Before you can start an LLC in New Jersey, some steps need to be taken. From our experience, managing these steps is much easier, when you have them listed. This is something that really could help us when we first started opening an LLC across New Jersey.
We have carefully examined and perfected a variety of techniques, leaving no stone unturned in our goal to achieve perfection in smoothly managing an LLC, with a team of legal experts and attorneys at our side.
To save you time, we have combined our over ten years of business formation knowledge into this guide.
Quick Summary
- To start an LLC in New Jersey you will have to go through a few main steps, from choosing a name, to picking a registered agent service.
- Forming an LLC in New Jersey comes with some benefits, including limited personal liability and different allocation of profit and loss.
- It is highly recommended to open a separate business bank account for your New Jersey LLC.
New Jersey LLC Formation Steps
Setting up a New Jersey LLC entails submitting LLC formation papers with the state's Division of Revenue and Enterprise Services [1].
While starting an LLC in New Jersey is not difficult, it does require time to go through all the obligations that come with the process.
1. Choose a Business Name For Your New Jersey LLC
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.
- The name cannot include restricted words like "bank," "university," or "insurance" unless proper licensing is obtained.
- The name must be distinguishable from other business entities registered in the state.
- Certain words may require additional approvals, such as "attorney," "doctor," or "architect."
You can always check official portals to check for LLC names [2].
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 [3].
To make a name reservation you will have to:
- Choose business structure
- List desirable name
- Provide an address, signature, and date
- Expect a certain fee for name reservation
The New Jersey Division of Revenue 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.
See our article and learn how to look up an LLC in New Jersey.
2. Appoint a New Jersey Registered Agent
Every New Jersey LLC needs to have an LLC registered agent 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 service – 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, and some companies even offer to set up your business bank account.
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.
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 can 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.
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 New Jersey.
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.
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 help collect sales tax.
To open a business bank account 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.
7. Acquire Licenses and Permits
If you establish an LLC and your operations include commercial interactions, you'll need to get an LLC 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 any federal or state regulations 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, be sure to check those first, as they may differ.
New Jersey LLC Taxes
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.
New Jersey sales tax is one of the most prevalent taxes that LLCs are required to submit concerning their gross income if they sell services.
Limited liability companies in New Jersey are subject to several different kinds of taxes, but they're all rather straightforward and uncomplicated to comprehend.
Limited liability companies must pay federal and state income tax by 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 start 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 Articles:
What is a New Jersey LLC?
A New Jersey LLC is the most common business structure in the state, offering personal asset protection, flexible operations, and ease of formation for its owners.
An LLC allows for various transactions, such as property transactions, contracts, and legal actions. Without an LLC, personal assets are at risk.
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 can 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.
New Jersey LLC FAQ
Do I Need to Register as a Foreign LLC?
You need to register as a foreign LLC. To do that you must file a Certificate of Authority along with your LLC Business Registration Application and pay the filing fee for the Certificate of Authority which is $125.
Do I Need to Renew My LLC Every Year in New Jersey?
You need to renew your LLC every year in New Jersey by submitting an annual report yearly.
How Many Members Can an LLC Have In New Jersey?
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 New Jersey?
To change from a partnership to a single-member LLC in New Jersey, you need to apply for a business entity change (Form REG-C-L).
How Do I Change the Members of My LLC in New Jersey?
To change the members of your LLC in New Jersey you need to go through your existing operating agreement to see if there are any rules in place.
How Do I Find Out if a Business Name Is Taken in New Jersey?
To find out if a business name is taken in New Jersey you can check the New Jersey Division of Revenue and its Name Availability Look-Up Service tool to check.
Starting an LLC in New Jersey
New Jersey LLC formation offers promising potential with proper guidance.
To avoid any risks and potential pitfalls, we recommend using ZenBusiness to help you avoid any potential complications and surprises.
As a prospective business owner, ensure organizational readiness to prevent unexpected legal complexities and costly issues.
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 all along the way.
Our #1 Recommendation
ZenBusiness
References:
- https://www.state.nj.us/treasury/revenue/
- https://www.njportal.com/DOR/BusinessNameSearch/Search/Availability
- https://www.state.nj.us/treasury/revenue/dcr/pdforms/unrr1.pdf
