An energetic entrepreneur from Newark, New Jersey pitched his “Coffee for America” campaign to a group of business investors. His dream was launching a fleet of coffee trucks to deliver coffee to everyone up and down the eastern seaboard. On that morning, the idea came to life as the investors tossed cash at him and a roar compliments. His business was off to the races – it is no longer “if” he can make money, but how much. It’s all hard work provided he can avoid legal pitfalls.
New Jersey is one of America’s most prominent business centers, so many people gravitate to it for guidance. Limited liability companies (LLC) are in high supply and for good reasons. LLCs provide flexible management and liability protection. They also give companies tax options, which allow either company level taxation or personal taxation.
“Coffee for America” must organize correctly or risk failing at inception. In order to create an LLC, thereby setting the company on the correct footing, it will need to do the following:
Select a name
There is no perfect name…or maybe there is a perfect name. Either way, you should think about social media and marketability as well as the ability to trademark the name. Selecting the name has both legal and practical implications, but don’t overthink it. Companies can always use a “Doing Business As” (DBA) designation to achieve the best of all worlds.
File with the Secretary of State and Pay Filing Fee
Each state has slightly different LLC formation requirements, but in New Jersey it’s fairly straightforward. Look on the website and fill out the form. Along with the form, you will have to pay a fee. Follow the link for more information: https://www.state.nj.us/treasury/revenue/gettingregistered.shtml
Select a Registered Agent
The registered agent is the person who will accept service of lawsuits and notice of tax bills. The registered agent will also get junk mail, notices, and even helpful solicitations. It can be very useful to have someone within the company as the registered agent because using a company may create a delay in service or notices.
Claim an EIN
Every company needs a Employment Identification Number (EIN), which is often called a tax ID or Pin as well. You have to have it…no questions. This is the number the IRS uses to identify how much a company or owners owe in federal taxes. Much ink has been split by objectors who have assailed the federal income tax – and many litigants have failed. Accordingly, every company has to register and pay up.
The process is easy – it takes literally 5 minutes. Just go to the IRS website and retrieve a number. https://irs-ein-forms-gov.com.
Create an Operating Agreement
Every company benefits from having an agreement spelling out the terms and condition of the company. For LLCs, the document is called an operating agreement (sometimes called a partnership agreement). The document can be created by a lawyer or not. As long as the owners understand each other, then the operating agreement works. For instance, most operating agreements explain each member’s obligations, how to cash out, how members will be paid, and countless other terms including what happens when someone dies.
Consult a Tax Professional and Select the Appropriate Tax Plan
Business owners and members must seek professional tax advice. Fortunately, LLCs work most of the time for whatever the tax professional suggests. An LLC can be taxed under the S-Corporation distinction or pass through taxation, as well as at the entity level.
“Coffee for America”
Using his business acumen, the entrepreneur behind “Coffee for America” nailed the name, filed with the New Jersey Secretary of State as “Coffee for America, LLC” and then requested an EIN. He then decided to use a super easy online set of documents creed by actual lawyers (perhaps draftedlegal.com). The documents gave him a great option for an operating agreement, which he filled in with input from his new investors. Lastly, he jumped on a call with his account to make sure filing for corporate tax status was the wisest option because he was receiving outside investments.
Easy enough. If you have a business idea and don’t know where to turn for your legal, there are options.
New Jersey is great for business and for operating as an LLC. As long as companies set up correctly, there are enormous opportunities. For more information on how to get started, legally visit draftedlegal.com. Remember, don’t zoom through your legal, GET DRAFTED LEGAL!