Forming a New Jersey corporation can help your organization establish itself. If you have ended up on this page, you have likely investigated how to form a business. You want to learn more about how to form a corporation to support your organizational growth.
In New Jersey, you can form a corporation as a C corporation, an S corporation, or a nonprofit corporation.
A C corporation, like all corporations, is a separate legal entity. A Corporation is also taxed separately, meaning it files taxes for the business; the individual shareholders also pay taxes on their share of the company’s profits on their individual tax returns, which is known as “double taxation.” An S corporation allows the profits to “pass through” to the owners, meaning those profits are only taxed once (at the individual shareholder level). As for nonprofits, they’re considered charitable and can apply for tax-exempt status with the IRS; income for a nonprofit goes to benefit its cause.
How do I form a corporation in New Jersey?
Steps to Incorporate in New Jersey:
- Name Your Corporation
- Appoint Directors
- Choose an New Jersey Registered Agent
- File the New Jersey Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit Your Corporation’s First Report
To start a corporation in New Jersey, you must file the Certificate of Incorporation with the New Jersey Department of the Treasury, Division of Revenue and Enterprise Services.
To simplify the process of forming a corporation in New Jersey, we’ve put together 10 easy steps to form your business:
Step 1: Name Your Corporation
Selecting a name for your business can be a momentous decision. New Jersey requires that a business name be unique. Fortunately, you can verify if a business name has been used in the state by checking its availability with the Division of Revenue and Enterprise Services.
There are some rules you’ll need to follow when choosing your name, though. New Jersey restricts certain terms that cannot be used without prior state approval. If your desired business name includes any of the following, you will have to email the Corporate Filing Department to check name availability and get cleared with a paper application. The restricted terms include:
- Citius Altius Fortius
- Express Mail
- Little League
- United States Olympic Committee
- Urban Renewal
- ZIP Code
In addition to the restricted terms, New Jersey mandates that business names do not contain any form of profanity.
Along with restricted words, some terms need to be included if your business is a corporation. The designators available in New Jersey include “Corporation,” “Incorporated,” “Company,” or an abbreviation of one of these words. The abbreviation (not the full word) “Ltd.” may also be used.
Once you select the name you want to use, you can reserve it for 120 days. You will need to file the Application for Reservation of Name to reserve a business name for a corporation in the state. The form requires you to submit your personal information, the requested business name, and a $50 fee. You can do this online or mail your form to:
NJ Division of Revenue
P.O. Box 308
Trenton, NJ 08646
In addition to selecting your legal business name, you can also select an alternate name, referred to as a “doing business as” (DBA) name in other states. Your alternate name is not subjected to the same availability restrictions as your legal name. You will need to fill out the Registration of Alternate Name form online or by mail and pay $50 to reserve the name for five years.
Before fully committing to your business name, though, you may want to search online to make sure it isn’t trademarked at the federal and state levels. Although not required, you can reserve your trademark at both levels, keeping in mind that a federal trademark offers broader protections.
Step 2: Appoint Directors
To form a New Jersey corporation, you also have to have directors. These business leaders will be in charge of managing the corporation, including setting the policies that the business follows.
The state requires at least one director who is at least 18 years old, but it does not require directors to be residents of New Jersey. There are also no limitations on the maximum number of directors, so you can designate how many you want in your bylaws and any other criteria outside of what is required by New Jersey law.
To determine how your organization will manage its directors, we recommend the following steps:
- Gather the members of your organization before filing your Certificate of Incorporation to write your bylaws. These bylaws will determine how many directors will run your business and their responsibilities.
- Use this opportunity to determine who will serve as your incorporators, who will form the business and sign for it as it becomes a corporation. Also, outline who will be the initial directors once the business is formed.
- Keep in mind that an owner does not have to be a director, although they can be, and you can set your prerequisites for being a director in your bylaws.
Step 3: Choose an New Jersey Registered Agent
A registered agent is a designated person who agrees to be served with any services of process (lawsuits) against the corporation and to receive communication from the state regarding notices or demands for doing business. New Jersey requires a registered agent to fit the following criteria:
- They are at least 18 years old.
- They have been appointed by the corporation in question and are authorized to receive official communication on behalf of the business.
- They have a registered office in the state.
To select the right agent, consider who would be willing to take on this responsibility. The state does allow owners and business founders to serve as the registered agent, provided they meet the criteria above. However, this might not be the wisest decision, as you will have to be available at the registered office address during normal business hours, Monday through Friday. Some of your information will also become public.
Step 4: File the New Jersey Articles of Incorporation
The Certificate of Incorporation is a legal document you file to create your corporation. Different states have various names for this document, like “Articles of Incorporation,” but in New Jersey, it is called the Certificate of Incorporation. You can submit your Certificate of Incorporation online using New Jersey’s Division of Revenue and Enterprise Services portal. To complete this registration for a corporation, you will need the following information:
- Business name
- Business entity type (This form is used for various business entity types, so use the appropriate code listed in the instructions on the form.)
- Business purpose (This is optional for domestic for-profit corporations.)
- Number of authorized shares of stock
- The name, physical address, and mailing address of the registered agent
- Names and addresses of all directors
- Names and addresses of all incorporators
Although you can fill out this information online, you can fill out a paper form and mail it to: NJ Division of Revenue Corporate Filing Unit P.O. Box 308 Trenton, NJ 08646 You will also need to include a filing fee of $125.
Step 5: Create Corporate Bylaws
Corporate bylaws articulate how your business will be run. They govern how decisions are made for your business. Although New Jersey does not require corporations to file bylaws, every business should prioritize creating its bylaws, as these will help the company move forward with a common understanding for everyone.
Quality bylaws will outline information, such as:
- How many directors your corporation has and their prerequisites
- How the corporation conducts votes and what is subject to a vote
- How often the board meets
- Information about your shareholders
- The purpose and goals of your organization
- How disagreements and conflicts of interest will be settled
- Procedures for replacing board members
- Rules for amending the bylaws
Step 6: Draft a Shareholder Agreement
A shareholder agreement can also be referred to as a stockholder agreement. This agreement outlines the role of shareholders within the corporation. This agreement complements the public documents that govern the corporation and can be confidential among the parties involved.
In your shareholder agreement, you may want to include information about:
- How stocks can be transferred or sold
- The responsibilities of the shareholders
- The commitments expected from the shareholders
- The rights and obligations of shareholders in elections and their ability to be elected to the board
- How dividends from the company are paid
Legal advice when drafting this agreement for your New Jersey corporation will play a helpful role.
Step 7: Issue Shares of Stock
Corporations are required to issue stock, or shares, of the company. This is an important part of raising capital for the organization. Before you incorporate, you will need to get approved to issue a certain amount of stock in your business.
You can then offer this stock to people in exchange for contributions to your business. This contribution could be financial, as in the individual contributed money to help you start your business. The stock can also be used as compensation for employers who use their time and talents to build the company.
You will need to track the stock that your company issues carefully. Once it has been issued, it cannot be issued again. However, stock owners can sell and trade their shares. A private company will generally have stock that gets distributed among the founders, employees, original shareholders, directors, or private investors. However, a public company has stock that can be bought and sold by the public.
When companies are bought and sold by the public, they are carefully monitored by the
U.S. Securities and Exchange Commission (SEC). The SEC requires regular reports from businesses and ensures that trading is fair and ethical. They also track who purchases the shares. In New Jersey, you can check with the New Jersey Bureau of Securities to stay abreast of the latest local stock regulations.
Step 8: Apply for Necessary Business Permits or Licenses
You will also need to make sure you have all the necessary licenses and permits to operate legally in New Jersey. The state requires a variety of licenses and permits, depending on your industry. For example, you may be in a profession like medicine or law that requires a professional license, and you will also have to keep these licenses up to date with the supervising board.
No one-stop-shop exists where you can find all of the licenses and permits that your business might require. You will need to practice due diligence to ensure you obtain all necessary federal, state, and local licensing. A good place to get started is with the NJ.gov website, which offers links and information for many licenses and permits.
Step 9: File for an EIN and Review Tax Requirements
EIN stands for Employer Identification Number. You will use this federal number when filing taxes for your business. You can secure your EIN from the IRS online. Once you get your EIN, you must keep careful track of it, as it will play an important role in many of your business documents.
Once you have your EIN, you will need to file the form NJ-REG to register your business with the state for tax purposes. Most businesses can complete this application online. However, businesses with a nonprofit classification will use a different form known as REG-1E.
Step 10: Submit Your Corporation’s First Report
New Jersey requires corporations to submit an annual report on the status of their business. You can submit this report online through the Division of Revenue and Enterprise Services portal. The report carries a $75 filing fee and is due at the end of the month you incorporated.
In the report, you will include information about your business’s finances, including worker compensation. You will also need to report information about your registered agent, officers, and business address.
How much does it cost to start a corporation in New Jersey?
Calculating the cost to form a corporation comes down to two required fees, specifically:
- Filing Certificate of Incorporation: $125
- Filing the annual report: $75
Other fees can go into forming a corporation, like reserving a business name and required licensing and permits. You can work with someone like ZenBusiness, where our starter plan can help you stay organized and get your business off the ground without having to rely on more expensive options.
What are the benefits of a corporation in New Jersey?
There are many benefits of a corporation in New Jersey that can help your organization. As a corporation, you will have limited liability from a legal perspective, which helps protect your assets. Ownership of the corporation is also transferrable, and it becomes easier to maintain a continuous existence. Many business owners find it easier to raise capital by issuing stock, and gaining recognition outside the U.S. becomes more straightforward.
Of course, you will also need to consider the drawbacks, which largely center around the regulations. You will need to keep extensive records to maintain your business. Some corporations, depending on their organization, might also find themselves facing double taxation.
How is a New Jersey corporation taxed?
In New Jersey, the Corporation Business Tax Act imposes a franchise tax on all domestic corporations having a taxable status unless specifically exempt. From there, how a corporation is taxed in New Jersey depends on its designation. Corporations may be designated as a C corporation, an S corporation, or a nonprofit corporation.
C corporations have double taxation, meaning that the profits are taxed first when they go to the corporation and, when they are distributed to the shareholders, they are taxed again on their personal tax returns. Although this might not sound ideal, C corporations do offer more flexibility than other forms because they can have unlimited investors, issue more than one kind of stock, and can have shareholders outside the U.S.
S corporations are pass-through entities. All profits are passed through to the owners, who must pay on their individual income taxes. Although you may be set up as an S corporation at the federal level, New Jersey doesn’t recognize your S corporation status at the state level until you apply with the state.
Nonprofit corporations can apply to be exempt from paying federal taxes as well as New Jersey Corporation Business Tax, provided they stay within the rules for nonprofit activity.
In addition to the state and federal corporation and income taxes, businesses also need to prepare to pay payroll taxes, sales tax, and other applicable taxes.
New Jersey Corporation FAQs
- Does running a corporation in New Jersey involve more paperwork than running other types of businesses?
Corporations are generally more complex than most other types of businesses. They require intensive record-keeping, filing of annual reports, and tracking shares, licenses, and taxes. Therefore, they do often require more paperwork than other businesses.
- What is the difference between an LLC and a corporation in New Jersey?
LLC stands for limited liability company, typically owned by one person or a small group of people. The owners of an LLC are known as members, each owning a certain percentage of the company. If there is only one owner of the LLC, it is taxed like a sole proprietorship. If there is more than one member of the LLC, it is taxed like a partnership. However, corporations have shares of stock that are issued and a board of directors who manage the company. They are taxed under corporate tax classifications and laws.
- How do I change my corporation’s name in New Jersey?
You can change the name of your New Jersey corporation by filing an amendment and paying a filing fee.
- How many people are needed to form a corporation in New Jersey?
A single person can form a corporation in New Jersey.
- Can I form my New Jersey corporation online?
Yes. You can form your New Jersey corporation online using the Division of Revenue and Enterprise Services Business Formation portal.
- How do I dissolve my New Jersey corporation?
To dissolve your New Jersey corporation, you will need to file an Application for Dissolution and pay $120. You will also need to meet the requirements listed on the form’s instructions, such as getting a Tax Clearance Certificate and paying any remaining taxes due.
If you are ready to start or grow your New Jersey corporation, ZenBusiness is here to help. See how we can simplify your paperwork so that you can focus on your organization.