For businesses seeking identification as separate legal entities, New Jersey law allows them to undergo the process of incorporation. When an incorporated business acts, whether it is to buy and sell property, agree to contracts or exercise legal rights, the process is then attributable to the business itself and not its owners. To incorporate in New Jersey, a business must file with the Secretary of State in compliance with specific guidelines.
Benefits of Incorporation in New Jersey
Benefits of incorporation are many. The primary benefit is that the liabilities of the business can only be satisfied by the assets specifically invested into the company by the owners. With unincorporated businesses, personal property of owners can be liquidated in order to fulfill the liabilities of the business. A corporation also allows creditors in the West Caldwell area to assess the credit worthiness of the business as a whole rather than that of its owners, allowing the business to get loans more easily. 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
Incorporation comes at a price. First, New Jersey might charge a filing fee to process applications for incorporation. Also, the corporation will pay taxes as its own entity. In other words, the profits a corporation makes are now taxed separately, while any disbursements to shareholders are taxed as individual income. This is called double taxation. However, a business might avoid this disadvantage with proper planning and assistance from a local West Caldwell lawyer.