How to Form a Professional Corporation in New Jersey (2023 Guide)
Starting your own professional corporation can be an exciting endeavor. Not only does it add a sense of legitimacy to your business, but it also provides certain advantages, such as limited liability. If you are looking to form a professional corporation in New Jersey, here's a step-by-step guide to help you get started in the year 2023.
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Step 1: Choose a Unique Name for Your Professional Corporation
Before you begin the process of forming your professional corporation, you need to come up with a unique and distinguishable name for your business. It's important to check the availability of the name you have chosen to ensure it is not already in use by another entity in New Jersey. You can do a name search through the New Jersey Business Gateway Services website.
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Step 2: Select the Type of Professional Corporation
In New Jersey, certain professions are eligible for professional corporation status. Some of the professions that can form professional corporations include physicians, attorneys, accountants, architects, engineers, and more. Determine if your profession qualifies for professional corporation status based on the requirements outlined by the New Jersey Division of Consumer Affairs.
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Step 3: Draft and File Articles of Incorporation
The next critical step is to prepare and file the Articles of Incorporation with the New Jersey Division of Revenue and Enterprise Services. You can find the necessary forms on their website or consult with a legal professional specializing in business formations to ensure compliance with all regulations.
The Articles of Incorporation should include relevant information such as:
- The name and purpose of the corporation
- The address of the registered office and registered agent
- The number of authorized shares and their par value (if applicable)
- The names and addresses of the incorporators
- The type of professional services the corporation will provide
Ensure that all information provided is accurate, as mistakes or discrepancies can cause unnecessary delays in the registration process.
Step 4: Obtain a Federal Employer Identification Number (EIN)
While not mandatory for all professional corporations, it is highly recommended to obtain a Federal Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This nine-digit number is used for tax identification purposes and is necessary if your professional corporation plans to have employees or intends to be taxed as an S-corporation.
You can easily apply for an EIN online through the IRS website.
Step 5: Create Corporate Bylaws
Corporate bylaws define how your professional corporation will operate and outline rules and procedures that govern the internal affairs of the corporation. They typically address topics such as shareholder rights, board of directors' responsibilities, and meeting protocols. While it is not a mandatory requirement in New Jersey, having well-drafted corporate bylaws enhances the credibility and structure of your professional corporation.
Step 6: Apply for Necessary Licenses and Permits
Depending on your profession, you may be required to obtain certain licenses and permits in New Jersey. Research the specific licensing requirements for your profession and make sure to complete and submit all necessary applications. This step is crucial for ensuring compliance with regulations and avoiding legal issues in the future.
Step 7: File Annual Reports
Every professional corporation in New Jersey is required to file an Annual Report with the New Jersey Division of Revenue and Enterprise Services each year. This report verifies and updates important information about the corporation, such as the current address, registered agent, and the names and addresses of directors and officers. Failure to file the Annual Report on time may result in penalties or the dissolution of your professional corporation.
Conclusion
Forming a professional corporation in New Jersey may seem like a complex process, but by following these steps and ensuring compliance with the regulations provided by the New Jersey Division of Revenue and Enterprise Services, you can establish a successful and legally sound entity. Consulting with a qualified attorney who specializes in business formations can provide further guidance, ensuring that the formation of your professional corporation goes smoothly in the year 2023 and beyond.
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