Why create a Corporation in New Jersey?
Businesses today are increasingly more susceptible to business risk and liability as a result of operating business under a sole proprietorship. In order to reduce business risk and to protect personal assets from any litigation, many individuals are beginning to see the benefits of forming a Corporation. Forming a corporation is the best way to protect your personal assets from litigation. The corporation in essence exists separate from that of its owners and share holders. Therefore, typically shareholders are not liable for debts and obligations incurred by the Corporation.
Requirements of a corporation filing
When filing for a Corporation with the state of New Jersey it is important to know that the Corporation is right for you. There are some straight forward requirements for filing this entity with New Jersey, they are:
Name Availability:
Before filing organizational documents such as Articles of Incorporation, it is wise to determine if the name is available. If you fail to determine if the name is taken or not, this may slow down the approval process considerably. We at Incorporate Fast will do everything possible to determine if a name is available or not.
Things to remember is that the corporation name must end in Incorporated, Corporation, or an abbreviation. Also, the name must be distinguishable for that of any other entity on file or reserved in New Jersey. The Secretary of State will ignore the use of any conjunctions, prepositions, and articles in determining distinction. Lastly, there are certain words and or phrases that are regulated and must require prior approval before that word or phrase is used in the Corporate name.
Filing
New Jersey is unique in that, the Articles of Incorporation requires a 4 digit business purpose code in order to file. These codes are available from the Secretary of State. Once the Articles of Incorporation have been prepared and appear to be in order, they are submitted to the Secretary of State for approval. The approval process can vary depending on the level of expedition you choose. Choosing to expedite the process can speed up the time for approval.
Confirmation of Approval
Once the approval is confirmed with the Secretary of State, you will be notified of the approval. The original filing certificate with the seal of New Jersey will be mailed out to the registered agent on file. Should there be any problems with the original filing, you will be notified and instructed on how to correct the problem.
Corporation is approved: Now What?
If your corporation is approved, congratulations. You just started the process of owning a legal entity in the state of New Jersey. There are certain things that you have to do in order to maintain good standing in New Jersey. To operate your New Jersey Corporation you are required to maintain By-laws for the corporation. Our Works Bundle package does include sample by laws in our corporate kit. Also the Corporation must hold and document the minutes of the of the annual shareholders and directors meetings. Also, there are annual reports that every corporation must file every year. The annual report is used to update any changes that may have occurred over the past year. This filing for the Corporation is $50.00 per year.
What is a Sub Chapter S corporation?
One option for a Corporation is to file a Sub chapter S designation. By default, every corporation filed in New Jersey has a Sub Chapter C status. The difference between the two designations is how the taxes are handled. By electing to file a S corporation status with the IRS, you must submit Form 2553 (PDF), Election by a Small Business Corporation. There are some requirements that the corporation has to maintain to keep the S Corp status. Consult a lawyer or CPA to determine what is best for you.
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