Understanding the Business Formation Process in New Jersey
Starting a business can seem like an overwhelming task. New business owners need guidance to ensure that as they begin the process of forming a business, they are following proper legal protocol in registering the business with the state for tax and employer purposes and becoming educated on the various legal requirements and responsibilities of a business owner.
When forming a business, there are two main steps that you must take in order to ensure that your business is properly registered in the state of New Jersey.
Choosing Your Business Entity Type
Before you can begin the process of starting a business in NJ you need to decide how you will structure your business.
The first step in forming a business is determining the type of legal entity that your business will be. Different types of legal business entities include:
- Limited Liability Companies (LLC)
- S Corporations or C Corporations
- Sole Proprietorships
Your type of business will determine the next steps for starting a business and the necessary tax requirements of your business.
If your business is a corporation or LLC, you must first file for a certification of formation with the state to create your entity, whereas you do not have to complete this step if you own a sole proprietorship or general partnership.
Registering Your Business for Tax Purposes
Regardless of your type of business entity, you must register your business for tax purposes.
You must apply for an Employer Identification Number (an EIN number), also known as a Federal Tax Identification Number, in order to properly file your federal taxes. In addition, you must file Form NJ-REG to be registered with the state of New Jersey for tax and employer purposes.
If you are planning on contracting with any public agencies in New Jersey, you will need a Business Registration Certificate as proof that you are properly registered with the state.
The Steps Vary
It is important to keep in mind that there are many other steps that may need to be taken depending upon the type of business you are starting.