If you are looking for a new way to grow your business, then the state of New Jersey might be the answer.
By registering an LLC in this state, you can protect your personal assets from liability and take advantage of the pass-through taxation.
However, before you can start your new LLC, there are some steps that need to be taken.
This blog post will guide you through all of the necessary steps that are needed to register an LLC in NJ and provide necessary information on New Jersey registration requirements.
What is an NJ LLC?
A limited liability company in New Jersey is the most common form of doing business in New Jersey.
An LLC can be formed by one person and acts as a shield to protect their personal assets from any liability that comes with running your own New Jersey company or LLC.
An LLC in New Jersey will allow you to run transactions through it, such as buying and selling property, entering contracts, suing another party for not holding up duty under contract law, etc.
For example: If an individual starts a small bakery and purchases supplies using money loaned from their family, which is then lost because the supply store doesn't give them enough product; if this was done without forming an LLC (company), they would have no protection against losing everything they had worked so hard to obtain.
LLCs are owned by members of the company who have a right to manage business affairs.
By forming an LLC in New Jersey, you are establishing business rules for how the business will be conducted within your organization and not allowing others to interfere with it.
What is also great about LLCs is that they are easy to get started. You don't need special knowledge or experience running one, but if these things do come up, there is New Jersey law in place which allows you leeway when needed without having too much red tape holding you back from running your business the way that makes sense for you.
An LLC offers more protection than most other business entities because it allows all employees equal rights under state law while at the same time protecting each owner's personal assets.
Thus, LLC owners are able to maintain their businesses without exposing themselves to unlimited liability.
The Benefits of New Jersey LLCs
The benefits of New Jersey LLCs include:
- Asset protection
- No double taxation
- Low-cost start-up fees and filing fees
- Flexible management structure.
Asset protection is a huge benefit of forming an LLC in New Jersey.
The law treats corporations and limited liability companies differently than unincorporated associations or partnerships, which means that they offer more extensive asset protections to those who implement them as part of their business structure.
LLC's don't have to worry about double taxation either. The profits or losses of an LLC are not taxed at the company level. Instead, they pass through to its owners just like a sole proprietorship or partnership would do - and then each owner will report them on their tax returns accordingly.
Finally, New Jersey LLC formation allows flexible business structure options. That means your NJ LLC can have one owner, or it could have more than one member (owner), or that it could be either member-managed or manager-managed.
NJ LLC Formation Steps
Setting up a New Jersey LLC entails submitting LLC formation papers with the state's Division of Revenue and Enterprise Services, for example.
While starting an LLC in New Jersey is not difficult, it does require time to go through all obligations that come with the process.
Step 1: Choose a Business Name
Business names are easy to obtain for an LLC in New Jersey, and the procedure usually takes only a few minutes of your time if you apply for one.
You can either hire an attorney or use the State name database directly to complete the process.
Naming requirements for LLCs are as follows:
The name must end with the words "Limited Liability Company" or contain the terms "limited liability company" in any order.
On the other hand, the LLC's name cannot be deceptive in its description of your business.
Under New Jersey law, names that imply a different sort of company you won't be running are not allowed.
Always use legal names for LLCs that are not linked to any particular meaning in state or federal laws, such as a bank, insurance, trust, trustee, and others.
If you utilize these words without the appropriate license or authorization to do so, you may be fined.
Two or more businesses may not use a name under the same LLC name. The name must be unique, and no other businesses can use it.
You may perform a search on the State website to see if the desired name is available, which is a free service that allows you to look for possible clashes in both registered and reserved names.
New Jersey provides both online and paper filings, with the Division of Revenue and Enterprise Services as the filing agency.
The Application for Reservation of Name must be submitted (in duplicate) to the New Jersey Department of Revenue and Enterprise Services.
The New Jersey Division of Revenue & Enterprise Services allows you to reserve a name for 120 days by submitting a $50 Application for Reservation of Name (UNRR-1) online at the Business Charter Amendment Service website.
Read More: How to Look Up an LLC in New Jersey
Step 2: Appoint a New Jersey Registered Agent
Every New Jersey LLC needs to have a registered agent in order for the LLC to remain valid.
A registered agent is someone who agrees to accept important legal documents on behalf of a business, including court summons and lawsuits that may arise.
The easiest way to set up this requirement is by appointing an experienced New Jersey LLC formation service as your company's registered agent – they will take care of these filings at no extra cost.
Registered agent services are typically provided by New Jersey LLC formation services, which are companies that specialize in setting up your business.
The registered agent fee is usually added to the formation service fees, but it can also be acquired separately if you already have an accountant or lawyer on board who offers these types of services for a separate fee.
The cost of registered agent service in New Jersey starts at around $40 per year.
The registered agent service is really helpful for New Jersey LLC formation services because it saves them time and effort in maintaining your business, which the company owner would otherwise do.
By appointing a registered agent to act on behalf of an LLC, you can save money that would have been spent on hiring legal professionals for this purpose.
Step 3: File New Jersey LLC Certificate of Formation
New Jersey Certificate of formation represents a certificate that is filed with the state of New Jersey.
The certificate contains information about the LLC, including its name, physical address, and purpose for business operations.
Every new LLC should have a certificate of formation because it establishes the company as an official legal entity within the New Jersey law system.
The certificate must include basic information such as:
- Name of organization (it can be anything)
- Principal registered office location in NJ State
- Mailing Address Details
In addition to this general information, the New Jersey Certificate of Formation will need to provide detailed data on members or managers responsible for running your business activities inside New Jersey.
This includes full names and addresses along with their contact numbers so they could be easily reached by any authorities if needed.
You need to file your Certificate of Formation with the New Jersey Division of Revenue and pay a $125 filing fee.
Step 4: Register your New Jersey LLC
Within 60 days of forming an LLC, all New Jersey businesses must register with the New Jersey Division of Revenue for the business and sales tax paperwork.
You will need this business registration application to get a tax identification number and become eligible for all required returns and notifications.
You can register online with a Public Records Filing for New Business Entity or download Form NJ-Reg from the state's website and mail it to the New Jersey Division of Revenue.
There is no filing fee to register an LLC in NJ.
Step 5: Create an Operating Agreement
An LLC operating agreement is a formal contract between all members and managers that regulates the procedures and regulations for managing an LLC.
An operating agreement is a contract that details how profits will be shared, which parts of the company each member contributes to (money, property, or labor), how much everyone pays when there are losses, and more.
Because they've already been set by law, an LLC operating agreement makes it easier for LLCs to make decisions.
Operating agreements can also help avoid legal fights if one partner wants to sell their share or another partner isn't fulfilling their part of the company workload.
Although operating agreements are not required to be filed with any government agency, we recommend keeping them in conjunction with other important papers because an operating agreement is just as essential during the LLC formation procedure as it is later on.
If you don't feel comfortable creating your own LLC operating agreement, contact an attorney or a legal document preparation professional in New Jersey.
Step 6: Obtain an EIN
An Employer Identification Number (EIN) is a number assigned to businesses and organizations by the Internal Revenue Service (IRS).
The EIN allows your company to be identified by the government and other companies, banks, and financial institutions.
The EIN is also referred to as the Federal Employer Identification Number (FEIN), Federal Tax Identification Number, and IRS EIN.
If your LLC makes a profit or intends to hire employees in New Jersey, it must have an EIN.
To open bank accounts within the state, get loans from any financial institution, create payroll checks for employees, file taxes with both the federal and state governments each year, and other paperwork that requires this information, a tax identification number is required.
You can get an EIN through the IRS by filling out a short form for your LLC online. The IRS website allows you to submit an EIN for free, and it should only take around 15 minutes to complete.
Step 7: Acquire Licenses and Permits
If you establish an LLC in New Jersey and your operations include commercial interactions, you'll need to get a business license alongside the operating agreement.
The same is true for LLCs running a retail business or professional services like a law firm and medical practice.
Local licenses, such as restaurant and bar permits, are a set of permits that may be required if your service necessitates them. There is no comprehensive list since each city has unique criteria, so double-check first.
Certain companies are required to obtain certain federal or state licenses, but it all depends on the business and whether there are any federal or state regulations that apply.
For business licenses on the federal level, check the U.S. Small Business Administration website, or visit New Jersey's Business Portal to obtain information about state business licenses.
Depending on the services your firm will provide, there are several sorts of permit demands. Before starting an LLC in New Jersey, be sure to check those first, as they may differ.
This is all the more crucial if you want to establish professional limited liability companies in the state.
New Jersey LLC Taxes
In New Jersey, LLCs can be taxed as a corporation, partnership, or sole proprietorship.
LLCs have a default tax status. Unless you choose corporate taxation, New Jersey taxes all LLCs at the same rates as conventional sole proprietorships for tax purposes, based on net income and the number of members/owners operating within the firm structure.
Franchise tax, withholding tax, depreciation recapture, capital gains tax, and other taxation structures are included.
If your company is organized as a limited liability company in New Jersey, you may be required to file one or more state tax forms.
New Jersey sales tax is one of the most prevalent taxes that LLCs are required to submit with respect to their gross income if they sell services.
Limited liability companies in New Jersey are subject to a number of different kinds of taxes, but they're all rather straightforward and uncomplicated to comprehend.
Limited liability companies must pay federal and state income tax in accordance with S-Corp standards (i.e., pay at rates set by your annual profits).
This also includes withholding tax on salaries paid into the company structure by employees.
Federal income taxes are levied on the net income of the business. The LLC is not taxed directly, but instead, taxes are paid by each member in proportion to their share of the company's profit or loss.
If you form an LLC, you should be aware of self-employment taxes, which are a must. Self-employment tax is charged if you have only one member in your single-member LLC.
Make sure to contact the Department of Revenue with any questions you may have about the taxes.
Related Article: How to Close an LLC in New Jersey
New Jersey LLC FAQs
What Do I Need to Open a Business Bank Account For My NJ LLC?
To open a business bank account for your New Jersey LLC, you will need to demonstrate that you have the Certificate of Formation, an EIN, and potentially, a copy of your Operating Agreement together with your New Jersey street address.
Do I Need to File an Annual Report for My LLC in NJ?
Yes. Every New Jersey LLC is under the obligation to file annual reports once a year.
The filing fee for the annual report is $75, and it's payable to the New Jersey Division of Revenue & Enterprise Services.
Do I Need to Register as a Foreign LLC in NJ?
Yes. To register a foreign LLC in New Jersey, you must file a Certificate of Authority along with your LLC Business Registration Application and pay the filing fee for the Certificate of Authority is $125.
Do I Need to Renew My LLC Every Year in NJ?
Yes. After you've formed a New Jersey LLC, you must renew it by submitting an annual report yearly.
How Many Members Can an LLC Have In NJ?
A New Jersey LLC can have anywhere from one to an infinite number of members,.
How Do I Change From a Partnership to a Single-Member LLC in NJ?
You will need to submit an application for a business entity change (Form REG-C-L) in the same manner as you would submit one for a company's tax registration.
The Form may be downloaded from the New Jersey Division of Revenue's website or completed manually.
How Do I Change the Members of My LLC in NJ?
If you want to add or remove LLC members, you'll need to go through your existing operating agreement to see if there are any rules in place.
You will then need to submit an Amendment of Certificate form. The New Jersey Division of Revenue website has this amendment form available for download.
How Do I Find Out if a Business Name Is Taken in NJ?
The New Jersey Division of Revenue provides an online Name Availability Look-Up Service tool that allows company owners to check whether a business name is currently available for use.
Who Can Be a Registered Agent in NJ?
A registered agent or a registered agent service can be anyone, whether an individual or business, that has a permanent residential address in the state of New Jersey and is of legal age. As long as they know how to help with the LLC, such as the LLC operating agreement, they are qualified.
Starting an LLC in New Jersey: The Verdict
As a future business owner considering setting up a New Jersey LLC, you want to make sure everything is in order.
You don't want any legal issues or surprises down the line when you least expect them, which could lead to more complicated and expensive problems.
For this reason, it's important to have someone who can provide professional guidance on legal matters. A service like ZenBusiness would open your business and give you the right information.
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