New Jersey is brimming with entrepreneurial spirit and industrial diversity, attracting many diverse business types. Those looking to start a new enterprise here may have good odds of gaining a foothold in the state consumer market.
However, you must make a few essential decisions before your business dreams can come true. Selecting the proper business entity or structure is one such decision, and here are a few things to consider.
Entity and owner taxation
Different business entities are subject to different tax rules at the federal and state level. For example, C corporations are taxed separately from owners, while a limited liability company (LLC) typically poses fewer tax burdens.
The tax consequences of your business entity may depend on the income, expenses and deductions of the business and its owners.
Management and governance
Some entities, such as corporations, have a formal structure that requires a board of directors, officers and shareholders. Other entities, such as LLCs, offer more flexibility in business management and operations.
The management and governance of a business entity can affect its decision-making process, accountability and compliance with legal and regulatory requirements.
Formation and maintenance
Sole proprietorships and general partnerships do not generally require formal registration or filing with the state. Others, such as corporations and LLCs, must file certain documents with the New Jersey Department of Treasury’s Division of Revenue and Enterprise Services.
Additionally, some entities must comply with ongoing reporting and filing obligations, such as annual reports and tax returns.
Given the complexities involved in selecting a business entity, consulting with an experienced business representative is highly recommended. It can ensure you receive tailored guidance based on your specific circumstances.