How to Form a Corporation in New Jersey

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New Jersey Corporation Quick Facts

How much does it cost to form a Corporation in New Jersey?

Initial Corporation Filing Fees – $125

 

Recurring Fees: Annual Report – $75

How long does it take to get a Corporation in New Jersey?

2-3 weeks

 

Expedited processing is available for an additional fee

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Quick Reference

The Corporation is a business structure that provides personal liability protection by separating the owner’s personal assets from the assets of the business. Thus, a corporation is liable for the actions and finances of the business, while the owners (known as shareholders) are not.

Corporation Pros

  • Corporations provide liability protection for the shareholders
  • A corporation can raise non-debt financing by selling shares of the business
  • Taxation may be lower than a sole proprietorship or partnership

Corporation Cons

  • Corporations are more complex and expensive to set up than sole proprietorships, partnerships, and Limited Liability Companies (LLC)
  • At a minimum, corporations are required to hold an annual board of directors meeting, shareholders meeting, take minutes at the meetings, issue shares, etc., to maintain the entity’s liability protection.

Related: Guide to starting a business in New Jersey

Generally, Corporations are chosen over a Limited Liability Company when a significant amount of funding is being raised from investors.  However, due to the cost and complexity of the Corporation, most small businesses are better off forming an LLC.

Related: How to form an LLC in New Jersey

The following steps are to create a domestic Corporation, which is the most common type for businesses. The other types of Corporations in New Jersey include a foreign Corporation (an out-of-state Corporation wanting approval to physically operate in the state), a professional Corporation (designated for Corporations offering professional services), or a non-profit Corporation.

Steps to Forming a Corporation in New Jersey

Step 1: Choose a Name

The first step in forming a Corporation in New Jersey is selecting a name.

The name of the Corporation has to be different from other entity names in the state of New Jersey.  Learn how to run a New Jersey Corporation name search to check name availability.

The name of the Corporation must include one of the following designators at the end of the business name:

  • Corporation
  • Incorporated
  • Or an abbreviation of one of those words – Corp. or Inc.

 

A comma may be used after the business name and before the designator.  For example, “Common Grounds Coffee Inc.” and “Common Grounds Coffee, Inc.” are both acceptable.

If there is a name you want but are not ready to register the Corporation, you can file the Application for Reservation of Name (Form UNRR-1) with the New Jersey Division of Revenue. The name reservation will hold a name for up to 120 days, at the cost of $50.

Before selecting a name, you may also want to see if the domain name is also available.

While a Corporation has to select a unique name that another New Jersey Corporation isn’t using, that doesn’t guarantee that the name isn’t currently used by someone else.  Before registering a Corporation name, be sure to do a trademark search to verify it is available for you to use.

Step 2: Choose a Registered Agent

To have a Corporation in New Jersey, a New Jersey Registered Agent must be identified to act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the Corporation.  This can either be a resident of New Jersey or commercial registered agent service.

You can act as the Corporation’s Registered Agent in New Jersey, and you are not required to pay for a registered agent. The requirements to be a Registered Agent are generally available during normal business hours and have a physical street address in the state.  A PO Box is not allowed.

Any individual meeting the requirements can be the agent; however, the agent’s name and address will become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or are still employed.  Hiring a company like Northwest Registered Agent to be the Registered Agent will help protect their privacy.

Related: Do I Need a Registered Agent in New Jersey?

Step 3: File the New Jersey Certificate of Incorporation

Next, you can start filing the Certificate of Incorporation (also referred to as the Articles of Incorporation or Certificate of Formation) with the New Jersey Division of Revenue and Enterprise Services. The Certificate of Incorporation can be filed on the Division of Revenue’s website

The information requested includes:

  • The name of the Corporation, which must contain the word “Corporation,” “Incorporated,” or an abbreviation.
  • Type of business entity – If forming a new corporation for business purposes, most will select NJ Domestic For-Profit Corporation (DP)
  • The purpose of why the Corporation is being organized.
  • Number of shares of stock the Corporation is authorized to issue.
  • Duration of the Corporation. Most will choose perpetual as the end date of the business hasn’t been determined. Some businesses (such as an investment fund or real estate investment) will have a final date already established to close the Corporation.
  • Registered Agent’s name
  • Physical address of the Registered Office. A PO Box isn’t allowed.
  • Management of the Corporation. Include the name and address of the initial Board of Directors.
  • Name and address of the incorporator.   This can be one of the owners of the Corporation or someone helping with the formation of the entity.

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Step 4: Create Corporate Bylaws

Bylaws are the general guiding principles and procedures of the operations of the business. For example, the bylaws may include the name of the officers of the Corporation, responsibilities of the board members, terms of office, procedures for removing or adding a new director or shareholder, policies for holding shareholder meetings, voting rights, and more.

While bylaws are required in New Jersey, they are critical for reducing owner and shareholder disputes.  An attorney can help draft bylaws, or you can use a template to generate your own with LawDepot or RocketLawyer.

Step 5: Hold the Initial Board of Directors Meeting

During the first board meeting, the board of directors will, at a minimum, elect the officers of the Corporation (the President, Vice President, Treasurer, and Secretary). They will also typically review and approve corporate bylaws, choose a bank, issue shares of stock, and decide whether the Corporation will be taxed as a C corporation or S corporation.

It’s critical to remember that taking meeting minutes at all meetings is necessary to protect the shareholders from lawsuits and court actions. The minutes provide a record of all decisions and actions taken during the meeting. Minutes aren’t filed with the state, however, they need to be stored with other Corporate documents.

Step 6: Issue Shares of Stock

In exchange for money or services, the Corporation can exchange shares of stock. The number of shares of stock issued cannot be more than the number of authorized shares listed in the Articles of Incorporation.

Alternatively, an inexpensive Corporate Kit can be purchased from Amazon, which has a corporate records book, blank stock certificates, initial meeting minutes template, a corporate seal, and more.

Step 7: Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies the Corporation for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file tax returns, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Step 8: Elect the Corporation’s Form of Federal Income Taxation

By default, a new corporation will be taxed by the Internal Revenue Service (IRS) like a C-Corporation.  C-Corporations pay corporate taxes on their profits, and the owners pay personal income taxes on their dividends.

A Corporation can elect to be taxed as an S-Corporation. S-Corporations are taxed as “pass-through entities,” which means the Corporation itself does not file corporate taxes. Instead, the profits (or losses) “pass through” to the shareholders, who then report this income on their individual taxes.

For most small businesses, the S-Corporation tax election is the most beneficial because it eliminates the double taxation of the C-Corporation. This tax election can be changed; however, it is highly recommended to talk with an accountant before making this decision.

Step 9: Open a Bank Account

Opening a bank account for your Corporation is important for liability protection as the bank account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account, such as:

  • banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original Articles of Incorporation showing the creation of the Corporation in addition to the bylaws.
  • Driver’s licenses of the members.
  • Depending on the age of the Corporation, a New Jersey Certificate of Good Standing may be needed to prove the business entity is active and in good standing with the state.

Related: How to Open a Business Bank Account 

Step 10: Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

Business Licenses – Business registration is required for any business operating in the State of New Jersey by filing Form NJ-REG.

Sales Tax Certificate – Businesses selling products and certain services will need to register for a Sales Tax Certificate with the New Jersey Department of the Treasury.

Professional Licensing – Some occupations such as contractors, landscapers, child care centers, and barbers require occupational licenses before offering their services in New Jersey. While this isn’t a license on the business, licensing is required to operate. More information about professional licensing is available from the NJ License & Certification Guide (published by the New Jersey Business Action Center.

Related: What business licenses and permits are needed in New Jersey

Step 11: File Annual Reports

Corporations are required to submit an annual report with the New Jersey Division of Revenue and Enterprise Services.  The annual report is due each year before the last day of the month in which the Corporation was created. For example, if the Corporate were created on November 5th, 2021, the next annual report would be due November 31st, 2022.

The filing fee for the annual report in New Jersey is $75.

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