Starting a business is an exciting time. But it’s seldom simple. You’ll need to navigate a variety of issues, including how to set up your company. Today’s article will discuss 11 steps that you’ll need to traverse to properly form a CNMI company.
First, pick a name. But don’t stop there. Do some research. Google the name to see if anyone else is already using it, both in the CNMI and elsewhere. If that search comes up clean, call the Department of Commerce to check if the name is available. If so, great. If not, pick a new name and repeat your detective work.
Second, select what kind of company you’ll own. You have five choices, depending on your circumstances. Those options are a sole proprietorship, a partnership, an S corporation, a C corporation, and a limited liability company. Each version poses different tax and liability consequences.
Third, write the governance documents for your company, especially if you have any partners. These documents should spell out each person’s investments and responsibilities, how profits and losses will be shared, how owners can exit the business, and so on. Generally, you’ll want to get a business lawyer to help with these documents because freely available online templates are normally too simple. They tend to omit important details that the typical person won’t notice until problems arise months or years down the line.
Fourth, choose a registered agent. This person will be designated to receive official correspondence on behalf of the business. For example, if the government sends the business a letter, it will go to the registered agent. And if someone sues the company, the lawsuit will also be given to the registered agent.
Fifth, file your governance documents. For instance, if you elected to set up an LLC, you’ll need to submit an Articles of Organization, an Operating Agreement, and a Registered-Agent Form. To do so, print three copies of each document and then hand-deliver them to the Department of Commerce’s office on Capital Hill. Once there, someone will review the documents and then give you an invoice. Take the invoice to the CNMI Treasury’s office on Capital Hill and pay. Thereafter, drive back to the Department of Commerce with proof of payment. From there, the processing time is seven-to-10 working days, according to the Department of Commerce.
Sixth, obtain a zoning clearance. To apply, go to the Zoning Department’s office in Dandan and provide them with a zoning permit application plus your office lease and a floor plan for your office space. The Zoning Department will review the application and then give you an invoice. Take the invoice to the CNMI Treasury’s Office, which is located in the same building. Pay the invoice and then return to the Zoning Department with proof of payment. From there, the processing time is 21 working days, according to the Zoning Department.
Seventh, get a business license. To obtain one, go to the Business License office in Dandan and submit a business-license application. As part of the application, also provide a copy of your office floor plan, Commerce-stamped governance documents, and Certificate of Incorporation. The Business License office will then give you an invoice. Go across the hall to the CNMI Treasury’s office and pay the invoice. Then return to Business-License office and provide them with proof of payment. From there, the processing time is 10 working days, according to the Business License office.
Eighth, file your initial company report. This document is a one-page form that can be found online at the Department of Commerce’s website. Fill out the form and then make a copy. Take them both to the Department of Commerce on Capitol Hill. The staff will then give you an invoice. Take the invoice to the CNMI Treasury’s office on Capital Hill and pay. Then drive back to the Department of Commerce. Once you hand them proof of payment, they will provide you with a stamped copy of your initial company report.
Ninth, create a Tax Identification Number. To do so, go to the IRS’ website and fill out the form. The process is quick and free. But note: If you are a sole proprietorship or a single-member LLC, then you don’t need to create a tax identification number for your business; in that case, you can use your social security number for taxes and banking.
Tenth, if the company has any employees (except for yourself), then obtain workman’s compensation insurance. To get it, call your preferred insurance provider.
Finally, set up a bank account. To do so, pick a bank and set up an appointment. Bring identification, your governance documents, the Certificate of Organization, and any other documents that the bank requests.
If that seems like more work than you want to go through, many lawyers and agents will handle the process for you for a fee. And some of them also offer to expedite the process for an extra fee.
But hopefully the process gets automated soon. In many states, forming a company takes minutes, not weeks, to become official.
This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.