How to Form an LLC in New Jersey
Are you thinking of starting a limited liability company in New Jersey? Limited liability companies, or LLCs, are popular business entities that entrepreneurs choose for their small businesses. The LLC has a unique business structure offering liability protection for LLC members' personal assets and "pass-through" taxation to the members' individual tax returns.
Steps to Form an LLC in New Jersey
Name Your LLC
New Jersey law requires that the business name be unique and different from any other company's name. The business name must end with "limited liability company," or its abbreviation, such as LLC or L.L.C. Below are some considerations when picking your business name.
- Search Name Availability. Your first task will be to search the New Jersey Business Record Service Name Database to check for name conflicts and ensure that any other New Jersey company does not use the name you have chosen.
- Reserve Your Business Name. Once you have a unique business name, file an Application for Reservation of Name with the Division of Revenue and Enterprise Services Central Forms Repository. You can file the form online or via mail for a $50 fee. A name reservation is not mandatory but keeps anyone else from using your name while you organize your LLC. The name reservation protects your name for 120 days.
- Protect Your Business Name. Next, make sure that no one else can use your business name in business or on the internet. You do this by doing a name search to make sure that the internet domain name is available. If it is available, register your domain name.
If you want to do business nationally or protect your trade name brand, you should trademark the name with the United States Patent and Trademark Office (USPTO). This process takes some time and money. The name is still protected as a common law trademark while that application is pending.
Once you receive your federal trademark, apply to the New Jersey Secretary of State to register it as a New Jersey Trademark or Service Mark. You may also trademark the name only in the state of New Jersey.
Get a Registered Agent
Your NJ LLC needs a registered agent. A registered agent receives service of process (legal documents) on behalf of the LLC. A New Jersey registered agent can be an individual or a company. You can be your own registered agent. The registered agent, either a person or company, must have a physical address in New Jersey. It must be a street address, not a P.O. Box. Some business owners use a professional registered agent service company to act as the registered agent.
File Your Articles of Organization
You are now ready to compose and file your certificate of formation business registration with the New Jersey Secretary of State.
Your certificate of formation document requires the following:
- An LLC name
- The business purpose of the LLC
- The LLC date of formation
- The Registered agent's name, email, and New Jersey street address
- The Dissolution date if your LLC will terminate on a specific date (if you leave this blank the LLC will continue indefinitely)
- A signature of the member or authorized person completing the form
- If the LLC is a foreign (non-New Jersey corporation), the application must include a certificate of good standing in its home state
- The filing fee of $125
File the certificate of formation either by mail or online. If filed online, you will receive a copy of your certificate immediately. A mailed copy takes about ten days.
Draft an Operating Agreement
An LLC operating agreement is a legal document that sets forth the rules of your business operation. It is much like the bylaws of a corporation. Some states require that an LLC has an operating agreement, but New Jersey is not one of them. There are other reasons to have one, even if you are a single-member LLC.
A bank may want to see your operating agreement and certificate of formation when opening a business bank account or getting a loan or credit card account. Additionally, if you're going to attract new members or sell the LLC, you will need an operating agreement.
An operating agreement can be relatively simple, but you want to address the following:
- Ownership percentage of each member
- Structure of profit and loss distributions
- Voting rights of members
- Responsibilities of members and managers
- Procedures for holding meetings
- Rules for buyouts, buy-sell agreements, or transfers on death
Get an EIN
Apply for an Employer Identification Number (EIN), especially if you plan to have employees or your LLC has more than one member. An EIN, or taxpayer identification number, is similar to a Social Security number for your business.
An EIN will allow your LLC to file taxes and open a small business bank account. It also establishes your business as an independent entity.
You can apply for an EIN online with the Internal Revenue Service (IRS) or file IRS form SS-4 by mail or fax. The response time depends on how you apply. If you apply online, you will receive an immediate reply from the IRS. An application by fax will receive an answer in 3-4 business days. An application sent to the IRS through the mail will typically receive a response from the IRS after 4-5 weeks.
Set Up Business and Tax Accounts
Once you have created your LLC, you must register the business with the New Jersey Department of Revenue & Enterprise Services. Register within 60 days from the formation date using their online business registration portal.
Additionally, you must set up federal, state, and local tax accounts, especially if you have employees.
Depending on your type of business, there are numerous state and federal requirements for your new LLC. Additionally, LLCs have different tax obligations for filing taxes depending on the elected tax status.
When doing business in New Jersey, you register for a tax account by completing the NJ-REG form with the New Jersey Division of Revenue. Identify what taxes are required, such as income, sales and use, and employer taxes. You receive a business registration certificate and a New Jersey tax ID number.
State Business Tax
If you elect your LLC to be a pass-through organization, the individual members file individual state and federal tax returns. There is no corporate state tax. If you choose a C corporation for tax purposes, you will be subject to New Jersey's corporation business tax and federal corporate taxation.
State Employer Tax
Your LLC will be subject to state rules if it has employees—even if the employees are also members. When registering your business tax account with the state, you indicate if you are paying payroll taxes and withholding wages.
- Register all employees with the New Jersey Child Support Employer Services Portal within 20 days of hiring date.
- Register and pay for New Jersey Workers' Compensation Insurance.
- Establish an unemployment insurance account with the New Jersey Department of Labor and Workforce Development.
Sales and Use Taxes
Your business may collect sales tax from purchasers if you sell taxable goods and services in New Jersey. When registering a tax account in New Jersey as a seller, you receive a Certificate of Authority to Collect Sales Tax. You remit the sales tax to New Jersey.
Business Licenses and Permits
New Jersey licenses certain kinds of businesses. The New Jersey Business Action Center has a list of these. Check with local authorities about local business licensing.
Registration in Other States
If you want to do business in another state, you register as a foreign LLC in that state. Depending on your operations, (i.e., planning to have employees in that state), you may also have to set up tax and employer accounts.
After you have formed your New Jersey LLC, you must file an annual report. You can file your annual report online with the New Jersey Annual Reports and Change Services. You will need your New Jersey business entity number and the date of initial LLC filing. The filing fee is $75. File the report each year on the anniversary month of the LLC's formation. For example, if you set up your LLC in December of 2022, you file the LLC annual report each year in December no later than December 31st.
New Jersey LLC Formation FAQs
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