Starting a Small Business in NJ: Do I Need an Attorney or CPA?

small business in nj

 

It’s the quintessential American dream to own a successful business. No matter what product or service(s) you’re eager to provide, every empire starts somewhere. While the popularity of Shark Tank has captured the spirit of the American entrepreneur, the statistics for success are quite grim. Over 627,000 new small businesses are started each year; however, 535,000 businesses close each year. To help your small business in NJ beat the odds and become a fixture of growth, it is important to start off on the right foot. Knowing where to begin is not always easy. You’ll need to hire the right professionals to help you navigate New Jersey’s complicated tax and business laws.

As a business owner, you’re the salesman, head of marketing, technical support provider, customer service representative, bookkeeper, debt collector, human resources department, and CEO. You need to either be an expert in each area or hire people with the expertise you need.

 


How to Jump-start Your Business


 

STEP 1: Decide on a business structure.

Some common business structures are sole-proprietorships, partnerships, limited liability companies (LLC), corporations, non-profits, and cooperatives. You can review the specifics here. This is a crucial decision, and making the right one without being informed would be a grave mistake. For this first step, you should consult with both an attorney and a CPA. Veitengruber Law can help advise you on what type of structure would best suit your business model. A CPA will advise you on how to minimize your tax burden when choosing a business structure.

 

STEP 2: Become an operating business entity.

To do this, you must file formation documents with the state, register your business name (for tax purposes), and obtain an employer identification number (EIN). Without all three, you cannot become an operating business entity in the state of New Jersey.

During (and beyond) these first steps, you’ll find the advice of both an attorney and a CPA invaluable in getting your business off the ground. Each provides important expertise and the right professionals will work together on your behalf.

 


The CPA and Your New Business


 

Not many people spend their leisure time brushing up on the ins and outs of business tax law. Even as a business owner, you’re probably unfamiliar with your tax exposure. A CPA is your translator and is ethically bound to give you sound business advice. Don’t try to navigate the tax code on your own.

Sales Tax

States, especially New Jersey, are notorious for changing sales tax on a whim. Is your product subject to sales tax? The NJ sales tax rate has changed twice in the last two years. Certain products are sales tax-exempt as are non-profits. A CPA can help make sure your sales tax charges are correct.

Payroll

If you have employees, you’ll need to accurately reflect payroll taxes, social security, and disability on pay stubs. For a first-time business owner this can all be very overwhelming. A CPA knows how to get your pay system up and running.

Income Tax

Sound financial planning is a necessity for a new business. A CPA will help determine your tax liability and set you up with a payment plan for quarterly tax payments to help you avoid an audit. They will also help maximize your deductions. A lot has changed in the allowable deductions since the changes in the 2018 tax code, so review with your CPA what you plan to deduct.

Growth

Many small businesses require an investment from outside parties in order to grow. A CPA can help create a financial plan to make the numbers look most attractive to investors. Your goal may even be to sell your business outright, and the process of reviewing your accounting books will determine your profits.

 


The Real Estate Attorney and Your New Business


 

Location, location, location

One of the first decisions you’ll make about your business once you’ve given it a name and registered it is where you will be located. Sometimes you start out in a home office. Hopefully the business will grow to the point where you’ll need to determine an outside location. Finding the optimal space that will boost your chances of success can be a daunting task as a business owner. You’ll work with a real estate agent to help you find the right space, but your attorney will be reviewing all contracts, leases, inspections, and will look for liens on potential locations.

Room to grow

There are many factors you’ll need to consider like whether to rent or buy. What size space is best suited for your current needs but can also accommodate future growth? Locales with heavy foot traffic, access to major roadways, proximity to your client base, and low crime rates may be more expensive but will be give your business the best chance for growth. Should you decide to rent a space, your real estate attorney will assist with any issues that arise with your landlord.

Veitengruber Law can also help your business in areas outside of real estate law, such as:

Liability

A common misunderstanding among many small business owners is that by incorporating into a formal business structure (as mentioned above), you’ll be free from all personal liability. While there are instances where you can be held personally liable, they are specific, and Veitengruber Law will spell out your personal liability as a business owner so that you don’t end up getting sued. Knowing the rules is very important!

Asset protection

In addition to lawsuit risks, you can also run into contract disputes and torts (actions that result in damages) when you own a business. Protecting your business assets is key, and this is one area in which Veitengruber Law is proud to be extremely well-versed.

Debt Negotiation

As your business attorney, we will form an important relationship with you throughout the life of your company. When your business hits a bump in the road, such as taking on too much debt, Veitengruber Law will be just a phone call away to assist with difficult creditors. We can help you formulate a plan to avoid getting into too much debt in the first place, but we do recognize that debt happens.

 


Attorney and CPA: Working Together


 

It is important that your CPA and attorney work well together. Veitengruber Law can recommend several experienced and trustworthy local CPAs from our extensive professional network. Together we can create a top-to-bottom budget that will fit your business needs.

Drafting the right Attorney/CPA combination is one of the most important steps you can take as you start your small business. Although it can be tempting to “do it yourself” in order to save money, the investment of hiring experienced professionals like Veitengruber Law will give your business a much higher chance for long-term success.

 

 

How Owning a Home in NJ Affects Your Net Worth

When it comes to numbers, especially finances, some of us become easily overwhelmed, which is totally normal. There are so many important numbers involved in staying afloat financially. Many of us keep close tabs on our various accounts such as our savings account, checking account, retirement accounts, and investment accounts. Though we attempt to use these accounts to prepare for the future and try our hardest to ensure that we will be financially safe, there is one critical number that defines how successful you will be at building your assets for the future. That is your net worth.

Net worth is probably a term you’ve heard before, but may not fully understand what it means. Your net worth is equal to your total assets minus your total liabilities. Your liabilities are the total amounts of money that you owe to any creditor. They are easier to calculate, as you most likely receive a reminder at the end of each month that lays out the exact amount you owe to creditors. On the other hand, it can be more challenging to accurately calculate your assets. You don’t want to give yourself a dishonest sense of financial security by overestimating your net worth, so always err on the conservative side.

Your house is probably the most valuable asset that’s in your name, so its monetary value will have the most influence on your net worth calculation. To estimate your home’s value, work with an experienced real estate professional. In general, it’s best to be conservative when estimating values of assets such as vehicles, jewelry, home furnishings, etc. Instead of basing figures off of how much you paid for it or how much you wish the valuable was worth, base it off of what you could sell the item for now.

As mentioned before, your house probably holds the most value of anything you own. Therefore, your net worth will be determined by how much equity you have in your home. When you calculate your net worth, you must subtract your liabilities, and that includes your mortgage. For example, if your home is worth $350,000, but you owe $100,000 on your mortgage, then your home will increase your net worth by $250,000 ($350,000 – $100,000 = $250,000).

Unsurprisingly, there is disagreement as to whether or not a home’s value should be included when determining net worth. Those in favor think that since a home is someone’s most valuable asset, it should absolutely be included. Those against argue that if you sold your house in order to actually use the money from the sale, then you may not have somewhere to live. To consider both opinions, many people will create two net worth calculations: one including a home’s value (as an asset and liability if a mortgage still exists) and one without it (continuing to include the liability if there is still a mortgage to be paid).

In New Jersey, depending on where you live, the value of land may be high, low, or somewhere in the middle. Depending on land value and the current market in the area, home prices are going to fluctuate. Remembering what you’ve learned so far, if a house is valued at a higher amount, an individual is going to have an increased net worth. If you purchase a home in a wealthier area, this will add more to your net worth opposed to if you bought a home in a middle or lower class area.

Another thing to take into consideration is a vacation home or rental property. These can actually have a positive influence on your net worth. Condos are usually purchased as vacation homes and are bought with cash. Good news: your net worth will increase by the same amount that the home is valued at, if you paid in cash.

Hopefully, net worth makes a tad more sense now and you know how owning a home will affect it. Since it’s a critical number to consider in the realm of finances, it’s important to know what goes into calculating that number. If you have more questions, or are looking for help with calculating your net worth, reach out to a real estate team near you.

Do I Need a Real Estate Attorney in NJ?

real estate attorney in NJ

Finding a new home is an intimidating adventure, but before you know it, you could be making an offer. What follows could be satisfying relief, or complete disaster. The answer: yes, you do need a real estate attorney in New Jersey, to ensure that your home purchase goes off without a hitch.

What does a real estate attorney actually do?

Most people have heard of, and potentially even worked with, a real estate agent, but a real estate agent’s job is different than an attorney’s duties. Our first suggestion is to begin your search for a NJ real estate attorney as soon as you start house hunting. The process of purchasing and selling a home includes intricate legal contracts and all paperwork involved in the transaction is extensive. An attorney will review the contracts, provide representation and closing services, and will be able to offer a third-party opinion on the process.

Barbara Casey, a past Chair of the New Jersey State Bar Association, shares that “Real estate transactions are emotional transactions.” She said, “The decisions you make can often be clouded by emotions.” Because of this, it is helpful to have outside opinions on one of the most important decisions you will make during your lifetime.

In Monmouth County, New Jersey, hiring a real estate attorney is not mandatory for a closing. Even so, it has now become normal practice in the area. Most people now recognize the critical importance of legal counsel on the matter of a home purchase or sale. There are certain services that you should expect from any experienced NJ real estate attorney.

Some of the services will naturally vary slightly, depending on the attorney, but all good attorneys will collaborate extensively with the mortgage company and seller. A real estate attorney will help their client to understand the process, serve as an advocate, and assist in making significant decisions. In addition, they will closely read the contract to make sure it’s all in your best interest as well as attend the closing with you. Generally, they will educate you about things you didn’t know you might need and explain the paperwork/contracts. One final key attribute of a superb attorney is that they will offer you options, but will still allow you to make the crucial decisions. In the end, your attorney should be there to advise while ultimately leaving the final decisions up to you.

At Veitengruber Law, we provide top-notch and comprehensive real estate transaction services. A quick overview includes:

  • Negotiating sales or lease agreements
  • Reviewing and drafting real estate contracts and title opinions
  • Directing due diligence in title search cases
  • Handling various kinds of deeds

Now that you know what we as real estate attorneys do, here are a few tips on how to find a reliable attorney to handle your upcoming real estate transaction.

Research how long they have been in practice as well as how much and what kind of experience they have had. This could include the number of closings that they complete per month. Make sure to find out if they have any complaints against them and the exact list of services that they provide. Finally, ask if they can give the name of a client that will give them a reference. If you have a special case, search for an attorney that has experience handling your specific type of case.

At Veitengruber Law, we have attorneys that want to help you and provide all the services that you will need during your NJ real estate process. Our professionals have incomparable financial acumen and experience. We strive to help our clients in the best way possible, all while remaining professional and efficient. Visit our website and give us a call or send an email to find out more about how we can meet your needs.