In New Jersey, you may incorporate a S corporation (S corp) by founding a limited liability company (LLC) or a corporation and then choosing S corp status from the IRS when applying for your EIN.
An S corporation is a tax categorization, not a company structure, according to the IRS. The S corp classification is used to lower a company’s tax burden.
In our How to Start a S Corp in New Jersey tutorial, we’ll walk you through the steps.
You must examine the following things before founding a S corporation:
S corporations are restricted to one class of stock and 100 stockholders, among other things. For more information, see our What Is a S Corporation? guide.
As entrepreneurs, we feel that incorporating a S corporation via an LLC is the best option since the benefits of founding a corporation are offset by S corp limitations. LLCs are also less difficult to manage than corporations.
You must determine if the S corp tax status is preferable to the default LLC tax status for your company. Read our LLC vs. S corp tutorial to fully grasp the tax benefits of a S corp.
There are two major methods to form a S corporation:
We do not advocate forming a company with the S corp tax status since it undermines all of the advantages of forming a corporation.
Forming an LLC and Choosing S Corp Status in New Jersey
Step 1: Give Your LLC a Name
Step 2: Select a Registered Agent.
Step 3: Submit your Certificate of Formation.
Step 4: Apply for a State Tax Identification Number.
Create an Operating Agreement in Step 5
Step 6: Obtain an EIN and complete Form 2553 to elect S Corporation Tax Status.
The first and most significant step in forming an LLC in New Jersey is deciding on a name.
Make certain that the name you chose conforms with New Jersey naming rules and is readily searched by prospective customers.
1. Follow the New Jersey LLC naming guidelines:
2. Does the name exist in New Jersey? To discover whether your selected LLC name is available, utilize the company name availability search on the New Jersey Division of Revenue and Enterprise Services website.
3. Is the URL accessible?
We suggest that you check to see whether your company’s name is accessible as a web domain. Even if you don’t intend to construct a company website right away, you may want to purchase the URL to prevent others from gaining it.
Your New Jersey LLC must have a registered agent.
A registered agent for your LLC will accept legal papers and tax notifications on your behalf. When you submit your LLC’s Certificate of Formation, you will name your registered agent.
Many company owners opt to use the services of a registered agent. Many of these firms will incorporate your LLC for a modest price and provide free registered agent services for the first year.
The Certificate of Formation in New Jersey is used to properly register an LLC.
You must register with the New Jersey Division of Revenue and Enterprise Services for business and entity tax filings within 60 days of founding your LLC. You may do this either by mail or online.
An LLC operating agreement is a legal document that defines your LLC’s ownership and member responsibilities.
An EIN is a number assigned by the US Internal Revenue Service (IRS) to companies in order to identify and tax them. It is basically a business’s Social Security number.
When you apply directly with the IRS, EINs are free.
