For businesses seeking identification as separate legal entities, New Jersey law allows them to undergo the process of incorporation. As a separate entity from the owners, the business is then considered to be operating on its own when it buys and sells property, assents to contracts and exercises legal rights. A business looking to incorporate in New Jersey must file with the Secretary of State in accordance with established guidelines.

Benefits of Incorporation in New Jersey

There are distinct advantages to incorporating a business. Most importantly, liabilities the business accrues may be satisfied only by assets that the owners have specifically invested in it. With unincorporated businesses, personal property of owners can be liquidated in order to fulfill the liabilities of the business. Furthermore, banks in the Bloomfield area prefer to evaluate the credit worthiness of a business as a whole rather than that of individual owners. This makes the process of receiving corporate loans simpler. Finally, a corporation's ownership stake is divided into equal slices or "shares" of stock, which make investments in the business much easier to transfer.

Costs of Incorporation

These benefits come at a price. First, incorporation in New Jersey may require a filing fee. Second, a corporation pays taxes just like any other entity. Disbursements to the owners of the corporation are also taxed as individual income, so this means earnings might be taxed twice. But this double taxation can be avoided with proper planning and help from a local Bloomfield lawyer.