If you have a great idea for a new business in New Jersey, you’ve likely spent hours planning and brainstorming. But before your business can get off the ground, you have to take care of the legal paperwork involved in officially registering your business with the state and setting up all the details so that you can stay compliant with state laws.
But once you start looking into the process, it’s easy to become overwhelmed. With so much information from so many sources, it’s difficult to tell what to trust and where to start. That’s where ZenBusiness has your back. We’re here to help and show you how forming a limited liability company (LLC) in New Jersey can be both straightforward and affordable.
In this guide, all of the required steps are laid out in an organized manner so that you can get both the big picture of what you need to do and all the relevant details. A clear understanding of New Jersey’s LLC formation requirements will put you on the path to launching your new company quickly and efficiently, allowing you to navigate the bureaucracy with ease.
Learn how the right LLC service can support you through this process and provide value to your company once it’s up and running. Once your New Jersey LLC is formed and all of the paperwork taken care of, you’ll be able to focus on making your company grow without worry.
The 5 steps to form an LLC in New Jersey:
To form an LLC in New Jersey, you must file a Certificate of Formation with the New Jersey Division of Revenue and Enterprise Services. This creates a public record of your business and allows the state to communicate with you on important matters of regulation.
The first steps to creating your business, however, begin before you file. There are important decisions that need to be made about your business name, your registered agent, and so on. Then, after filing, you will need to create an Operating Agreement, obtain any necessary licenses or authorizations, and set your business up to pay taxes at the federal, state, and local levels.
This section breaks all of these steps down into simple pieces so that you can keep it all straight. Read the following step-by-step guide to forming an LLC in the state of New Jersey so that you can get started and take charge of your business formation with confidence.
Step 1: Name Your New Jersey LLC
The first step in preparing to register your business is choosing a name. You want a name that is descriptive of your services and not too generic or vague. Consider using words creatively, but avoid copying competitors or creating something too complex.
To make sure you aren’t picking a name that is the same or almost the same as an existing business in New Jersey, you can do a quick and easy check on name availability via New Jersey’s Division of Revenue and Enterprise Services Business Name Search page.
Another factor to consider for your LLC name is the availability of website domains. Most businesses do best by having a website these days, and you don’t want to come up with a name, register it, and then realize there are no web domain names to be had that include your business name in a reasonable way. So, as you are brainstorming business name ideas, do a domain name search to verify that you’ll be able to create a good website name as well.
To comply with New Jersey state law, your company’s name must end with one of the following to designate it as a limited liability company. Note that when registering through the online portal, you will first be asked for the business name only and later asked to select a designator.
- Limited Liability Company
- Limited Liability Co.
- Ltd. Liability Company
- Ltd. Liability Co.
Keep in mind that New Jersey prohibits some words. For example, words that might suggest your business is a government agency (e.g., “police,” “city,” “federal,” etc.) cannot be included.
If you are not yet ready to file your Certificate of Formation but want to make sure your chosen business name is safe, you can file a Business Name Reservation. This form allows you to reserve the business name for four months, so you don’t have to worry about someone else using that name before you get the rest of your paperwork in order. Filing to reserve a name requires payment of a $50 fee.
At the same time you reserve your business name, it is probably a good idea to reserve your website domain name through a service like ZenBusiness as well.
If you plan on filing your Certificate of Formation right away or you aren’t worried that someone will snag your business name before you do so, you do not need to file a Business Name Reservation and will name your business when you file the Certificate of Formation.
If you plan on doing business under a name other than your official business name — for example, if you want to separate different services under different titles or advertise under a name that doesn’t include the required “LLC” after the title — you can also file an Alternate Business Name form after your business is registered with the state.
Another thing to consider is whether you want to trademark anything with your business. You can visit the United States Patent and Trademark Office’s site to see whether or not your business name or logo is trademarked. Once you have a trademark, you’ll want to file the correct form to register your specific mark.
Step 2: Appoint a Registered Agent in New Jersey
The state of New Jersey requires that every LLC have a registered agent for service of process. Service of process is the fancy term for the delivery of any legal papers that might be headed your way.
A registered agent can be a person or a registered agent service. The key requirement is that they have a physical address in the state of New Jersey and agree to receive and forward legal notices to you. The rules pertaining to registered agents in New Jersey are:
- “Every corporation organized for any purpose under any general or special law of this State and every foreign corporation authorized to transact business in this State shall continuously maintain a registered office in this State, and a registered agent having a business office identical with such registered office.”
- “The registered office may be, but need not be, the same as a place of business of the corporation which it serves.”
- “The registered agent may be a natural person of the age of 18 years or more, or a domestic corporation or a foreign corporation authorized to transact business in this State, whether or not any such agent corporation is organized for a purpose or purposes for which a corporation may be organized under this act.”
- “The designation of a principal or registered office in this State and of a registered agent in charge thereof by any corporation of this State or by any foreign corporation authorized to transact business in this State, as in force on the effective date of this act, shall continue with like effect as if made hereunder until changed pursuant to this act.”
Step 3: File New Jersey Certificate of Formation
To officially create your LLC in the state of New Jersey, you’ll need to complete the Certificate of Formation paperwork online with the Division of Revenue and Enterprise Services. Then, you will click “get started” and be asked to choose your business type and enter your business name without the LLC designator. In addition to other required information, you will have the option of including a description of your business purpose.
The fee required for business formation is $125 for most businesses and $75 for nonprofits. When paying online, you will be charged a $3.50 credit card service fee or a $1 eCheck service fee. If you would like to obtain a certified copy of your business registration, this costs an additional $25.
To complete the online forms, you’ll need to provide the following information:
- Business name and type
- Registered agent information (including email address to receive registered agent notifications)
- Names of all members
- Standing Certificate from your home state (only for foreign entities)
- Credit card or eCheck (an electronic version of a paper check used to make online payments)
Step 4: Create an Operating Agreement
An LLC Operating Agreement is a document that spells out all the details involved in the day-to-day operations of your business. It covers things like who owns what percentage of the business, how profits and losses are distributed, and how decisions are made.
Creating an Operating Agreement helps set the ground rules between you and your business partners before your business takes off. It helps you avoid disagreements and make clear decisions.
While Operating Agreements are not strictly required for LLCs in New Jersey, they are recommended. There are many benefits to having an Operating Agreement. Among these are:
- Protection of personal assets: By clarifying which assets and affairs are tied to the business, you add another layer of legal protection between business and personal affairs.
- Clearly defined rules: In the absence of an Operating Agreement, there are rules set forth by the state of New Jersey for how things work in an LLC. If you want to avoid the default rules, you will need an Operating Agreement to clarify how your company should run.
- Assigning ownership: The agreement can spell out what percentage of the company each member owns, including what they contributed in capital and how any expenses and profits should be shared. This will help avoid any disagreements with your partners down the road and avoid default state rules.
- Succession and dissolution: The agreement can also include explicit details about who gets your share of the business if something happens to you and how things will be divided up if the business dissolves.
- Business funding: Sometimes, to get business loans or lines of credit, a bank will want to see an Operating Agreement to make sure you’ve given your business some serious thought.
- Mindset: Creating an Operating Agreement gets you in the right mindset to start a business. It forces you to think about different scenarios and plan accordingly.
A good Operating Agreement should include the following:
- Details of the LLC: Business name, “Doing Business As” (DBA), members, registered agent, and so on. This is any information that was included in the Certificate of Formation when you registered your business.
- Capital contributions: This is a record of how much money each member contributed to starting the business. These numbers are often relevant when determining how profits are to be divided.
- Distribution of profits and losses: Perhaps the distribution of profits should be proportional to capital contributions, or maybe you and the other members want a different plan. You should also clearly explain what happens to losses. Are those split up evenly?
- Ownership percentages: Do all members own an equal percentage? Or is ownership proportional to capital contribution? You can spell this out clearly in the section of the agreement.
- Books, records, and tax returns: Here, you can spell out who maintains the books and how taxes are accounted for and prepared.
- Bank accounts: This is information about the company bank accounts and who has access.
- Management structure and voting: Who is in charge? How are decisions made? If there is a disagreement, does a majority rule, or do some votes count more than others? If there is a tie, who breaks it?
- How changes in membership are handled: If someone wants to leave, are they paid a certain percentage of the business value? How will the members decide if and when to add someone new? If a member dies, does their ownership transfer to their next of kin?
- Dissolution and liquidation: If the business dissolves, how will assets and debts be split up? What will be the process?
- Arbitration: How will disagreements and disputes be handled?
An Operating Agreement is considered a legally binding document in the state of New Jersey. This means it should be drafted carefully. The right partner can help you create an Operating Agreement at a surprisingly affordable cost, using existing templates to expedite the process. In terms of peace of mind, it’s a prudent investment.
Once you have finalized your Operating Agreement and it’s time for all members to sign, you should have the signatures notarized. This secures the legal foundation of the agreement. You do not, however, need to file the finalized agreement with the Secretary of State or any other entity. You just need to keep it in a secure location with any other business-related documents.
Step 5: Apply for an EIN
An IRS Employer Identification Number (EIN) is required of your LLC unless it is a single-member LLC with no employees. Obtaining an EIN is as easy as completing the application on the IRS website.
An EIN can be thought of as a Social Security number for your business. It is a way that the government can uniquely identify your business as an entity separate from you. You will also need to file from NJ-REG to be registered with the state of New Jersey for tax purposes within 60 days of formation. (Nonprofits complete form REG 1-E instead.) Filing this form will ensure that you will receive the proper returns and notices. What type of taxes your business will need to pay will depend on the taxes it will be collecting and/or has been collecting from the state as well as whether you have employees.
Visit the state of New Jersey Treasury Division of Taxation page to learn more about which taxes might apply to your business and how to pay them.
How much does it cost to start an LLC in New Jersey?
The exact amount depends on what type of business you are starting, which forms you file, and any consulting fees. At an absolute minimum, you will need to pay the $125 filing fee for filing your Certificate of Formation. Additional fees that may or may not apply are as follows:
- $50 for reserving your business name
- $50 for a Standing Certificate (only for out-of-state entities)
- $25 for a certified copy of your business registration
- Fees for any required business licenses
- Fees for registered agent service
- Fees for assistance in writing an Operating Agreement
- Notary fees
What are the benefits of an LLC in New Jersey?
When considering the benefits of forming an LLC in New Jersey, it makes sense first to note the benefits of an LLC itself and then look at why New Jersey is a great place to start a business.
Forming an LLC provides many benefits and is one of the most popular business types. With the formation of an LLC comes the protection of a corporation along with the tax benefits of a partnership or sole proprietorship. In New Jersey, an LLC:
- Protects the individual owners, called “members,” from personal liability for the acts of the company. They are not personally liable for debts, obligations, or liabilities created by the company in most situations.
- Is taxed like a sole proprietorship (if one owner) or a partnership (if multiple owners).
- Is a simple business structure with straightforward filing, management, compliance, regulations, and administration.
- Allows for flexible management structure and ownership.
New Jersey can be a great place to get a new business off the ground. There are many advantages of forming an LLC in New Jersey compared to other states. Among these are:
- New Jersey is one of the most diverse and densely populated states in the country.
- New Jersey is home to the eighth-largest economy in the country.
- New Jersey is located right outside of New York.
- Business owners report feeling supported by their local community.
How is a New Jersey LLC taxed?
There are a wide variety of business taxes that your New Jersey LLC may need to pay. These include taxes payable to the New Jersey government, like sales tax and income tax. You will also need to pay federal, self-employment, and possibly payroll tax to the IRS.
Sole proprietors and single-member LLCs do not file a business income tax return. They are treated as individuals for income tax purposes and must instead file an NJ-1040 or NJ-1040NR return to report and remit any net profit earned from the business.
This is because LLCs are considered “pass-through entities.” If you are a single-owner LLC, all of your LLC income will be treated as though it is your personal income and taxed accordingly. If you have multiple partners, you will need to file forms indicating what each member’s earned share was, and they will then pay taxes on their share as part of their personal tax return. In addition, every member of a multi-member LLC pays a $150 partnership filing fee every year.
Every New Jersey business that sells taxable items or services must collect and remit New Jersey sales tax. If, when you registered your business, you indicated that you would be collecting this type of tax, the state of New Jersey will send you a New Jersey Certificate of Authority for Sales Tax. This is your permit to collect sales tax and issue and receive exemption certificates. The New Jersey Certificate of Authority must be displayed at your place of business.
If you have employees, you are also required to withhold New Jersey income tax from wages paid to any employees physically working in the state. Pennsylvania residents, however, are exempt from New Jersey withholdings.
Depending on what services you provide or use, additional taxes and fees you might be responsible for include the following:
- Admissions Surcharge
- Alcoholic Beverage Tax
- Atlantic City Luxury Tax
- Atlantic City Tourism Promotion Fee
- Cape May County Tourism Sales Tax
- Cigarette Tax
- Controlling Interest Transfer Tax
- Corporation Business Tax
- Cosmetic Medical Procedures Gross Receipts Tax
- Domestic Security Fee
- Employer Withholding (Payroll) Taxes
- Estate and Inheritance Taxes
- Fur Clothing Retail Gross Receipts Tax and Fur Clothing Use Tax
- Gross Income Tax
- Hotel/Motel Occupancy Fee/Municipal Occupancy Tax
- Inheritance and Estate Taxes
- Insurance Premiums Tax
- Landfill Closure and Contingency Tax
- Litter Control Fee
- Local Property Tax
- Luxury and Fuel-Inefficient Vehicle Surcharge
- Meadowlands Regional Hotel Use Assessment
- Motor Fuels Tax
- Motor Vehicle Tire Fee
- 9-1-1 System and Emergency Response Assessment
- Nursing Home Assessment
- Out-of-State Winery License for Direct Ship Wine Sales to New Jersey
- Petroleum Products Gross Receipts Tax
- Prearranged Ride Surcharge
- Public Community Water System Tax
- Public Utility Taxes
- Realty Transfer Fee
- Recycling Tax
- Sales and Use Tax
- Sanitary Landfill Tax
- Spill Compensation and Control Tax
- Sports and Entertainment Facility Tax — Millville District
- Tobacco and Vapor Products Tax
- Transient Accommodation Taxes and Fees
- Urban Enterprise Zone
To learn more about each and determine which taxes apply to you, visit New Jersey’s Division of Taxation page.
New Jersey LLC FAQs
If you still have questions about forming and running an LLC in New Jersey, we’ve compiled a list of frequently asked questions that will hopefully fill in any remaining gaps.
- What is the processing time to form my New Jersey LLC?
Since the Certificate of Formation is filed online, the information is received by the state immediately. After submitting, you will be able to download business registration documents.
- Do I need to file my Operating Agreement with the state of New Jersey?
Operating Agreements do not need to be filed with the state. However, they are legally binding documents that should be kept in a safe place in case they are needed in the future. In the absence of an Operating Agreement, your LLC will be subject to the rules and regulations laid out in New Jersey law.
- What tax structure should I choose for my New Jersey LLC?
When you get an EIN, you will be informed of the available tax classification options. Most LLCs elect the default tax status, which means that owners pay state and federal taxes on income earned from the business as part of their individual taxes. The LLC is not separately taxed as an entity. Larger LLCs may opt to file taxes as a corporation.
- Does New Jersey allow a Series LLC?
A Series LLC is a limited liability company with more than one series of members, managers, or LLC interests having separate rights, powers, or duties with respect to specified property and/or obligations of the LLC. Any series may also have a separate business purpose.rnrnDelaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee, and Utah all allow a Series LLC. They are not explicitly allowed in New Jersey, and you should check with a lawyer before attempting to register an LLC associated with a larger Series LLC in the state to make sure you will not face legal repercussions.
- Which licenses and insurance are required for an LLC in New Jersey?
New Jersey’s business portal provides a license and certification guide to help you determine if you need a license or certification for your business. rnrnMany specialized professions, such as accountants, architects, attorneys, electricians, engineers, inspectors, and medical professionals, must be licensed to comply with state laws. Other types of activities may require permits, such as the sale of alcohol or controlled substances. rnrnIf you have any questions about what might be required for your business, check out the guide, and look for the regulations related to your profession.rnrnNew Jersey employers are also required to withhold and remit Unemployment Insurance, Disability Insurance, and/or Family Leave Insurance on behalf of employees. Be sure to check out New Jersey’s Department of Banking and Insurance site to complete your insurance checklist.rnrnIn any case, we recommend hiring a professional service like ZenBusiness who will provide you with a comprehensive package of all the municipal, state, and federal requirements for a New Jersey LLC.
- What is the process for creating a foreign LLC in New Jersey?
A foreign LLC is one in which the business is not based in the state of New Jersey but wants to do business in New Jersey. The process for registering is very similar to that of a domestic LLC but requires additionally filing a Standing Certificate (known as a Certificate of Good Standing in most other states) from the home state.
- What annual filings are required for an LLC in New Jersey?
Many states require regular reports about your business, and New Jersey is no exception. New Jersey requires that you file an annual report to stay in good standing. The annual report is your opportunity to update any information about ownership and registered agents for your LLC, as well as any change of address or alterations to your business practice.rnrnThe annual report filing fee is $75 and can be filed on the Annual Reports and Change Services website.
- How do I update or amend the information for my LLC in New Jersey?
All businesses go through changes. To stay compliant, these changes often need to be relayed to the government. In New Jersey, most changes to your business can be made by filing online. To amend your original business charter, use the Business Charter Amendment Service. If you need to update your registered agent, use the Annual Reports and Change Services.rnrnForm REG-C-L is used for the following changes:rnrnAdding or removing tax eligibilitiesrnA change in identification information (e.g., name, trade, location address, or EIN)rnA change in filing or business activityrnReplacing your temporary Taxpayer Identification Number with your official Taxpayer Identification Number (e.g., your EIN)rnrnForm NJ-REG must be used for the following changes:rnrnA change in ownershiprnOpening additional locations for an existing business
- How do I dissolve my New Jersey LLC?
To dissolve your New Jersey LLC, you’ll want to close your business’s tax accounts and file Articles of Dissolution through the State of New Jersey Business Portal.
- What are some additional resources for small businesses in New Jersey?
Running a new business, especially if you’ve never done it before, can be daunting. In addition to ensuring all of the proper forms are filed, taxes are paid, and so on, you also want to establish good business practices and turn a profit. You need to know what to expect, how to form a business plan, how to keep finances in order, and much more. rnrnLuckily, many resources are available in the state of New Jersey to help you out. Among these are:rnrnThe Small Business Administration (SBA): This organization can provide you with information about how to plan, launch, balance, and grow your business. rnSCORE (Service Corps of Retired Executives): This is the nation’s largest network of volunteer and expert business mentors.rnSmall Business Workshops: This is offered by the state, and workshop topics include “How to Register,” “New Jersey Sales Tax Seminar,” and “Online Businesses and Sales Tax.” rnGuide to Doing Business in New Jersey: This guide includes an array of topics ranging from what you need to get started to providing you with numerous informational resources.rnNew Jersey Business Action Center: Here, you can find professional assistance and Business Advocates ready to take your call. rnNew Jersey Business & Industry Association (NJBIA): This association has provided members with information and services and a number of other benefits to help New Jersey businesses prosper since 1910.