When forming a new business, there is a lot of paperwork. Many of the documents and contracts are required by the New Jersey Secretary of State, while others are simply good practice.
For sole proprietors and partnerships, the filing requirements are fairly limited. However, if the business name does not include the first and last name of the owner(s), you must register it as an assumed name, i.e. Back Street Yoga Studio.
On the other end of the spectrum, forming a corporation requires filing articles of incorporation with the Secretary of State. The articles of incorporation require specific information, including the legal name of the company, the address of a registered office located in the state of New Jersey, the total number of shares authorized and the names and addresses of the incorporators. Incorporators may use the form provided by the state, which requires only basic information. However, drafting articles of incorporation specific to your business plan allows you to add to or modify the basic statutory provisions set forth in the Business Corporation Act of New Jersey to fit your business.
Every Red Bank business also needs governing documents. The exact nature of the document depends on your business structure, i.e. whether you are starting a partnership, limited liability company or corporation.
Partners should always execute a partnership agreement, even though not required by law. The partnership agreement should minimally address crucial issues such as the financial contributions of the partners, the allocation of management duties, the distribution of profits and losses, the procedures for resolving disputes and rights upon termination. Having an agreement in place not only allows the business to run more smoothly, but also helps avoid partnership disputes and other commercial litigation.
More sophisticated business entities like LLCs require an operating agreement. The binding contract provides the structure for the company’s management and financial decisions. Most importantly, the agreement formalizes that the members will have no personal liability to the LLC. Like a partnership agreement, the operating agreement should also describe the ownership shares of the members, the responsibilities of each member, the management structure of the company, the rules for holding meetings and taking votes and the procedures for transferring ownership if a member leaves, dies or becomes incapacitated.
Starting a Red Bank business can be a daunting task. Having an experienced and knowledgeable business lawyer on your side can help your startup succeed.