How to Start an LLC in New Jersey? (A Complete Guide)

Jon Morgan
Published by Jon Morgan | Co-Founder & Chief Editor
Last updated: June 19, 2024
FACT CHECKED by Lou Viveros, Growth & Transition Advisor
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Starting an LLC in New Jersey is a strategic move for entrepreneurs looking to establish a flexible and legally recognized business structure.

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.

Establishing an LLC can be a lengthy process for those new to the business. As such, it's wise to consider an LLC service provider in New Jersey, particularly those who offer complimentary LLC formation.

Quick Summary

  • Starting an LLC in New Jersey involves various steps, including choosing the type of LLC, appointing a registered agent, and filing the Certificate of Formation.
  • Entrepreneurs must decide between a single-member and a multi-member LLC, each offering different advantages and challenges.
  • With 1.9 million small business employees, small businesses account for 48.8% of New Jersey's workforce, as per U.S. Small Business stats, showcasing the vital role they play in the state's economy.
  • In my opinion, given the robust support system and straightforward process, starting an LLC in New Jersey appears to be a promising path for entrepreneurs aiming for success in a competitive marketplace.


How to Form an LLC in New Jersey

To form an LLC in New Jersey, you must submit the required paperwork to the state's Division of Revenue and Enterprise Services, ensuring compliance with all associated obligations [1].

1. Choose the Type of Your LLC (Mandatory)

Drawing from my experience as a business consultant, I've observed that the choice between a single-member and a multi-member LLC in New Jersey hinges on specific business needs and owner dynamics.

In New Jersey, small businesses significantly contribute to the workforce, with 1.9 million small business employees accounting for 48.8% of the state's employees, as per U.S. Small Business Economic Profile stats [2].

  • Single-Member LLC:
    • Advantages: For entrepreneurs looking for simplicity and full control, this is ideal. My clients often appreciate the streamlined decision-making and ease of compliance.
    • Disadvantages: However, they sometimes struggle with limited networking opportunities and reduced credibility with banks and investors.
  • Multi-Member LLC:
    • Advantages: Clients with multi-member LLCs benefit from diverse perspectives and shared responsibilities. This structure often results in more innovative strategies and risk-sharing.
    • Disadvantages: The downside, as I've frequently seen, is the potential for internal conflicts and the need for more complex operating agreements.

The key to a successful LLC in New Jersey lies in a clear understanding of these structures and aligning them with your business vision and operational style.

2. Choose a Name for Your New Jersey LLC (Mandatory)

Brand concept on a calculator

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 term "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 [3].

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 [4].

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.

3. Select a Registered Agent (Mandatory)

Shaking hands with another person

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 best method to fulfill this requirement is to hire a skilled New Jersey LLC formation service as your registered agent, who will handle these filings without additional charges.

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.

4. File New Jersey LLC Certificate of Formation (Mandatory)

A person in business attire reading through the files

The 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 legal 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 their 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.

Steps to Take After Forming an LLC in New Jersey

Putting a signature on a document

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 outlines profit sharing, member contributions (money, property, labor), loss payments, and other company aspects.

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's workload.

If you don't feel comfortable creating your own LLC operating agreement, contact an attorney or a legal document preparation professional in New Jersey.

A person holding an employer number card

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.

If your LLC makes a profit or intends to hire employees in New Jersey, it must have an EIN to help collect sales tax.

A tax identification number is also needed to open a business bank account, obtain loans, create payroll, file federal and state taxes, and do other official paperwork.

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.

Files for an NJ LLC

I strongly advocate opening a bank account based on my extensive experience with LLCs. This action is pivotal for maintaining your LLC's legal status and financial clarity.

  • Separation of Personal and Business Finances: Creating this separation is crucial. I've seen how a separate LLC bank account can effectively shield personal assets from business liabilities, upholding the legal distinction between the individual and the LLC. This safeguard is a key advantage of an LLC.
  • Professionalism and Credibility: A business account significantly elevates your LLC's professional image. It assures clients, suppliers, and financial institutions of your business's legitimacy and structured approach.
  • Simplified Accounting and Tax Filing: Having a dedicated business account streamlines bookkeeping and tax preparation. I've observed that it greatly aids in accurately tracking business transactions, a practice essential for precise financial records and compliance.
  • Compliance with State Laws: A separate bank account for your LLC aligns with best practices for compliance and audit readiness. This helps businesses stay organized and prepared for potential state reviews or audits.

To set up your LLC's bank account in New Jersey, you'll need your LLC's EIN, formation documents, and, if applicable, a resolution for authorized signers.

Based on my clients' experiences, it's beneficial to compare banks to find one that meets your specific business needs, considering factors like fees and services offered.

8. File Your LLC Annual Report (Mandatory)

A woman answering registration form

This report is essential for maintaining your LLC's good standing with the state.

Here are some key points to keep in mind:

  • Filing Deadline: The Annual Report must be filed each year by the end of the anniversary month of your LLC’s formation. For example, if your LLC was formed on March 15th, the report is due by March 31st each year.
  • Filing Fee: The fee for filing the Annual Report is $75. This is a fixed amount and applies to all LLCs, regardless of size or income.
  • Information Required: The report usually requires basic information about your LLC, such as the names and addresses of members/managers and the registered agent, as well as the LLC's business address.
  • Consequences of Non-Compliance: Failing to file the Annual Report can lead to penalties and may even result in the state revoking your LLC's status, which can have legal and financial ramifications.
  • Online Filing: New Jersey typically allows (and may require) the Annual Report to be filed online through the state's business filing portal, which simplifies the process.

9. Obtain Business Licenses and Permits

Approved a document with a stamp

If you establish an LLC and your operations include commercial interactions, you'll need to get an LLC business license along with the operating agreement.

The same is true for LLCs running a retail business or professional services like a law firm or 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.

10. Employee Reporting and Tax Obligations (Mandatory)

Managing an LLC with employees in New Jersey involves specific reporting and tax responsibilities. Firstly, all new hires must be reported to the New Jersey New Hire Reporting Center within 20 days of their start date.

This requirement is crucial for maintaining compliance with both state and federal employment regulations.

Additionally, once your LLC's payroll exceeds $1,000, you're obligated to start paying unemployment insurance taxes. This contributes to the state's unemployment benefits pool, offering a safety net for employees who may lose their jobs.

Another critical aspect is withholding taxes. Your LLC must withhold state and federal income taxes, along with payroll taxes, from your employees' wages. This ensures that your employees' tax obligations are met regularly and reduces their year-end tax burden.

Finally, it's mandatory to provide workers' compensation insurance. This insurance is a safety measure that covers medical expenses and lost wages if an employee is injured on the job.

11. Choosing Your Tax Structure

Calculating taxes and expenses

New Jersey LLCs can be taxed as corporations, partnerships, or sole proprietorships.

LLCs are taxed as sole proprietorships by default, with rates based on net income and member count, unless opting for corporate tax status.

Franchise tax, withholding tax, depreciation recapture, capital gains tax, and other taxation structures are included.

The 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:

Benefits and Drawbacks of an LLC in New Jersey

Reading papers and documents

With 952,029 small businesses comprising 99.6% of all New Jersey businesses, as per the Statistics of U.S. Business, the state presents a fertile environment for entrepreneurs aiming to establish their presence [5].

Benefits:

  • Limited Liability Protection: One of the primary advantages of an LLC in New Jersey, as in other states, is the limited liability protection it offers. Members are generally not personally responsible for business debts and liabilities.
  • Flexible Taxation Options: New Jersey LLCs benefit from pass-through taxation, meaning profits and losses can be reported on members' personal tax returns, potentially lowering overall tax liability. Additionally, LLCs can choose to be taxed as corporations if it is beneficial.
  • Ease of Formation and Management: Compared to corporations, LLCs in New Jersey have fewer formalities and requirements for formation and ongoing management, making them a more accessible option for small business owners.
  • State-Specific Incentives: New Jersey may offer specific incentives for LLCs, especially those in certain industries or areas, which can be advantageous for new and growing businesses.

"Grow NJ is an initiative designed for start-up companies in New Jersey, offering tax incentives for job creation and retention. This program is intended to enhance New Jersey's competitiveness globally. Eligible businesses could receive tax credits varying from $500 to $5,000 for each job created or retained annually."

-Jon Morgan, Co-Founder & Chief-Editor of Venture Smarter

Drawbacks:

  • Annual Report Filing and Fee: Unlike some states, New Jersey requires LLCs to file an annual report with a fee of $75, adding to the administrative burden and ongoing costs.
  • Limited Duration: In New Jersey, unless otherwise stated in the formation documents, an LLC has a default existence of 30 years. This limitation might require additional paperwork for long-term operations.
  • Employment Taxes and Regulations: For LLCs with employees, New Jersey mandates strict compliance with employment-related reporting, tax withholdings, and insurance requirements, which can be complex and time-consuming to manage.
  • State Tax Considerations: While offering pass-through taxation, New Jersey's overall tax climate, including state-level taxes, should be considered, as it might impact the financial planning of an LLC.

Prospective LLC owners should weigh these factors in light of their specific business needs and goals.

DIY vs. Professional LLC Formation

DIY LLC Formation:

  • Pros:
    • Cost-Effective: Generally, DIY is less expensive as it eliminates professional fees.
    • Control and Learning Experience: You have direct control over the process and can gain valuable legal knowledge about your business structure.
  • Cons:
    • Time-Consuming: It requires time and effort to research and understand state-specific regulations.
    • Risk of Errors: Without professional guidance, there's a higher risk of making mistakes in the filing process, which can lead to compliance issues.
    • Limited Legal and Tax Advice: You won’t have access to expert advice, which can be crucial for complex decisions.

Professional LLC Formation Services:

  • Pros:
    • Expertise and Compliance Assistance: Professionals are knowledgeable about state-specific requirements, reducing the risk of errors.
    • Saves Time: It's a time-saver as the service handles the bulk of the paperwork and filing.
    • Additional Services: Many offer additional services like registered agent service or help with obtaining an EIN.
    • Peace of Mind: Having experts handle the process can provide peace of mind, especially in complex situations.
  • Cons:
    • Cost: Professional services come with fees, which can be a significant factor for budget-conscious entrepreneurs.
    • Less Hands-On Involvement: You might have less involvement and understanding of the intricate details of your LLC’s formation.

Choosing between DIY and professional LLC formation depends on your budget, business complexity, legal understanding, and available time.

Go DIY if you prioritize cost savings and are confident in handling the process. Choose a professional service for expert guidance, compliance assurance, and convenience. Ultimately, it's about matching your personal needs and comfort with legal procedures.

FAQs

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.

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.


References:

  1. https://www.state.nj.us/treasury/revenue/
  2. https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-NJ.pdf
  3. https://www.njportal.com/DOR/BusinessNameSearch/Search/Availability
  4. https://www.state.nj.us/treasury/revenue/dcr/pdforms/unrr1.pdf
  5. https://www.nj.gov/state/press-2023-0502.shtml

About The Author

Co-Founder & Chief Editor
Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
Learn more about our editorial policy
Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
Learn more about our editorial policy

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