As a prospective business owner, you have a lot to consider, namely, the approach you wish to take when forming your business. You have several options to choose from, but not all may reflect your business model. Here at Feitlin, Youngman, Karas & Gerson, LLC, our business formation lawyers have extensive experience assisting new business owners to start their enterprise off on the right foot, and we’re here to do the same for you.
Business Formation Lawyers Serving Northern New Jersey
The type of business structure you choose is an important decision. Our Bergen County business lawyers are here to explain your options, and, from there, help craft a tailored strategy. We’ve effectively represented business owners in New Jersey for decades, and we’re here to do the same for you.
Types of Business Structures
When deciding on the best structure for your business, it’s essential to understand the different types of business models available and how they can impact your operations, taxes, and legal liability. Here’s an overview of some common options:
Sole Proprietorship: This is the simplest business model, where one individual owns and operates the business. While easy to establish, it offers no separation between personal and business liabilities, meaning the owner is personally responsible for any debts or legal claims against the business.
Partnership: In a partnership, two or more people share ownership of the business. There are two main types of partnerships—general partnerships (where all partners manage the business and are equally responsible for liabilities) and limited partnerships (where limited partners contribute capital but have limited control over operations). Partnerships are straightforward to form but, like sole proprietorships, do not offer liability protection.
Limited Liability Company (LLC): An LLC combines the flexibility of a partnership with the liability protection of a corporation. This model shields personal assets from business liabilities and offers various tax benefits. LLCs are a popular choice for many small to medium-sized businesses due to their flexibility in management and taxation.
C Corporation: A C corporation is a more complex structure suitable for larger businesses that intend to raise capital through investors. This model provides the strongest liability protection, but it is subject to corporate taxes, and shareholders are taxed on dividends, resulting in “double taxation.” However, a C corporation can offer advantages like perpetual existence and easier transfer of ownership.
S Corporation: Similar to a C corporation, an S corporation provides liability protection for its shareholders but avoids double taxation by allowing profits and losses to pass through to shareholders’ personal income. However, there are limitations on the number of shareholders and certain restrictions on ownership.
Nonprofit Corporation: If your business is mission-driven and focused on serving the public good, a nonprofit corporation might be the right choice. Nonprofits enjoy tax-exempt status but must adhere to specific guidelines, such as limiting the distribution of profits to owners or directors.
Choosing the right structure is critical to the success of your business. Our business formation attorneys can help you navigate these options and select the model that best aligns with your goals and needs.
What to Know About Starting a Business in New Jersey
Starting a business in New Jersey involves several important legal and logistical considerations. Here are some key points every prospective business owner should keep in mind:
Registering Your Business: All businesses in New Jersey must register with the New Jersey Division of Revenue and Enterprise Services. Depending on your chosen business structure, you may also need to file formation documents, such as a Certificate of Formation for an LLC or Articles of Incorporation for a corporation.
Obtaining Licenses and Permits: Certain businesses in New Jersey require specific licenses or permits to operate legally. For example, restaurants must obtain health department permits, while construction companies may need contractor licenses. It’s important to research the licenses relevant to your industry before launching your business.
Understanding Taxes: New Jersey imposes several taxes on businesses, including the Corporate Business Tax (CBT) and sales tax, depending on your business type. LLCs, partnerships, and sole proprietorships typically pass their income to individual owners, who are taxed at personal rates. Corporations, however, are subject to double taxation. New Jersey also has a unique sales tax structure that varies by locality, so it’s essential to understand your tax obligations.
Employer Obligations: If you plan to hire employees, New Jersey law requires that you meet specific obligations, such as registering for employer withholding taxes and unemployment insurance. You’ll also need to comply with wage and hour laws, anti-discrimination statutes, and other employment regulations.
Zoning Laws: Before settling on a business location, check the local zoning laws to ensure that your business activities are permitted in that area. Zoning regulations can impact everything from the types of businesses that can operate in a given location to parking and signage requirements.
Legal Considerations: New Jersey offers certain protections and incentives for businesses, but it’s essential to be aware of your legal obligations. These include complying with state and federal employment laws, adhering to environmental regulations, and ensuring that your contracts are legally enforceable. Having an experienced business attorney by your side can help you navigate these legal complexities.
New Jersey offers a thriving business environment, but starting a business here requires careful planning and legal compliance. At Feitlin, Youngman, Karas & Gerson, LLC, we have the experience and local knowledge to help you succeed.
Contact Our NJ Business Formation Lawyers
For comprehensive guidance through the business formation process, please don’t hesitate to contact the skilled Bergen County business lawyers here at Feitlin, Youngman, Karas & Gerson, LLC, today.
