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How to Form an LLC in New Jersey: The Benefits of Doing Business as a New Jersey LLC

There are many requirements that go in to getting your New Jersey LLC up and running, some of which can be overwhelming for new business owners.

However, with the right support, you’ll be able to successfully form your New Jersey LLC so you can start doing business as a limited liability company. Below you will find an overview of each step:

The New Jersey LLC formation process has ten easy steps:

1. Complete an LLC Name Search

2. Select a Registered Agent

3. Obtain a Certificate of Formation

4. Create an LLC Operating Agreement

5. Get an EIN Number

6. Open a Business Bank Account

7. Complete an Annual Report

8. Obtain a Business License

9. File Your LLC Taxes

10. Set up a Business Phone Number

What is a Limited Liability Company (LLC)?

There are many advantages to forming an LLC in New Jersey, such as asset protection and multiple tax advantages. LLCs provide personal liability protection to business owners who may be faced with a lawsuit or outstanding business debts.

Forming and operating a New Jersey LLC is a big responsibility, but the benefits are definitely worth all of the work. To successfully launch and maintain your New Jersey LLC, certain steps are required in a certain order before you can be legally approved to do business within the state.

If you plan to launch a New Jersey LLC, keep reading for detailed information and the necessary steps that are required to operate an LLC in New Jersey. You can also visit our home page for more information about how LLC Formations can help you start your New Jersey LLC.

1. Choose a Name for Your New Jersey LLC

Now that you are ready to form an LLC in New Jersey, you need to first select a name for your new business. To be certain that no one else has selected the name that you’ve chosen for your LLC, you need to conduct a New Jersey LLC name search.

Before you file for your LLC in New Jersey, New Jersey requires you to conduct a name search to make sure that your ideal name is available before you continue with the registration process. The name search will check the public records of all New Jersey LLCs within the state to see if your desired name is available, and if it is, you can form a New Jersey LLC with that name.

How to Use the New Jersey LLC Business Name Search Tool

Check the state database and compare names that are currently registered with the state of New Jersey to your proposed business name. If your ideal name is not being used, then the name is available for your business.

Be sure to keep in mind that the name of your business has to be easily distinguishable and unique in comparison to other businesses within the state of New Jersey. It’s one of the state requirements when forming a limited liability company in New Jersey.

The search tool is available via New Jersey’s web portal. Their other search tool is called the New Jersey LLC Name Availability. It has more of an intelligent functionality in that it provides a yes or no answer about whether an LLC name is available for use or not.

If you need help with choosing a name for your New Jersey business, contact the professionals at LLC Formations so we can help you get your business up and running.

Using the Proper LLC Designator

The state laws of New Jersey, section 42:2C-8(a) indicates that the name of your LLC is required to end with the correct designator. New Jersey allows the following LLC designators:

  • LLC
  • L.L.C.
  • LC
  • Ltd.
  • LTD.
  • Limited
  • Limited Co.
  • Limited Company
  • Limited Liability Co.
  • Limited Liability Company

If you’re unsure about which designator you should use, consider LLC as it’s the most widely used and most recognizable designator for LLCs in the US.

Designators That are Not Allowed With LLCs

Another error that is made by many business owners when selecting a name for their LLC is choosing the incorrect designator. New Jersey requires that entities structured as an LLC cannot use the designator that may be confused with another type of legal entity or business structure.

The designators that are not allowed include the following:

  • Inc.
  • Incorporated
  • Corp.
  • Corporation
  • LLP
  • LP
  • P.A. or P.C.
  • Professional Association or Professional Corporation
  • Non-Profit Corporation

The New Jersey LLC Act does not allow LLCs to be formed with a name that is being used by another business that is registered in New Jersey. For more information about how to go about selecting the correct LLC New Jersey business name, visit the state’s Department of the Treasury or contact the professionals at LLC Formations.

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2. Choose a Registered Agent for Your New Jersey LLC

According to the New Jersey Division of Revenue, LLCs that are registered to do business in the state of New Jersey must select a registered agent and list them in the LLC Certificate of Formation (also referred to as your Public Records Filing). Some business owners may not be familiar with a registered agent and how their role can impact an LLC.

A registered agent is an individual or a company that the business owner designates to receive legal information on behalf of their LLC. This information could consist of notices from the NJ Division of Revenue or similar legal documents (which is referred to as a Service of Process).

The registered agent that you select to represent your LLC is required to have a physical street address in the state of New Jersey so that any Service of Process or related services can be easily received. A PO box cannot be used as an address for your registered agent.

Who Can be a Registered Agent?

When you designate a registered agent on behalf of your New Jersey LLC, there are three options that you can consider:

I. You can be your own registered agent

II. A family member or friend can be your registered agent

III. You can have a commercial registered agent, which is best for keeping your personal address off public record

Whoever you designate as your registered agent must be available during normal business hours and remain in compliance at all times. Additionally, your registered agent must be responsible and reliable as he or she will handle all of your important business mail for your LLC in New Jersey.

If New Jersey is not your home state, or if you’re operating foreign LLCs, you may want to hire a professional service to work as your registered agent. This way, you can be sure that your mail is being appropriately handled when you’re not in town.

If you need assistance with locating a registered agent, please contact our office for more information. We’d be happy to refer you to one of our partners so you can get your business started.

3. Obtain Your Certificate of Formation

The next step in forming an LLC in New Jersey is to submit a Certificate of Organization. Also known as the Articles of Organization, the Certificate of Organization is an important public records filing that will essentially register your limited liability company with New Jersey state.

Once you submit your Public Records Filing for your New Jersey LLC, it is referred to as a Certificate of Formation, which is then filed with the New Jersey Division of Revenue & Enterprise Services. The LLC Public Records Filing and the registration of the Business Registration Application can both be filed online with the Division of Revenue.

How to Prepare the Certificate of Formation

While some states have a preferred form for the Certificate of Formation outline, New Jersey leaves it up to the business owner to create his or her own Certificate of Formation document. You can prepare the certificate yourself, download a template from a trustworthy source, or hire a professional company to file your LLC with the Division of Revenue.

Generally speaking, this document for your New Jersey LLC includes the following articles:

Article 1: LLC name

Article 2: Registered Agent

Article 3: Principle business office address

Article 4: Management structure

Article 5: Duration of business

New Jersey LLC Filing Fees and Methods

There is a one-time filing fee required by New Jersey state when you set up your LLC in New Jersey. The filing fee will cost $125 and can be made payable to the New Jersey Division of Revenue.

You can either file for your New Jersey LLC by mail or online. Filing online is recommended because the process is faster, and with a quicker approval time, you are able to get your limited liability company up and running more quickly.

If you file by mail, you can pay your filing fee by check or money order. If you file online, you can pay your filing fee by credit card.

The New Jersey LLC Approval Process

When filing online, the LLC formation process takes five to 30 minutes to be approved, whereas the registration only takes roughly two business days to be approved by the New Jersey Department of Revenue.

The formation approval will include an approval stamp as well as an approved Certificate of Formation. The registration approval will also include the Business Registration Certificate and a Sales Tax Certificate of Authority (if applicable to your New Jersey LLC).

You can check the specific state requirements to see what is needed on your Certificate of Formation, or you can contact the professionals at LLC Formations so we can write up the document for you.

4. Setting up Your LLC Operating Agreement

As the owner of a new LLC, you will be required to create an LLC Operating Agreement for your business in New Jersey. An Operating Agreement is a written contract between each of the members of the LLC. It contains information about who owns the LLC, the percentage share among members, and other relevant information about your business structure.

The Operating Agreement also documents how the company will be managed, how the taxes will be paid, and so forth. An Operating Agreement is required for multi member LLCs and single member LLCs that are based in New Jersey state.

What are the Benefits of Having an Operating Agreement?

The Operating Agreement also proves that your company is a separate and legal entity from each of the members, which is really important for your liability protection when starting a business. The Operating Agreement also provides an extra layer of protection to you and the other members, which is beneficial if your company is served a lawsuit.

The Operating Agreement is an internal document, so you don’t need to send a copy to any of the government agencies or pay any state fees to file it. A copy should be filed with your normal official corporate documents and additional copies should be distributed to all of the members of your LLC.

When forming an LLC, it’s important to take every step to protect yourself and your business. Even though you may not need to register an Operating Agreement with the state, it’s still important that each entity type has some sort of agreement in place.

5. Obtain an Employer Identification Number (EIN)

When you form an LLC in New Jersey, an important part of the LLC formation process is to establish an employer identification number for your business. An employer identification number (EIN) is essentially like a social security number for New Jersey LLCs.

You can obtain this number from the IRS after your LLC has been formed, registered, and approved. There are no state fees or filing fees required for an EIN in New Jersey state.

What is an EIN?

New Jersey LLCs need an EIN for a few important reasons. An EIN allows the IRS to identify your business amongst the many New Jersey LLCs. Your LLCs EIN is also used for tax purposes when filing New Jersey LLC taxes with the city, state, or federal government.

Additionally, when starting a business, an EIN is also used to obtain specific business licenses in New Jersey state and to open bank accounts for your New Jersey LLC.

Don’t get confused if you hear your EIN referred to any of the following:

  • FEIN
  • Federal Tax ID Number
  • EIN Number

These terms are used interchangeably but mean the same thing. When you form an LLC, there are many steps to consider. Let the professionals at LLC Formations handle this part of the process so you can focus on growing your business.

6. Filing Annual Reports

Once your LLC has been formed and registered in New Jersey, you then have annual responsibilities. Each year you must file an annual report that needs to be submitted to the Division of Revenue. All New Jersey LLCs are required to file an annual report regardless of what their income levels may be or how much business activity takes place.

How Much is the State Fee?

The state fee for the annual report is $50 per year when you form a New Jersey LLC. You can either file by mail or online.

When are the Annual Reports Due?

The annual reports are due one year after the LLC has been formed and then on the last day of the LLC’s anniversary month each year after. For example, if your LLC was approved on October 20th, then you must renew your annual report on or before October 31st of the following year and each year after.

Be careful to file your annual report before the deadline. If you’re late with your state filing, you may be subjected to late fees. Even worse, you could lose your Certificate of Good Standing or have your company dissolved if you’ve missed your deadline.

Foreign LLCs will need to submit an annual report in each state they do business in, so keep this in mind if it applies to you.

7. Additional Business Licenses and Permits

The state of New Jersey does not require state-level business licenses. However, you may be required to have various permits and licenses based on your geographical location and the industry of your LLC. What that means is that the location and type of business you operate determines if you need to apply for different licenses and permits at the municipal level.

Reseller’s Permit

If you’re LLC plans to purchase goods from other businesses or individuals for the purpose of reselling or manufacturing them, the New Jersey sales taxes can be avoided if the seller is presented with your LLC’s resellers permit.

If you will be selling products within the state, you will be required to use Form ST-3. If you plan to sell outside of the state then you will be required to use Form ST-3NR.

Sales Tax Certificate of Authority

The New Jersey Sales Tax Certificate of Authority, which is also referred to as a Sales Tax Permit is required by all LLCs that plan to sell retail goods in the state of New Jersey. This certificate is issued after the LLC registration has been completed.

Sales Tax

If your LLC will sell retail goods, you must collect the required sales tax from your customers as soon as you form an LLC and start to make sales. You will be required to send the collected funds to the New Jersey Division of Taxation. This requirement is for both online businesses as well as brick-and-mortar businesses.

Fulfilling your filing requirements is very important. Without these additional licenses and permits, you could be operating your business without being in compliance. This could result in additional fees and penalties or even the suspension or revocation of your business.

If you are still uncertain about whether you have the correct New Jersey-based licenses and permits, contact the team at LLC Formations so we can help you figure out what your LLC needs in order to remain in compliance.

8. Paying Your New Jersey LLC Taxes

There are several tax requirements associated with running a New Jersey-based LLC, all of which can become very complicated for some business owners.

For the most part, there are three basic income taxes that you need to be concerned about if you operate in New Jersey:

  • Federal
  • State
  • Local tax

Federal Income Taxes

New Jersey Federal Income Taxes for LLCs is a pass-through entity whereby all profits and losses flow through the entity to your personal income tax returns. The tax form to be used is determined by whether your LLC is a single-member or multi-member entity.

Single-member entity

A Single-member LLC is taxed as a Sole Proprietor. The profits or losses are reported on Schedule C, which is part of your personal 1040 tax returns. The single-member LLC by default treated like a disregarded entity. What this means is that the IRS simply ignores the LLC structure and focuses on who owns the entity.

Multi-member entity

Multi-member LLC is taxed like a partnership. IRS Form 1065 Partnership Tax Return is used and a Schedule K-1 will be issued to each member. Afterward, each member will use the reporting information that appears on Schedule K-1 on their personal 1040 income tax returns.

In addition to the default tax classifications, owners of New Jersey-based LLCs have the option to elect to be taxed as either a C Corp. or an S Corp. These elections will be honored by the New Jersey Division of Revenue for federal elections.

LLC Partner Tax

LLCs that have two or more members will experience a $150 partnership tax. This must be paid when submitting your State Partnership Return via Form NJ-1065. No partnership tax is required for this type of LLC.

Sales Tax

As indicated above, with your LLC sales retail clients, you are required to collect the sales taxes from your customers. You are then expected to pay and file them with the New Jersey Division of Taxation.

For more information, we strongly recommend that you work with a professional tax accountant to better determine all of the taxes that you are responsible for in order to avoid penalties and fees. Contact the team at LLC Formations so we can direct you to a tax professional.

9. Open up a Business Bank Account

When you open a bank account for your LLC, make sure you start to keep everything separate from your personal account. Having a separate account helps LLCs avoid commingling funds, which helps LLCs to protect their personal assets and avoid exposing personal funds and investments. Once you You will also be able to obtain a business credit card and pay employees from payroll.

Once you have received an EIN, you can open up a checking account in your business name. Since banks located in New Jersey state have various rules and regulations, you should call ahead to see what you may need to bring with you to the appointment. You will definitely need:

  • Your stamped Certificate of Organization
  • Your EIN approval letter
  • Your name, address, and photo ID

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Questions to Ask Before Choosing the Bank for Your LLC

  • What is the minimum deposit amount required to open a bank account?
  • What is the minimum balance requirement?
  • What are the monthly maintenance fees?
  • What’s the online banking policy?
  • What are the policies regarding debit and credit cards?

10. Set up Your Business Phone Number

Now that you have set up your new LLC in New Jersey state, you can go ahead and set up your business phone number. Phone.com has affordable plans and the option to purchase a local or 800 number.

A major benefit of setting up a business phone number is that there’s no need to list your private phone number or expose your personal information. When choosing a number, be sure to pick an area code within the state if it’s relevant to your client base.

How Can LLC Formations Help You?

Upon implementing all of the steps outlined above, you should now be able to successfully set up a New Jersey-based LLC. However, if all of this is too overwhelming, you can contact the professionals at LLC Formations so we can help you get started with building your dream business.

Check out the next guide on how to for a New Mexico LLC.

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