Certificate of Formation: Everything You Need to Know
A certificate of formation in NJ must be filed in the public record for certain business entities to be authorized to transact business in the state. 8 min read
What Is a Certificate of Formation in NJ?
A certificate of formation in NJ must be filed in the public record for certain business entities to be authorized to transact business in the state. Legal entities required to file this certificate of formation include:
- Limited Partnerships
- Limited Liability Companies
General partnerships and sole proprietors are not required to file the Certificate of Formation.
New Jersey Business License, LLC Formation, and Incorporation
Many businesses choose New Jersey to incorporate or form a limited liability company because of the vibrant business community led by corporate giants, Johnson & Johnson, Prudential Financial, and Honeywell International. New Jersey is especially popular with business leaders in agriculture, pharmaceuticals, and tourism.
Choosing a Name for Your Business
After determining the type of entity you will establish for your business, you need to decide on a name. Your name needs to be distinguished from other New Jersey businesses, and you can search at no cost, all the business names registered with the State. For assistance in this search, for a fee, you may contact the corporations division by phone at 609-292-9292. If you have a name you wish to use and it is available, you may make Application for Reservation of Name by submitting the form to the New Jersey Division of Revenue along with payment of $50.00. The name may be reserved for 120 days to allow time to complete your business formation filings.
Name Requirements for Out of State Business Entities:
If your business was incorporated or organized in a state other than New Jersey, then the name used for filing the certificate of formation must match exactly with the business name on the documents forming the business in the state of organization. If the formal business name is currently in use in New Jersey, then the out-of-state business can establish a “dba” or “doing business as” name for purposes of transacting business in New Jersey.
Only businesses not organized in New Jersey may register “dba” or fictitious names. The registration is made by submitting a form determined by the type of entity making the registration and the registration is not available for submission online.
Name Filings for Sole Proprietorships:
Unlike for business entities such as corporations, LLCs, and certain partnerships, a sole proprietor using a “trade name” files its registration at the County Clerk’s office rather than with the State.
New Jersey LLC Name Requirement
- The business name must be designated at the end as a “Limited Liability Company,” “LLC,” or “L.L.C.”
- The name must not be misleading so as to give consumers the idea that the business operates in any manner other than for the purposes set forth in the company’s Certificate of Formation.
- The name must not be confusingly similar and is required to be distinct from other LLCs, out-of-state LLCs and other reserved names and registrations.
- Use of the terms “Little League,” “Olympic,” “Realtor” and “Trust” are prohibited. Additional words not allowed in corporate names include: Cemetery, D.C., District of Columbia, Metropolitan, Postal, and Underwriters.
- Certain words are restricted for use in a business or trade name in New Jersey and require approval before use: Blind, Cemetery, Funeral Homes, Handicapped, Insurance, Little League, Olympia, Olympic, and Urban Renewal.
Requirements for the Certificate of Formation
Once the business type and name are settled, the new business is created by filing a Certificate of Formation. This document is filed with the New Jersey Department of Treasury, Division of Taxation. This form may be completed and filed online or by mail.
The following information must be included in the Certificate of Formation:
- Corporate name and address.
- The name and address of a registered agent with a New Jersey address at which the agent will be available to receive tax and legal documents related to the business.
- The month chosen for the end of the businesses tax year.
- The purpose of the business organization
- If the business entity is a corporation, the certificate must state the number of shares of stock that the corporation will be allowed to issue.
- A list of names and addresses of initial directors appointed to run the corporation
- The name and address of every person undertaking to form the business entity.
The fee for filing the Certificate of Formation is $125 for all “for profit” businesses and nonprofit businesses organized outside of New Jersey. Nonprofit businesses formed in the State of New Jersey pay a filing fee of $75.
What’s Next to Form the Business?
Set Up a Corporate Records Book
A corporation must have a principle office which is a physical location within the State of New Jersey wherein the important records of the corporation are kept.
The incorporator should set up a corporate book which contains the corporation’s certificate of formation, bylaws, stock certificates and records of transfers of stock, minutes of meetings of the shareholders, directors and officers along with all other important company documents.
Appoint Initial Corporate Directors
The incorporator, after completion of the formational documents for the corporation should select individuals who will constitute the initial board of directors. These directors will govern the corporation until such time as the shareholders meet and elect directors.
The names of the initial directors selected by the incorporator shall be designated on the “Incorporator’s Statement” along with their addresses. While the Incorporator’s Statement does not have to be submitted to New Jersey government, it should be signed by the incorporator and kept in the corporate book.
Hold Your First Board of Directors Meeting
Once selected, the board of directors should meet promptly to make several initial decisions to include:
- Appointment of officers to manage the day to day business of the corporation.
- Preparation and adoption a set of bylaws which govern how the corporation is to be governed.
- Determination of the number of authorized shares of stock, the different classes and applicable restrictions and rights of stockholders, stock certificates issue authorization and determination of the official form of stock.
- Adoption of a corporate seal.
- Determination of the corporation’s fiscal year.
- If applicable, approval of the election as an “S” corporation under the Internal Revenue Code.
One member of the board of directors or the incorporator should be designated as the secretary to keep minutes of the initial board meeting. These minutes should be prepared and approved by the directors and kept in the corporate records book.
Do I Need to File Bylaws With the State?
Bylaws are an extremely important part of forming a corporation. While they are not required to be filed with the state, they should be maintained in the corporate records book for easy access to review the guidelines for managing the business. Bylaws further lend legitimacy to the corporation in the eyes of banks, creditors, the Internal Revenue Service and other business and government entities with which the corporation will interact.
In contrast to corporations, limited liability companies or LLCs do not have a board of directors. The LLC business is managed by individuals called member/managers. Each LLC must have at least one member/manager but may have more.
New Jersey law provides no restrictions or other requirements with regard to where member/managers live but they must be at least 18 years old.
The Certificate of Formation must list the names and addresses of each member/manager of the LLC.
Registering all Business for Tax and Employer Purposes
Regardless of whether the business is formed in New Jersey or another state, or whether it is a corporation, LLC, partnership, or sole proprietor, in order to transact business in New Jersey, Form NJ-REG is required to be filed to register the business for employment and tax purposes. The NJ-REG form requests detailed and complete information about the activities and organization of the company.
There is no fee to file the NJ-REG, but it must be filed no less than five (5) days before beginning operation of your business in New Jersey. Additionally, if the business will be required to collect sales tax, the NJ-REG must be filed no less fifteen (15) days prior to the businesses’ first sale.
Before filing the NJ-REG, the business must have a federal identification number (FEIN) as this will also be your tax number for use in New Jersey. You may apply for a FEIN online with the IRS or as you complete the online NJ-REG.
The NJ-REG may be submitted along with the initial business formation filing. If filed separately, the NJ-REG is due within 60 days of the Certificate of Formation.
The Division of Taxation, upon receipt of a filed NJ-REG without a Certificate of Formation will conduct a nexus review to determine proper tax treatment. Businesses formed outside of New Jersey must file a paper NJ-REG form if there is no state tax nexus. This paper filing is required for the issuance of a Business Registration Certificate.
In addition to the NJ-REG form, there may be other local and state forms and licenses required before transacting business.
Corporations who have elected to be “S” corporations must file that designation within 75 days from the start of the corporation’s first fiscal year. This election is made on Form 2553 and must be filed with the New Jersey Division of Taxation.
Proof of Registration
Filing the NJ-REG entitles businesses to be issued a Business Registration Certificate. This certificate is required for any business to enter into contracts with any public agency in New Jersey.
Does New Jersey Have Publication Requirements or Other Follow-Up Filings?
Businesses do not have to post or publish any public notices regarding the company’s business formation and the only recurring filings in that regard are annual reports filed with the Department of the Treasury, Division or Revenue along with a $50 filing fee on or before the anniversary date of the company formation or prior filing.
Though not business formation filings, New Jersey corporations pay an annual tax based on income with a minimum of $500.
Other Business Types
Flea Markets or Seasonal Operations
Although temporary in nature, there is no difference in filing requirements between seasonal operations or temporary businesses such as flea market sellers or other “pop-up” businesses and those which are in operation throughout the entire year.
Professional Services Businesses
In many states, professionals such as accountants, attorneys and physicians can organize together as PLLCs “Professional Limited Liability Companies.” This is not allowed in New Jersey, but they may form a corporation or a LLC.
Foreign Corporations Doing Business in New Jersey
Foreign corporations are those organized in a state other than New Jersey of a foreign country. In order to conduct business in New Jersey, the foreign corporation must file the Certificate of Formation just like a new business forming in New Jersey. Additionally, the foreign corporation must include with the filing a document from the corporation’s home state that the corporation is in good standing with the home state. This certificate of good standing must be dated within the past 30 days. The foreign corporation must also designate a resident process agent who is physically located in New Jersey and authorized to accept important documents on behalf of the corporation.
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