Benefits of a Corporation
A corporation is a limited liability entity, which means that your personal assets are protected from your business’s debts and obligations. Forming a corporation can also help to protect you personally if someone sues one of your business partners or employees. There may also be other benefits to forming a corporation, including tax savings and increased appeal to investors.
Requirements for Incorporating in New Jersey
Preparing Your Certificate of Incorporation
Unless you specify a later date, your corporation begins its existence when you file its certificate of incorporation and pay a filing fee with the Division of Revenue of the New Jersey Department of the Treasury. The certificate of incorporation can contain many provisions, but it must contain the following:
- Name of the corporation
- Corporate purpose
- Stock structure
- Names and addresses of incorporators
- Names and addresses of initial directors
- Registered agent and registered office
- Duration of the corporation, if not perpetual
A corporation can offer different types of stock, called classes or series. These classes can offer different rights to their shareholders, for example some classes of stock may offer voting rights while others do not. Regarding stock structure, the follow applies:
In regards to the corporation’s stock structure, your certificate of incorporation must contain the following information:
- You must list the total number of shares your corporation is authorized to issue.
- If there is more than one class or series of shares, you must list a designation and number of shares for each class and series and state the relative rights, preferences and limitations of the shares of each class and series, to the extent that they have been determined.
- You must state any authority that the directors have to divide shares into classes or series and to determine or change any class or series or its designation, number of shares or relative rights, preferences and limitations.
Naming Your Corporation
Before filing a certificate of incorporation, you should find out if your proposed corporate name is available. You can either do this either by calling the state and paying a fee or by using an online entity name check service.
You can reserve a name for 120 days by submitting a form to the Division of Revenue and paying a fee.
Your corporation name must meet the following criteria:
- Your business name must contain the words, “incorporated,” “corporation” or “company,” their abbreviations or the abbreviation “ltd.”
- Your corporation’s name must be distinguishable from the names of other corporations or limited partnerships on file with the state or from names that have been reserved or registered with the state.
A person or entity that signs and files the certificate of incorporation is called an incorporator. Once the corporation has been formed, the directors take over and the incorporators have no further responsibilities.
The following guidelines apply when specifying incorporators:
- Incorporators’ names and addresses must be listed on the certificate of incorporation.
- There can be one or more incorporators.
- Your corporation cannot be its own incorporator.
- An incorporator can be either an individual who is at least 18 years old or a business.
Corporate directors set and implement corporate policies and strategies. They also manage the corporation, though they may delegate duties to officers and committees.
You must meet the following requirements when specifying your corporation’s directors:
- The certificate of incorporation must list the names and addresses of the initial directors.
- There must be at least one director.
- Although New Jersey does not limit the size of your board of directors, the number should be specified in the bylaws.
- Directors must be at least 18 years old. They do not have to be company shareholders or residents of the United States. The bylaws or certificate of incorporation can impose additional eligibility requirements on directors.
Specifying a Registered Agent and Registered Office
All corporations must designate a registered agent to receive legal documents on behalf of the corporation. A registered office is the place where those documents are sent.
The following requirements apply when specifying your corporation’s registered agent:
- A registered agent may be an individual over 18 or a business in good standing in New Jersey. The individual must agree to be the agent and
- The registered office must have a New Jersey street address.
Stating a Corporate Purpose
You can state your corporation’s purpose in general terms, which affords your corporation the greatest flexibility if you decide to change the purpose of your business at some point. The following general-purpose language is authorized by New Jersey’s statutes: “The purpose for which the corporation is organized is to engage in any activity within the purposes for which corporations may be organized under N.J.S.A. 14A:1-1 et seq.”
Determining Incorporation Bylaws
A corporation’s bylaws describe its operating procedures and usually include such provisions as the number of directors and officers, their duties and the way directors’ and shareholders’ meetings will be conducted.
Bylaws are not required to form a corporation, but once the corporation exists, the directors must meet to adopt bylaws. New Jersey does not require bylaws to include any specific provisions.
Costs of Incorporating in New Jersey
The Division of Revenue of the New Jersey Department of the Treasury requires a fee when filing a certificate of incorporation, searching the availability of a corporation name or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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