Starting a Business in New Jersey or New York — What the SBA’s 10 Steps Don’t Tell You
The U.S. Small Business Administration publishes a widely used 10-step guide to starting a business that covers the foundational elements of business formation — from conducting market research and writing a business plan to registering the business and setting up financial accounts. It is a useful general framework, but it is written for a national audience and does not address the specific legal requirements and considerations that apply to businesses starting up in New Jersey or New York. This post identifies some of the state-specific legal issues that new business owners in these states need to be aware of.
Choosing the Right Business Structure for NJ and NY
The SBA’s guide addresses the choice of business structure — sole proprietorship, partnership, LLC, corporation — at a general level. In New Jersey and New York, the choice of entity has specific tax, liability, and operational implications that vary from other states. New York imposes an annual publication requirement on LLCs formed in the state, requiring publication of a notice of formation in two newspapers in the county where the LLC’s principal office is located — a requirement that can cost several hundred to several thousand dollars depending on the county and that many new business owners are unaware of when they form their LLC.
New Jersey has its own LLC and corporation statutes that differ in meaningful ways from the uniform acts adopted in other states. Operating agreements for New Jersey LLCs should be reviewed by a business attorney familiar with the New Jersey Revised Uniform Limited Liability Company Act to ensure they are consistent with New Jersey law and the specific needs of the business.
Registration and Licensing Requirements
The SBA’s step on registering the business covers federal and general state registration requirements. New Jersey and New York both have specific registration, licensing, and permit requirements that vary by industry, business type, and location. Professional businesses — medical practices, law firms, engineering firms — have additional requirements under the applicable professional licensing statutes in each state. Local zoning and municipal permits may also apply depending on where the business is located and what it does.
Employment Law From Day One
New Jersey and New York have some of the most employee-protective employment laws in the country, and those laws apply from the moment a business hires its first employee. Wage and hour requirements, paid leave obligations, anti-discrimination protections, and notice requirements under New York and New Jersey law go significantly beyond federal minimums. New business owners who are not aware of these requirements from the start can face significant exposure even before the business is fully operational.
Operating Agreements and Governance Documents
The SBA’s guide recommends putting governance documents in place but does not address the specific provisions that New Jersey and New York business owners should include in their operating agreements or shareholder agreements. A template operating agreement downloaded from the internet may satisfy the basic formation requirement but is unlikely to address the specific governance, succession, and dispute resolution issues that closely held businesses in these states need to plan for. A business attorney can help new business owners identify and address those issues at formation — when it is easiest and least expensive to do so.
New business owners in New Jersey and New York who are working through the formation and startup process should consult with a business attorney to ensure they are meeting state-specific legal requirements and putting the right governance structure in place from the beginning.
Disclaimer
The legal and business issues discussed in this post vary depending on the specific facts and circumstances of each situation. This post is for informational purposes only and does not constitute legal advice. It is not an offer for Russo Law LLC to represent any party, nor does it create an attorney-client relationship. No action or inaction should be taken based on the information provided without seeking professional legal counsel. This post is intended for businesses in New York and New Jersey and may not reflect laws in other jurisdictions.
Do not send confidential or sensitive information through this website or in response to this blog post. Unsolicited information does not create an attorney-client relationship and should not be treated as privileged or confidential.