New Jersey S Corporation Formation

Forming a New Jersey S Corporation is a process consisting of two steps: 1) filing formation documents with the Secretary of State, and 2) obtaining the “s” classification from the IRS.

Once the formation documents are filed with the state, a New Jersey Corporation is formed; under the law, a corporation is a legal person, able to enter into contracts, take out loans, and other transactions.

Forming a New Jersey Corporation

To form a New Jersey Corporation, you must draft and file a document called the Articles of Incorporation. This document will contain basic but important information about your business, and upon filing, it will become public record.

The following information should be included in your Articles of Incorporation:

  • Name: The name of your S Corporation must end in an appropriate corporate designator and must be available for use in the state. We can do a corporate name search for you if you wish to screen your business name ahead of time.
  • Registered Agent: Give your registered agent’s name and registered office address; a mail box number is not sufficient.
  • Purpose: You should provide the purpose for your corporation, or the type of business you will be conducting.
  • Shares: You should indicate the amount of shares that your S corporation is authorized to issue. With a for-profit business corporation, this number must be at least one. (If you wish to have no shares, you may determine that you should file a New Jersey Nonprofit Corporation.)
  • Board of Directors: List the names and address of your initial board of directors.
  • Incorporator: An authorized person should sign as incorporator.
  • Main Business Address: Provide the main location of your business, which may or may not be the same as the registered office address.

If you are going through the filing process yourself, you may wish to review our New Jersey articles of incorporation on which you can model your own.

Further Responsibilities of a New Jersey S Corporation

After your Articles of Incorporation have been filed, you have 75 days to file your S Corp Election Form with the IRS. This form will give you S Corporation status and allow you to be taxed as such.

You should file an Article amendment if any of the information in your Articles of Incorporation changes after they have been filed.

More Information about a New Jersey S Corporation

Your S corporation:

  • Can have up to 100 owners/shareholders
  • May deduct the cost of benefits provided to employers (parking permits, health insurance, and so on)
  • Has a board of directors, which oversees the policies of the corporation
  • Cannot have more than one class of shares
  • Issues limited liability for owners
  • Must be owned by US citizens or resident aliens
  • Is taxed as owners’ income, not as a separate entity
  • Allows business losses to be deducted on the owners’ individual tax returns
  • Must pay a payroll tax

For S corporations, only the salary paid to the owner-employee is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, an owner of an S corporation stands to realize substantial employment tax savings. However, the salary you give yourself must not be artificially low; if the IRS finds your salary unreasonable, they may reclassify some of the distribution funds as salary and require you to pay taxes on it.

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Other Types of Businesses in New Jersey

For information on other types of businesses in New Jersey, please explore the links below.