Jersey corporation is allowed to issue
- Your New Jersey statutory agent’s street address and name
- Your New Jersey initial corporate directors’ addresses and names
- Your New Jersey corporation’s addresses and names of the incorporators
Additionally, when completing the articles, you need to specify whether your New Jersey corporation is going to issue more than one share series or class
Once you’ve put together the relevant and necessary information, go ahead and file Articles of Incorporation online with New Jersey’s Online Business Formation site.
5. Create and approve bylaws
Every New Jersey Corporation is required to create and approve corporate bylaws. The bylaws are basically a document that outlines how the corporation is going to be operated and clarifies the rules and procedures for everyone involved in the corporation.
The bylaws must also supplement the rules set forth by the federal government or the state of New Jersey and include the following information:
- What constitutes a quorum for voting purposes
- Fiduciary duties to the corporation
- The process of negotiating company contracts
- The date of the annual shareholder meeting and annual meetings
- The process of adding and amending bylaws
- The process of handling company disputes
- How corporate records will be stored and managed
- How voting procedures will be conducted
- The responsibilities of corporate directors and corporate officers
- How the New Jersey corporation will be operated
The bylaws do not need to be filed with the state of New Jersey; however, they must be kept on file for reference as and when needed.
6. Select a share structure
Each share of stock represents a percentage of ownership of the corporation, and a share of stock is the unit of ownership of a corporation. So if your corporation issues one share of stock to a stock owner or shareholder, then a hundred percent of the corporation is then owned by that shareholder.
Shares may be structured into classes, and each class which is known as a share class, may hold a different set of rights and privileges. New Jersey corporations may have multiple classes, and each class can hold any number of shares.
7. Obtain an EIN
An EIN or Employer Identification Number is necessary for a number of purposes. For example, you’ll need an EIN in order to open up a business bank account, submit paperwork for tax purposes, and hire employees for your corporation.
The EIN is often referred to as a Federal Tax ID Number and is a unique nine-digit code that the federal government assigns to business entities in every state. Essentially, it’s used as a form of identification for business entities.
In order to obtain an EIN, you’ll need to fill out the online application on the IRS website. The application doesn’t cost anything, and neither does obtaining your EIN. If you’d prefer to download the EIN application form, also known as IRS Form SS-4, you may do so and then submit it to the Internal Revenue Service at the following mailing address:
Internal Revenue Service
Cincinnati, OH 45999
8. File New Jersey state taxes
You may be liable for one or more corporate taxes in New Jersey, based on the type of business you are running:
- Corporate income tax: New Jersey corporations are subject to corporation business tax. The business tax is based on the corporation’s entire net income.
- Employer taxes: Every New Jersey corporation that is going to hire employees will need to register for New Jersey employer taxes. You need to register via the New Jersey Department of Treasury as part of your application for business registration.
- Sales tax: You need to contact the Department of Treasury and put in an application for business registration if you’re going to be selling physical products in the state of New Jersey. After the application process, you’ll receive a New Jersey Certificate of Authority for sales tax. This certificate will allow you to collect sales tax on qualifying sales.
9. New Jersey business licenses and permits
Large and small business owners may need to secure certain licenses and permits in order to legally operate in the state of New Jersey:
- Seller’s permit: If your corporation is involved in the sale of goods and services, then you need to secure a certificate of authority which is also known as a seller’s permit.
- Professional license: If you’re running a professional corporation, then you need to be licensed by the state of New Jersey. Some of the professions that require state licensing include dentists, lawyers, doctors, accountants, architects, veterinarians, nurses, and more.
Refer to the New Jersey Business Action Center for more information on the relevant licensing required to operate legally in the state.
10. Annual report requirements in New Jersey
New Jersey corporations are required to file an annual report each year on the anniversary date of the corporation’s date of registration. The annual report may be submitted online.
11. Costs of starting a corporation in New Jersey
The filing fees below apply to all New Jersey corporations:
- Name reservation: $50
- DBA name: $25
- Articles of Incorporation: $125
- Annual report: $75
- New Jersey Certificate of Good Standing: $50
Next steps after forming a corporation
After forming a New Jersey corporation, there are a few additional steps you’ll need to take to ensure that your business gets off to a good start:
Get your business finances in order
Separating your personal and business finances is one of the first things that you should do after forming a New Jersey corporation. The best way to do this is to open up a business bank account in your business name, and this will help to simplify accounting and tax filing processes as well. Additionally, you should look into getting a business credit card to help build your business’s credit score so that you can qualify for capital as and when you need it.
Protect your business
While forming a corporation does protect your personal assets and offer you liability protection to some extent, you should not stop there. In the event of a lawsuit, your business assets also need protection, and this is where business insurance comes in. Having business insurance will ensure that your business is covered if anything unexpected occurs. General liability insurance is the standard form of business insurance that most businesses start off with.
One of the advantages of forming an LLC is that they can elect to be taxed as C corporations or S corporations if they choose. By structuring your business as an S corporation, you avoid double taxation.
Corporations are already at an advantage as separate legal entities and exist apart from their owners or shareholders. However, by obtaining business insurance, you will strengthen your business’s liability protection.
A C Corp. is considered a separate legal entity, and not only do they pay corporate income tax on income, but they are also taxed on the profits distributed to shareholders. This is known as double taxation.
There are many aspects to consider when deciding on a business name, including the availability of the name, your brand as well as the naming laws in New Jersey. Ensure that you check with the relevant government agencies to ensure that your name is available and in line with state naming requirements.