Starting LLC in New Jersey: Peculiarities & Detailed Manual
Want to start an LLC in New Jersey? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in New Jersey, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An New Jersey LLC: The Notion & Essence
Many New Jersey business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of New Jersey puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet New Jersey’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of New Jersey obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with New Jersey’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in New Jersey and will help you to start an LLC. The agent can be an New Jersey resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of New Jersey notifies:
Per the New Jersey Secretary of State, every LLC must assign a registered agent as a contact means between the company and the state government to pass official notices corresponded to the LLC. The registered agent here needs to provide an office address registered in New Jersey for the correspondence mailing.
A registered agent guarantees an excellent reputation for your New Jersey LLC. Also, if your business gets worse, New Jersey can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in New Jersey, you must file the Articles of Association with the New Jersey State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
To record an LLC in New Jersey, you are to accomplish the respective form online or file by mail. For the latter, exploit the Complete Business Registration Packet, which holds all the necessary paperwork for the deal.
Price for LLC formation: There is a fixed fee set in New Jersey for LLC registration. It’s $125.
The time for processing the formation: Normally, it takes up to 2 weeks before the state of New Jersey prepares the LLC formation paperwork and mails the ready documents to the recipient. To speed up the process, you can as well pay an expediting fee to get the documents prepared as swiftly as in 1 to 2 working days. Furthermore, paying $500 or $1000, you can get the deal completed in 2 or 1 hour respectively.
Mind, that for the state of New Jersey to start working on your application for LLC formation, all the required papers must be presented correctly filled up.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in New Jersey, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
Depending on the nature of the operating company, New Jersey will require respective taxes. With partnerships and sole proprietorships, the taxpayer can pay them on his individual tax returns.
Corporation LLCs, meanwhile, are subject to New Jersey’s corporate business taxes. The amount of the income on the state level determines the rate for the income tax. Get more information on the matter here.
Those LLCs in New Jersey, which are involved in retail, must pay sales taxes at the rate of 6.6255%. We suggest you seek further information on the sales taxes here.
Those LLCs, that hire employees, are expected to pay several other tax forms. The first tax form is the withholding tax. The latter presumes to keep a small part of every employee’s salary to forward to the state tax fund. For more information on New Jersey’s withholding taxes, access here. Just the same way every employer in New Jersey has to pay unemployment taxes to the state.
This isn’t approached as a traditional tax, yet you must pay it regularly. At the New Jersey Department of Labor and Workforce Development, you can find more about the fund.
These are not all taxes to be paid to New Jersey state. Some specific industries must pay respective taxes. Spot the thorough list of New Jersey’s business taxes here.
Local Tax Business Demands
Besides state taxes, LLCs pay local ones, too. Here the sales tax rate is flat with no additional taxes permitted in any town or county of the state. If the company owns any property, respective taxes are expected, too. Not to overlook any significant details on the required local taxes, contact the local clerk.
Stage №6: Getting Business Licenses & Permits
Here, in the state of New Jersey, there is no general license that could be applied to all local LLCs for doing business. And still, certain occupations (such as aviation, agriculture, etc.) must acquire licensure by the federal government. If you are interested in the complete array of federally-regulated industries that demand licensing, contact the Small Business Association.
Just like taxes in New Jersey are industry-specific, so are licenses and permits. In New Jersey, these licenses range from real estate agents to health services. Most probably, your business will be one of them.
All LLCs operating in the state of New Jersey had better browse the array of licenses for businesses listed here so that not to miss your dues. Your town government may demand permits and licenses, too. Hence, we advise you to contact your local government to check this out.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the New Jersey Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Every year a New Jersey employer reports about his income. It’s important to remember that whether you have gained profit or lost money while doing business during the year, reporting about it is a must. The state has prepared a guide for income reporting regardless of the business type. The guideline and all the required forms can be found here.
Referring to the services of a qualified accountant
An annual report is another must for every LLC in New Jersey. Accomplish and file it here. This report must serve as an update to show what essential changes have been made to the business during the passing year. To file the form, expect a payment worth $50. In case of assigning a new registered agent, be ready to pay an additional $25.