Starting a small business in the state of New Jersey first requires one to decide on what type of business one wishes to start and deciding which type of legal entity to form: Sole proprietorship, corporation, or Limited Liability Company (LLC). The best type of business entity to form depends greatly on the long-term financial goals of the business owner. If an entrepreneur is seeking to acquire large sums of working capital through investors, a corporation would be the best possible option for the company in the long run.
There is a six-series article (The Pros-and-Cons of Business Structures) that can be very helpful in making an informed decision about the six different business entity options at my business-development organization’s blog.
Once the type of business and legal entity has been determined, the entrepreneur must then create a unique business name and run an online check through the state of New Jersey’s Division of Revenue website to ensure that the name is available (that is, it hasn’t been used already). If it is available, the business should get registered online as soon as possible in order to start operating. Registering the business will result in a certificate that states the business is currently in good standing, and it must be registered annually to continue to remain in good standing.
If the business gets registered as a corporation or a limited liability company with the state of New Jersey, the business must then also apply for a Federal Employee Identification Number (FEIN) with the IRS. This number serves as a unique ID number that identifies the business when it pays its taxes, opens a bank account, or applies for credit. An FEIN can be obtained immediately online through the IRS website.
Some municipalities require new businesses to apply for and receive local permits or sales certificates before operating. A simple online search for your municipality’s home page or website should bring you to the information that will be able to tell you whether or not you’ll need to apply for a local permit or sales certificate. Any additional regulations set by the local municipality should also be followed, such as the proper way of hanging a sign outside or the zoning law requirements of running a home-based business.
For certain businesses – such as hair salons, disc jockeys, or food-related establishments – the state of New Jersey requires additional licensing or certification. The state provides an online guide – available through their website – which can be consulted to see those occupations that require additional licensing and their associated fees. Once any licenses or certifications have been paid for and acquired, the business is legally ready to operate in its entirety.
The last requirement for starting a business in New Jersey is to register online with the state’s Department of Labor and Workforce Development (this is only necessary if there will be one or more employees). Setting up an account can be done online and the state will log and track payments made for Unemployment Insurance and Workers’ Compensation Insurance.
Some benefits of establishing a business in New Jersey are having a location within the world’s wealthiest consumer market, easy access to import/export transportation systems, the ability to tap into an experienced workforce, and operating in a state that has higher-than-average productivity rates. New Jersey also provides small businesses with access to state-sponsored incubation and business-development networks, both of which could help a new business to grow and procure state contracts.
If there are any questions about starting a small, online or home-based business in New Jersey, please feel free to contact me through my website or my Twitter or LinkedIn accounts.