Guidance for Business Formation in Newton, NJ
Helping you get your enterprise off to a strong start
Every business in Warren or Sussex County starts with an idea. However, for ideas to become reality, they must come together as one of the several business structures available under New Jersey law. Each of these business types has upsides and downsides, and no one structure is superior under all circumstances. In fact, choosing a structure that suits your business type and goals takes a thorough review of your business plan and a great deal of thought about the goals and future of your business.
Our lawyers at Hollander, Strelzik, Pasculli, Hinkes, Vandenberg & Hontz, L.L.C. can guide you through this process by offering insights, helping you prepare the necessary documentation and coordinating with the appropriate government agencies.
Things to consider when forming a business
The primary reason to form a business entity is to gain liability protection and insulate your personal assets from attachment for business debts. Nearly every type of business has some degree of liability exposure that you should identify and consider before deciding whether forming an entity is necessary. Your intended management style and plan for raising startup capital can also affect your choice of business entity. Lastly, the type of business entity you choose can have substantial income tax implications.
Types of businesses in New Jersey
There are several types of business structures available to entrepreneurs in Warren and Sussex Counties. Our attorneys at Hollander, Strelzik, Pasculli, Hinkes, Vandenberg & Hontz, L.L.C. can help you determine which is most suitable to your situation:
- Sole proprietorship — When you start a business and do not establish a formal entity, it is automatically considered a sole properietorship. You remain personally liable for any business debts you incur, and any profits you earn are taxed as personal income. This type of business is usually risky but may be passable for very small businesses with little or no liability exposure.
Partnerships — While the partnership allows multiple people to join together to form a single business entity and offers certain tax advantages as well, it can create difficulties when one partner wants to leave. Moreover, not all types of partnerships offer limited liability. Partnership may, however, be a useful form when you want keep partners from transferring their business interest to other parties.
- Limited liability companies — As the name implies, limited liability companies (LLCs) offer members limited liability for company debts. They also provide a great deal of flexibility in management structure and the raising of capital. LLCs also enjoy a great deal of flexibility in tax treatment, with multi-member companies having the option of being taxed as partnerships or as corporations.
- Corporations — Corporations offer strong liability protection to shareholders and also allow promoters to raise capital by selling shares. Most corporations, however, face the burden of double taxation — the company has to pay corporate income tax on profits, and then shareholders have to pay personal income tax again on any dividends. Corporations can avoid this by making the S election on their corporate tax returns; however, this option is only available to smaller companies and makes shareholders personally liable for a share of the company’s tax liability.
Contact the Newton firm that can be a partner for the life of your business
If you run a business in Warren or Sussex County or are interested in starting one, you can rely on the law firm of Hollander, Strelzik, Pasculli, Hinkes, Vandenberg & Hontz, L.L.C. to provide competent and practical legal counsel for the life of your venture. Call our office today at 973-383-3233 or contact us online to set up an appointment to speak to one of our attorneys.