People in New Jersey should know about the benefits of setting up businesses as limited liability companies. Unlike a sole proprietorship or partnership, an LLC separates the business’s liability from the owner’s. There are other important advantages to forming an LLC, too. For example, the profits generated by an LLC pass through the company and become income for the owners. It’s as simple as a sole proprietorship for tax purposes.
Setting up an LLC is fairly simple. Some of the steps a business needs to take involve the federal government. For example, it’s important to get an EIN, or employee identification number, from the IRS. Other than that, most of the regulations that affect LLCs exist at the state level only.
An example of the state’s role in regulating LLCs can be seen in the standards for naming new businesses. Entrepreneurs typically need to search the secretary of state’s website to ensure that the name they want is not already in use. In some cases, there are standards about how different a name needs to be. For example, in many states, it’s not enough just to pluralize the name of an existing business.
Finally, it’s necessary to officially file articles of organization with the state. The regulations around this filing can be very finicky. It’s common for applications to be rejected for incompleteness; for example, applications can be judged incomplete for filing just one copy when two are required.
In order to navigate all the rules and regulations involved in setting up a new limited liability company, it may be a good idea to get some professional advice. Consulting with a firm that’s experienced in business formation may be beneficial for entrepreneurs.