Are you looking to form a corporation in New Jersey, but you’re not familiar with the formation process? There are quite a few important steps you’ll need to take to create your New Jersey corporation and maintain it, so this guide will outline the rules and regulations involved with this process.
To get started, please reference our 12-step guide below or hire a professional business incorporation service.
Rocket Tip: To see how some of the top online incorporation services stack up, here are two of our most popular comparisons.
How to Form a New Jersey Corporation (in 12 Steps)
Step One) Determine Whether a Corporation is the Right Choice
Before beginning the process of forming a New Jersey Corporation, it’s very helpful to review your business’ objectives and become familiar with your options as a business owner.
Should you form a corporation?
This guide explains how to create a New Jersey corporation. When starting a new business, forming a corporation is just one of several options. Many businesses instead choose to set up a Limited Liability Company, or to be recognized as a sole proprietorship or partnership. Not sure which option is right for you? Read this guide from the SBA.
Does your business offer professional services?
If your business offers a professional service that requires a license from the state of New Jersey (e.g. public accountant, chiropractor, dentist, doctor, attorney), then you cannot form a standard New Jersey business corporation. You may instead form a special type of corporation known as a professional corporation.
How will ownership be divided?
A corporation issues “shares” to its owners, who are known as its shareholders. Before forming your corporation, it’s important to decide how shares of ownership will be divided among the owners.
How will the corporation to be managed?
Corporations have two layers of control. The first layer is the Board of Directors. Directors are elected by the shareholders and meet periodically (as a “Board”) to make key decisions and set the strategic direction of the company. The Board of Directors appoints “officers” who are responsible for carrying out the Board’s initiatives and managing the corporation’s day-to-day activities. Directors and officers can be (and often are) the same people. Before forming your corporation you should determine who your initial director(s) will be.
Step Two) Choose a Name
One of the most important aspects of the incorporation process is naming your business. There are three major elements to consider when choosing a name:
When naming a corporation in the state of New Jersey, you will need to include one of the following words or abbreviations: incorporated, corporation, limited, company, Inc., Corp., Ltd., or Co. Your corporation’s name also cannot include any words or abbreviations that indicate other business types, like the phrase “limited liability company” or the initials “LLC.” You also are not allowed to include words that refer to certain types of businesses (like “bank” or “law office”) unless your business fits those descriptions.
In addition to the legal considerations, you might want to identify your line of business or your mission in your company name. For example, you can display any closely held values in your name, like using the word “green” for environmentally friendly businesses.
A Name You’re Proud of
Keep in mind that this is your business, so you should choose a name that you’re proud of, and that you enjoy sharing with potential customers. You should also make sure it sounds good when spoken aloud, and also looks good when written down.
Check whether your preferred name is available: Visit the New Jersey Business Name Search to check whether it is already in use. If it’s not unique enough, you may need to tweak it or come up with a new name altogether.
Consider Reserving a Name
For a $50 fee, you can instantly reserve a name online for up to 120 days. This will ensure that your name is not taken by another company during the incorporation process.
Step Three) Select a Registered Agent
New Jersey corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Public Records Filing and Business Registration Application in step four.
Who can be my Registered Agent?A registered agent must have a physical address within the state of New Jersey where mail and legal notices can be served during regular business hours. You can hire a service to act as your Registered Agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.
The New Jersey Secretary of State says that,
the registered agent serves as the point of contact for official notices sent to the business, and the registered office address is the required mailing address for the registered agent… You will need to provide a New Jersey street address for the registered office.”
Our Recommendation: We recommend hiring a professional service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off the public record.
Rocket Tip: You can get a free registered agent service when hiring a service like ZenBusiness or Incfile to incorporate online. Check out their reviews and how it works below.
Step Four) Complete Your Public Records Filing And Business Registration Application
This is THE document that formally registers your corporation with the state of New Jersey.
Keep in mind that you are acting as the incorporator when you fill out and submit the Public Records Filing and Business Registration Application. You should sign as the incorporator before submitting the document.
|Cost to File||Public Records Filing: $125 Business Registration Application: no fee|
|Time to Complete Filing||15-30 days|
|Agency||New Jersey Division of Revenue and Enterprise Services|
NJ Division of Revenue
|Agency contact info for filing questions|
Step Five) Establish a Corporate Record
Corporations are required under New Jersey law to document and keep a permanent record of all important company decisions.
The official corporate record may be kept at the corporation’s principal place of business, or stored in a safe location elsewhere. You should take the opportunity to set up a secure digital or physical location for storing company records as soon as possible.
Step Six) Designate a Board of Directors
The incorporator is responsible for selecting initial director(s) of the corporation. Unless initial directors were specified in the Public Records Filing and Business Registration Application, the incorporator should record initial director appointments in a signed document and file it to the corporate record. This document is known as the “incorporator’s statement.” A sample incorporators statement can be found here.
The initial directors (no initial directors are required in New Jersey) will serve until new directors are elected at an annual shareholder meeting, or as otherwise indicated in the bylaws. The incorporator may serve as an initial director.
Step Seven) Create Corporate Bylaws
Corporate bylaws set out the rules and procedures for how the corporation will operate. Some important topics typically covered in the bylaws include:
- How shareholders will conduct votes
- The total number of directors and how each director will be elected
- How often the board of directors will meet
- The types of officer roles that will be appointed
- Procedures for resolving internal disputes
Bylaws are not legally required in New Jersey, but they are strongly recommended.
Bylaws help your business run smoothly, and are sometimes required by financial institutions for opening business bank accounts or acquiring loans.
Either the incorporator or the initial directors may prepare the company bylaws. The bylaws should be recorded in an internal company document, signed by the incorporator or a director, and filed to the corporate record. The bylaws are not filed with the state of New Jersey.
Popular Strategies for Preparing Bylaws
- Use a free online template. Northwest Registered Agent has a great free template you can download.
- Hire a lawyer to draft the bylaws. If your business has investors, is already profitable, or has multiple co-owners, we strongly encourage you to hire a lawyer experienced in New Jersey Corporate law to help you draft suitable bylaws. Use Avvo to find a New Jersey attorney who can help you draft bylaws.
Step Eight) Hold First Board Meeting
After designating a board of directors and preparing bylaws, the new corporation should call for an initial board meeting. The incorporator often arranges and attends this first meeting. During the first board meeting, the initial directors should plan to cover the following topics:
- Review and approve corporate bylaws
- Designate officers to manage day-to-day business affairs
- Choose a bank
- Approve issuance of stock certificates
- Determine whether the company should elect to be taxed as a C corporation or S corporation (see step Nine for more details)
Recording Meeting Minutes: a detailed record of all key discussions and decisions during the board meeting should be prepared and distributed to all board members for their review and approval. This record is known as the “minutes”. A copy of the minutes should be sent to each director for review and filed in the company record.
Step Nine) Handle Tax Obligations
You’ll need a federal tax ID number (EIN) to operate a corporation in New Jersey. You can obtain your EIN from the IRS for free, and it’s a fairly painless and simple process. An EIN enables your corporation to hire employees, file corporate taxes, open business bank accounts, and more.
A major decision for any corporation is determining whether to be taxed as a C corporation or an S corporation. Take a look at how these two formats differ:
- C Corp: The majority of corporations are C corporations, as they are subject to far fewer restrictions than S corps. With a C corp, profits are taxed at the corporate level, and again on the personal tax returns of the shareholders, resulting in what’s commonly referred to as double taxation.
- S Corp: This is only an option if your corporation has fewer than 100 shareholders, only issues one class of stock, is not owned by another business entity, and does not have any foreign shareholders. If your corporation meets these requirements, you can select the S corp’s pass-through taxation which eliminates the double taxation issue of C corps. S corp dividends are not taxable.
If you form a corporation in New Jersey, you will have to pay taxes on your corporate income. Your rate depends on your level of income: read more about that here. There are other taxes you might also have to pay, depending on what goods and services you provide (such as alcoholic beverage tax, cigarette tax, motor fuels tax, etc.)
Luckily, according to the state of New Jersey, “when you register your business, the State of New Jersey will send pertinent forms and information necessary for compliance with the New Jersey tax laws.” You will need to complete the public records filing and business registration application mentioned in step four in order to receive these required forms.
In addition to state taxes, you will also need to determine if you are eligible for any local taxation requirements. Contact your city and/or county to check in on this. These are business sites for a few of New Jersey’s major cities:
Step Ten) Obtain Business Licenses and Permits
In New Jersey, you will not need to acquire a general business license. Instead, you may need to obtain licenses and permits depending on whether your line of work requires them. The state of New Jersey says, “occupations and business activities often require some form of registration, license or certification by the state.
The New Jersey Business Action Center serves as a clearinghouse for inquiries relating to licensing and registration requirements confronting persons who are considering entering various professions, occupations and business enterprises.” To access a comprehensive list of any licenses or permits you may need, visit the state of New Jersey’s Licenses and Permits page
You may also need to acquire licenses and permits in the city and/or county in which you operate business. Check with your local government to see if there are any additional requirements you need to fulfill. These include local zoning ordinances, local mercantile licenses, and additional requirements to register a business.
Step Eleven) Acquire Insurance
If you plan to employ workers as part of your business plan, you will need to provide them with coverage through unemployment insurance. According to the state of New Jersey, “if you have at least one employee, registration is required with the Division of Employer accounts, New Jersey Department of Labor and Workforce development.” There are a few exceptions; first, check with the department to determine whether you are eligible, and then register online.
Additionally, according to the Department of Labor and Workforce Development, you are required to provide your employees with coverage through workers’ compensation insurance: “all corporations operating in New Jersey must maintain workers’ compensation insurance or be approved for self-insurance so long as any one or more individuals, including corporate officers, perform services for the corporation for prior, current or anticipated financial consideration.”
In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.
Step Twelve) Open a Business Bank Account
To operate a corporation and receive the limited liability protection that comes with it, you have to keep your personal assets entirely separate from your business assets. Due to this requirement, it’s strongly advised that you acquire a business bank account for your corporation.
Get Help Forming a Corporation
The process of incorporating in any state can be a lengthy one. If you run into any trouble along the way, remember that there are plenty of organizations that can help you navigate the incorporation process.
Online Incorporation Services
If you would like to hire an affordable business incorporation service to create your corporation for you, services like ZenBusiness and Incfile can help you out. These service providers can handle most of the formation process, while still charging much lower rates than a business attorney’s fees.
There isn’t the same level of personalization that a lawyer can provide, but online incorporation services can still be a tremendous help. The only major issue with these service providers is the fact that they can’t provide any actual legal advice, so you need to know what you want ahead of time.
New Jersey Business Attorney
There are some situations where hiring a business lawyer is a preferable route to using an online incorporation service. The corporation as a business structure can be highly complicated, and if you want to have the peace of mind that every single step was taken care of by a true expert, hiring a business attorney to form your New Jersey corporation is the way to go.
If you would like to pursue this route, there are some convenient services that can help you choose the right lawyer for your business. We like to use Avvo, which has extensive reviews and ratings for hundreds of New Jersey business lawyers, which can make it much easier to select an attorney who has your best interests in mind, and also has the expertise to get the job done right.
New Jersey SBDC
For help forming your business in New Jersey, there are a number of resources available. This Guide to Doing Business in New Jersey walks you through each step of starting your business successfully. Additionally, you can visit the New Jersey Small Business Development Center, the New Jersey Business Action Center, the Department of the Treasury, and the New Jersey Business Portal. They all provide counseling, training, workshops, contact information, and more.