Steps to Pay Your New Jersey Small Business Taxes
Most small businesses in New Jersey must pay taxes at the federal, local, and state levels, and understanding your tax obligations is a crucial part of owning and operating your business. In fact, failure to do so can result in various consequences for you individually, and for your business as a whole. While this may sound intimidating, know that you don’t have to navigate the process on your own. Use our guide below to learn more about how to file small business taxes in New Jersey and see what we can do to help you keep your business legally compliant.
If you need more complete legal compliance help, check out our Worry-Free Compliance service, which keeps your business documents organized and can help keep you on track with required business filings. No matter what size your business is or what stage, we have the tools you need to help your business succeed.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.
Step 1: Establish your New Jersey business’s corporate income tax obligations
Before taking the plunge and actually paying your taxes, it’s important to first determine what tax obligations your business has. One such obligation relates to taxes on your business’s corporate income.
In New Jersey, the Corporation Business Tax Act imposes a franchise tax on all corporations registered in the state. This tax is essentially a tax imposed on businesses for the privilege of engaging in business within the state. This tax applies to the following entity types:
- Domestic corporations
- Foreign corporations
- Joint-stock companies or associations
- Business trusts
- Limited partnership associations
- Financial business corporations
- Banking corporations
Importantly, however, the New Jersey business tax rate on corporate income will be 6.5% for corporations with net income of $50,000 or less, 7% for corporations with net income of $50,000 to $100,000, or 9% for corporations with net income greater than $100,000.
It’s also important to note who pays taxes for your business. This will depend on the type of entity you form.
For example, in pass-through entities, the individual owners, rather than the business entity itself, will be responsible for paying taxes on the business’s income at their own individual tax rate. Pass-through entities in New Jersey include:
- Federal S corporations that have made the New Jersey S corporation election
- Limited liability companies (LLCs)
A pass-through entity’s tax return is due on the 15th day of the third month following the close of the tax year. For all other entities, however, the due date for filing is the 15th day of the fourth month following the end of the business’s accounting period.
Step 2: Determine your New Jersey business’s employment taxes
Next, you’ll want to determine whether your business is subject to any employment tax requirements. In New Jersey, these employment taxes are referred to as withholding tax or employer payroll taxes.
Generally, if your business has employees, it will be subject to withholding taxes on any employees’ incomes. Specifically, all the following are subject to New Jersey income tax withholding:
As a general rule of thumb, if an employee is considered an employee for federal income tax purposes, they will also be your employee for New Jersey income tax purposes.
The precise amount or rate of withholding will vary depending on a number of factors, including the amount of income, the employee’s filing status, and any applicable exemptions. Due dates will also depend on the frequency of payroll at your particular business.
Additionally, any payments made to unregistered, unincorporated contractors for services performed within the state will be subject to withholding at a rate of 6.625%.
Step 3: Establish your New Jersey business’s additional state tax obligations
In addition to income and withholding taxes, there may be a number of other types of taxes your business will need to pay.
For example, another tax to be aware of is New Jersey’s sale and use tax. This is a tax imposed on the sale of certain goods and services within the state. Currently, the rate of taxation is 6.625%.
Another example is unemployment contributions. While not specifically referred to as a “tax,” this is essentially a periodic contribution paid by employers to the state’s Unemployment Trust Fund. New employers are assigned rates for the first 3 calendar years of the business. After that, the rate will be calculated based on employment experience.
Below are other examples of potential taxes your entity could be subject to depending on the goods and services provided by your business:
- Cosmetic medical procedures gross receipts tax
- Cigarette tax
- Fur clothing retail gross receipts and use tax
- Hotel/motel state occupancy fee and municipal occupancy tax
- Motor fuels tax
- Recycling tax
- Tobacco and vapor products tax
- Insurance premiums tax
- Alcoholic beverages tax
- Public utility taxes
And as always, check with any local municipalities in which you currently operate, or in which you plan to operate, to verify whether there are any local tax requirements to be aware of.
Step 4: Prepare to file and pay your New Jersey small business taxes
Once you’ve figured out all your tax obligations, you’re almost ready to move forward. But first, there are a few things you can do to prepare before you actually file your business taxes in New Jersey.
One of the best things you can do to better ensure a smooth and efficient filing process is to have everything that you may need readily available. Examples of information and documents to compile include:
- Your business EIN
- Any accounting records for the entity
- Business-related receipts and invoices
- Any legal documents related to the business
While this may seem tedious, gathering and organizing these materials well in advance can greatly simplify the process. In the long run, this can save time and alleviate stress later on down the line.
Finally, you’re ready to file. You can do so online through the State of New Jersey Department of the Treasury Division of Taxation.
Not sure how to stay compliant? Learn more about legal compliance for small business owners.
Do I need an accountant?
Before you move forward, you might be wondering whether your business really needs an accountant.
Of course, there’s no legal requirement stating that you must have an accountant to run a successful business. Nevertheless, most businesses, big or small, will benefit a great deal from having professional accounting help.
Filing taxes timely and correctly is crucial to the success of your new or growing business. In fact, failure to properly do so can result in severe consequences. Thus, when in doubt, err on the side of caution and seek assistance from a certified tax professional who can help ensure that your business continues to comply with its state tax requirements.
How we can help
Owning and operating a business involves a seemingly endless number of moving parts. It also requires a great deal of hard work and focus. Although paying taxes for your New Jersey business is necessary to the success of your business, this doesn’t mean you have to handle them on your own. First of all, we are here to help with the ZenBusiness Money App. This app allows you to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard.
Disclaimer – The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
- How much can a New Jersey small business make before paying taxes?
All New Jersey businesses that generate income from business conducted within the state will have to pay taxes. The precise rate and resulting amount, however, will depend on the total amount of net income your business generates.
- What percentage does a New Jersey small business pay in taxes?
Currently, the business income tax rate ranges from 6.5% to 9%. However, business income taxes aren’t necessarily the only ones your business will have to pay. There may be taxes with varying rates that your business must pay, depending on the goods and services your business provides.
- How does a New Jersey small business pay taxes?
You can pay taxes for your New Jersey business online through the Division of Taxation website.
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