5 steps to forming a business entity in New Jersey
Certificates of Formation, IRS Federal Employer Identification Number, NJ Business Registration
After incorporating or forming an LLC, there are ongoing compliance requirements for your company. These compliance requirements vary by state and fall into two categories: internal and external. Internal requirements need to be fulfilled by the directors and shareholders or members and managers and must be documented as part of company records. External compliance requirements are imposed by the state in which your business is incorporated and any state where it is registered to transact business, or Foreign Qualified.
For more information on internal and external business compliance requirements and the consequences failure to comply, read: Business Compliance Requirements and Consequences.
Dissolution is the process of voluntarily ending your business. Deciding to end a business can be a stressful and overwhelming process, but it’s important to complete the necessary steps to dissolve the formal business entity as it lets the state (or states) know your business is no longer active. Each state has different regulations but failure to dissolve can lead to state penalties and fees. Dissolving your company is a multi-step process that includes obtaining owner/shareholder approval, filing the dissolution certificate, and filing federal, state and local tax forms.
For an overview on the six common steps to dissolving your business read: How to End Your Business.
Reinstatement is the process of returning an inactive or non-compliant company to good standing within the state you formed your business. Corporations and Limited Liability Companies (LLCs) need to stay on top of ongoing state formalities including filing annual reports or statements and paying franchise and/or other state taxes. When deadlines are missed or documents are prepared incorrectly, your business can fall out of “good standing” with the state and be subject to penalties or even involuntary dissolved. A company that is not in “good standing” with the state has an uncertain legal status and may be vulnerable to the very things that you created your Corporation or LLC to protect you from.
For more information, visit Reinstatement.
From raising capital to taxation to transferability of interest--there are a multitude of factors to consider when evaluating which business type might be right for your particular situation. Sometimes comparing complex options is easier when you can look at them side-by-side. The Business Entity Comparison Guide allows you to select the business types you'd like to compare and see how they stack up on key characteristics.
Interested in comparing business entity types? Visit the Business Type Comparison Guide.
An entity conversion may be necessary if you want to change the nature of your business. Common reasons for entity conversion include: no longer needing to issue stock, the desire to seek venture capital funding, taking advantage of certain tax benefits, deciding to issue stock or realigning the management requirements for your company. Whether you are changing your business type from a corporation to an LLC, or from an LLC to a corporation, converting your company from one business type to another requires the business owner to follow the procedure required by the company’s state of incorporation.
For an overview of the conversion process go to: Converting Your Business.
S corporation, C corporation, Limited Partnership, or LLC--choosing a business entity structure can be daunting and a bit overwhelming. The Incorporation Wizard is an online tool that helps you evaluate business forms based on your specific business needs. As you answer business-related questions across six categories, the Wizard ranks each entity type based on how well each may align your requirements.
Want to find out which business type might be right for you? Visit the: Incorporation Wizard.
A Federal Tax ID Number or Employer Identification Number (EIN) is a federally issued nine-digit number that identifies a business entity — you can think of it as a Social Security Number for your business. The IRS requires an EIN to be used on all business tax filings. An EIN is also typically required to open a business bank account and many companies require an EIN to pay invoices.
For more information on EINs visit: Federal Tax ID (EIN) Obtainment.
A Registered Agent is a person who receives important legal and tax documents on behalf of a business, including important mail sent by the state — such as annual reports or statements and tax documents. A Registered Agent also receives Service of Process — sometimes called Notice of Litigation — which initiates a lawsuit. Appointing a Registered Agent is a state requirement no matter where you’ve chosen to form your business.
For a general overview on what a Registered Agent is and the role they serve, read What is a Registered Agent?