3 Key Steps to Establishing a Startup in New Jersey
Startups have been gaining traction in recent years as a way for enterprising individuals to earn money while simultaneously addressing community needs. This focus on innovation is precisely why New Jersey assemblyman Andrew Zwicker has highlighted the importance of ensuring that local businesses have the support they need to flourish and help the economy bounce back from the pandemic.
Of course, there are some entrepreneurs that might still be a little hesitant to start a new business at the moment. In preparation for the new year ahead, this article will outline three absolutely crucial steps that entrepreneurs need to take when setting up a startup in New Jersey.
1. Create a business plan and find funding
The first step to starting any business is identifying demand. Case in point, Hoboken-based shoe company Loyal Footwear has built their business around offering sustainable and ethically made footwear — an option that’s surprisingly hard to come by in today’s economy. Identifying your niche will inform all the other business decisions you make, from your company name to your marketing collateral.
You’ll then need a business plan, even if you’re running a one-person team for now. Part of your business plan should also include funding, whether it’s from bank loans or investments from family and friends. In fact, having a business plan can actually help you score more funding by making you eligible for grants.
You can use your plan to practice pitching to family and friends, who will then be able to help you get the word out. A well-crafted plan can also make it easier for you to find suppliers and other partners, depending on the nature of your business.
2. Register your business
You have the option to start out as a sole proprietor, which the Office of Innovation notes is easy to register and requires no set-up fees. However, you should note that this will mean your personal finances aren’t separate from your business. A sole proprietorship makes it easier to file taxes, but also means you have no liability protection.
Startups who want a bit more protection can set up a limited liability company (LLC) in order to keep personal finances separate from the business. Forming an LLC in New Jersey is relatively easy. After checking your business name’s availability with the New Jersey Business Record Service, you’ll have to find a registered agent, file an article of formation, register for tax filings, and review other tax requirements. It costs $125 to register as an LLC in New Jersey, which isn’t pretty reasonable.
Startups operating with a group of people can register as a limited liability partnership (LLP). LLPs and LLCs are similar, but partners within LLPs are not liable for the negligence of other partners. This is also a bit more formal than an LLC, as you’ll need a written agreement outlining the roles of each partner.
3. Get all the necessary bank accounts in order
If you choose to go with an LLC or LLP, you’ll have to open bank accounts for your business. You’ll want to have a checking account, a savings account, a merchant service account, and a credit card account. The basic rules still apply, as you’ll still want to shop around for the best interest rates and introductory fees.
You shouldn’t have to worry about scaling your business just yet; so local banks and credit unions can be a great place to start. One other tip to keep in mind is that your business accounts should be able to integrate with accounting software to help you keep track of your finances easily.
Our recent report on US unemployment rates suggests that the economy might well be recovering, but it’s still too soon to say whether it will continue to do so for the months ahead. What is clear is that local businesses will be key to stimulating the economy, so for anyone looking to establish a startup they will need to make their business plans is airtight for what could be a difficult end to 2020.