Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
If you want to start a business entity in New Jersey, forming an LLC is one of the quickest and easiest ways to create your business. An LLC, or limited liability company, is a great business entity type for small start-up businesses that offers personal liability protection with the flexibility that comes with being a sole proprietorship or partnership.
This comprehensive guide will walk you through the entire process of forming an LLC in New Jersey, from choosing a business name to keeping your LLC compliant.
Step 1: Choose a Name For Your LLC
The first step in forming an LLC in New Jersey is choosing a name for your business. When deciding on the name, try to go for something unique and relevant to your business. If you’re unsure what name to use, there are online name generators available that you can find with a quick Google search.
If you have already decided on a name, check if it is available to use on the New Jersey Business Record Service business name database.
You must ensure that your chosen name meets the following requirements under the New Jersey law:
- The business name must include the words Limited Liability Company or L.L.C.
- The business name cannot include words that are used to name government agencies
- The business name cannot be the same as another registered business in New Jersey
The complete list of requirements can be found here.
Once you have chosen the name, you can reserve the name on New Jersey’s Business Charter Amendment Service website. The filing fee is $50 to reserve the name for up to 120 days.
Using an alternative name
When doing business in the real world, you don’t have to use your registered name. You can use an alternate or fictitious name. Under New Jersey law, this alternate name also needs to be registered online for a fee of $50.
Step 2: Appoint a Registered Agent
New Jersey law requires that you need to appoint a registered agent. This agent can either be an individual or a company that receives service of process, legal documents, and notices on behalf of your LLC.
The appointed registered agent has to meet the following requirements:
- The registered agent must be authorized to do business in New Jersey
- The registered agent must have a physical New Jersey address
- The registered agent must be on-site and available during business hours to receive any documentation for the business
Step 3: Acquire a New Jersey Business License
Depending on the nature of your business, New Jersey law requires that certain businesses have a license before they can conduct business.
Find out if your business needs a license here.
Step 4: File the Certificate of Formation
Once you have all the information needed for your LLC, you will need to file for a New Jersey Certificate of Formation, also known as a Public Records Filing for New Business Entity in New Jersey.
You can file online through the Division of Revenue Business Formation web portal for a fee of $125. You can also file by mail or in person, but it is much faster to do this online.
To complete the filing, you will need the following:
- The LLC’s name
- The name and address of your registered agent
- The LLC’s business purpose – this can be a general statement
- The LLC’s dissolution date – if any
- The names and addresses of the management structure at the time of LLC formation
- Signature of the person forming the LLC
Step 5: Receive Certificate
After filing for the certificate of formation, the state will review and issue you with the certificate that will formally confirm the existence of your LLC. This certificate will allow your LLC to obtain licenses, employer identification numbers, and bank accounts.
Step 6: Prepare an Operating Agreement
New Jersey law doesn’t require an LLC to have an operating agreement, but you should create one. This document will outline how your business will be conducted. New Jersey LLC law will determine how your business will be governed if you do not have an operating agreement.
A good operating agreement should have the following:
- The names of management and addresses
- Name and address of the registered agent
- Information about the certificate of formation
- The purpose of the business
- How profits and losses of the business will be divided
- Procedure for hiring more staff
- Indemnification and liability clauses
Step 7: Obtain an Employer Identification Number
The final step in forming an LLC in New Jersey is to acquire an Employer Identification Number or EIN. This nine-digit number is issued by the Internal Revenue Service either through the mail or online. Filing for an EIN is free.
Having an EIN can assist with the following:
- Filing and managing federal and state taxes
- Hiring employees
- Opening a bank account
Cost to Start an LLC in New Jersey
Registering an LLC in New Jersey will cost you $125, and an additional $3.50 will be charged when you make a credit card payment. To reserve a name it will cost $50, and you may need to pay another $50 if you want to register an alternate name.
Hiring a registered agent can cost around $50- $300 a year depending on your chosen company or individual.
An additional cost you may incur is paying for an LLC formation service. While filing all the forms yourself is cheaper, it may also seem overwhelming, and hiring a professional to help take care of this grunt work will cost you a bit more. Numerous companies can assist you in forming an LLC.
What To Do After Forming Your LLC in New Jersey
Once you have filed all necessary documentation and formed your LLC, there are a couple of things you need to do next.
Get your documents in order
To ensure that your paperwork is always up to date, you should prepare a corporate file that contains the certificate of formation, bylaws, shareholder information, and resolutions.
Open a business bank account
Opening a business bank account will keep your business and personal finances separate. This will make record-keeping and tax filing much simpler. You will need your EIN and certificate of formation to open a business bank account.
Register the business with New Jersey’s tax agency
You will need to register your business with the New Jersey Division of Revenue and Enterprise Services within 60 days of forming your LLC. This will enable you to pay business, employment, and sales taxes.
Hire a professional accountant
Hiring an accountant is a good way of ensuring your LLC meets all tax deadlines and that the business’s accounts are correct and remain in good standing with the state.
Hire a good lawyer
Having someone who can provide legal guidance can help avoid expensive legal mistakes. A lawyer can also assist in drawing up employee contracts and advise on copyright issues and state laws.
Get insurance for the business
To minimize even further legal risks, investing in insurance for the business is highly recommended. In New Jersey, there are plenty of insurance companies offering basic to premium packages for business insurance.
File annual reports
All LLCs in New Jersey must submit an annual report every year to the New Jersey Division of Revenue & Enterprise Services website. These annual reports are due at the end of the month of your LLC’s anniversary date. So, if you formed your LLC on April 2nd, you must file your annual report each year by April 30th. The annual report ensures all of your business’s information is updated in the state records. The annual report fee costs $75 to file.
How to Keep Your LLC Compliant in New Jersey
Now that you’ve formed your LLC, you need to take the following steps to ensure that your business remains compliant with New Jersey law:
- Ensure all permits are up to date – you can check what permits you need here
- Pay all taxes on time
- File your New Jersey LLC annual report
- Stay compliant when hiring employees – research what you need on the New Jersey Department of Labour and Workforce Development website
Tax Filing Requirements for LLCs in New Jersey
In New Jersey, an LLC is considered a pass-through entity. Therefore, the individual members of the business have the responsibility to report the business income through their personal tax returns. There is an option to have your LLC treated as a corporation instead if that is in your business’s interests.
If your LLC has employees, you will need to register for Unemployment Insurance Tax and Employee Withholding Tax as well.
Lastly, if your LLC is selling taxable items, you will be required to collect sales tax and submit them quarterly to the state.
The tax filing regulations and requirements can be pretty complicated, so hiring an experienced accountant to handle your LLC’s taxes and reports is highly recommended.
Frequently Asked Questions
How long does it take to register an LLC in New Jersey?
Registering an LLC online in New Jersey is a very quick process because all the documents are submitted online. Forming an LLC generally takes just 1 to 2 business days. Because of the fast turnaround for online filings, New Jersey does not offer an expedited online or mail registration service. Registering via mail can take longer, around 7-8 weeks, including when they mail back the documents.
What tax structure should I choose for an LLC in New Jersey?
The tax structure you should choose largely depends on how you want your LLC to be taxed. If there is only one member in your LLC, then you should be taxed as a disregarded entity. You, the owner, will pay income tax through your personal tax return.
If your LLC has multiple employers and investors, you could consider choosing to be taxed as a corporation, as this can provide certain tax benefits.
If you’re still unsure, it is best to speak to an accountant for professional advice and guidance.
Should you hire an LLC formation service in New Jersey?
This depends entirely on you as the business owner. Forming an LLC in New Jersey is not complicated; it just requires many forms to be filled in and submitted. That being said, if you do feel that you may need additional help, there are plenty of services available in New Jersey that you can choose from. Certain LLC formation services can even help maintain your business after formation by acting as your registered agent.
Filed under: New Jersey Business Guides