New Jersey LLC Filing Fees and More
There are many advantages to forming an LLC in New Jersey, such as asset protection and multiple tax advantages. LLCs provide personal liability to business owners who may be faced with a lawsuit. Forming and operating an LLC is a big responsibility, however. To successfully launch and maintain your new LLC, certain steps are required and they must take place in a certain order.
If you plan to launch a New Jersey LLC, below is more information and detailed steps that are required to operate an LLC in New Jersey. Visit our home page for more information.
1. Perform a Name Search and Register LLC in New Jersey
Now that you are ready to start a business in New Jersey, you need to first select a name for your business. To be certain that no one else has selected the name that you’ve chosen for your LLC, you. need to perform a New Jersey LLC search. To do this, check the state’s database and compare names that are currently registered with the state of New Jersey to your proposed business name. If the name is not being used, then the name is available for your business.
The thing to keep in mind when you are selecting a name for your new business is that it has to be easily distinguishable and unique in comparison to other businesses that are registered to do business in New Jersey.
The use of New Jersey’s LLC Business Name Search Tool
You will be able to perform a search for LLC business names by using a search tool that 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 or not.
It is recommended that both search tools are used to ensure that the name that you’ve selected is indeed distinguishable and unique.
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:
- Limited Co.
- Limited Company
- Limited Liability Co.
- Limited Liability Company
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If you’re unsure about which designator you should use, consider LLC, 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. The New Jersey law also indicates that entities structured as an LLC cannot use the designator that may be seemingly confused with another type of legal entity.
The designators that are not allowed include the following:
- 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.
2. Choosing a Registered Agent
According to the New Jersey Division of Revenue, businesses that are registered to do business in the state of New Jersey must select a Registered Agent and list them in your LLC Certificate of Formation (which is 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 received.
Those Allowed to be Designated as Your Registered Agent
When you designate a registered agent on behalf of your 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 private.
Whoever you designate as your Registered Agent, they must be available during normal business hours and remain in compliance at all times.
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.
3. Setting Up and Registering Your New Jersey LLC
By now you should have taken care of all of the fundamentals and are ready to move on to setting up your new LLC. But first, we need to clarify the difference between the words “formation” and “registration” when used by the state of New Jersey. First of all, the two words mean two entirely different things.
- To Form LLC in New Jersey, you must file a Public Records Filing for a new business entity. After it is approved, it is referred to as a Certificate of Formation, which is then filed with the NJ Division of the Revenue & Enterprise Services.
- The state of New Jersey has a mandatory requirement for all of its New Jersey-based LLCs to register with the Division of Taxation within a 60-day window.
The LLC Public Records Filing and the registration of the Business Registration Application (also referred to as NJ-REG) can both be filed online.
New Jersey LLC Filing Fees
There is a one-time filing fee for the formation step in the amount of $125. There is no filing fee for the registration portion of the process.
New Jersey Filing Methods
There are two filing methods that are available when setting up your LLC: by mail or online.
Filing online is recommended because the process is faster. The approval time is faster too.
To form your LLC and register it online, just visit the NJ Portal.
The New Jersey Approval Process
When filing online, the LLC formation takes five to 30 minutes to be approved, whereas the registration only takes roughly two business days to be approved.
- The formation approval will include an approval stamp as well as an approved Certificate of Formation.
- The registration approval will consist of the Business Registration Certificate and a Sales Tax Certificate of Authority (if applicable to your LLC).
4. Setting up Your NJ Operating Agreement
As the owner of a new LLC, you will be required to create a New Jersey Operating Agreement. 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.
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 LLC’s that are based in New Jersey.
The Operating Agreement also proves that your company is a separate and legal entity from each of the members.
The Operating Agreement also provides an extra layer of protection to you and the other members, which is very beneficial if your company is taken to court as a result of a lawsuit.
The Operating Agreement is Mainly for Internal Use
The Operating Agreement is an internal document, so you don’t need to send a copy to any of the government agencies. A copy should be filed with your normal official corporate documents and additional copies distributed to all of the members of your LLC.
5. How to Obtain an EIN
You are also required to obtain an EIN number, (short for Employer Identification Number) for your LLC. You can obtain this number from the IRS after your LLC has been formed, registered and approved.
What is an EIN?
An EIN number is to an LLC what a Social Security Number is to an individual. It allows the IRS to identify your business. It is also used for tax purposes, when filing taxes, with the city, state or federal government.
Don’t get confused if you hear your EIN referred to any of the following:
- FEIN, short for Federal Employer Identification Number
- Federal Tax ID Number, or
- EIN Number.
These terms are used interchangeably but mean the same thing.
6. Filing Annual Reports
Once your LLC has been formed and registered in New Jersey, you then have annual responsibilities as well. Each year you must file an Annual Report that needs to be submitted to the division of revenue. All LLCs that operate in New Jersey are required to file an Annual report regardless of what their income level may be or how much business activity takes place.
The fee for the Annual Report is $50 per year.
The Annual Reports are due one year after it has been formed and then on the last day of the LLC’s anniversary month each year thereafter. 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.
How to File Your Annual Reports
At this time Annual Reports can only be renewed online.
7. Additional Business Licenses and Permits
The state of New Jersey does not require a state-level business license. 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.
If you’re LLC plans to purchase goods from other businesses such as wholesalers 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.
If your LLC will sell retail goods, you must collect the required sales tax from your customers. Upon doing so you will be required to send the funds collected to the New Jersey Division of Taxation. This requirement is for both online businesses as well as brick-and-mortar businesses.
Filing Sales Taxes in this manner can be complicated, so if you need assistance with filing your sales taxes or figuring out what your tax filing requirements are, please refer to TaxJar for more information.
If you need more information concerning whether your LLC requires additional licenses and permits, contact your local municipality and let them know the kind of business you operate. They will then advise you as to whether or not you need an additional license or permit to operate your business.
This step is very important because, without these additional licenses and permits, you could be operating your business and not be 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, for your then contact Inc.File to get more information.
8. Paying Your New Jersey Business 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. They consist of the
- state, and
- local taxes
Each of them is described in more detail below.
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. If your LLC is owned by an individual or buy a couple, the IRS allows you to treat your LLC Like a sole proprietorship. If your LLC is owned by another entity, the IRS allows you to be taxed like a division of a parent company.
- Multi-member entity: The 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.
By default, the IRS treats a Multi-Member LLC as a partnership.
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. However, federal elections are meant to have your LLC taxed like an S Corp., this election is not honored by New Jersey on the state level and you would be required to file CBT – 2553 with the state of New Jersey. Additionally, you should also know that LLCs/C-Corporations require a minimum corporate tax payment of $500 each year whereas LLCs/S-Corporations require a minimum property tax payment of $375 each year.
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 single-member LLCs.
As indicated above, with your LLC sales retail clients, you are required to collect the sales taxes from your customers. Then pay and file them with the New Jersey Division of Taxation.
If your company is responsible for collecting sales taxes but you’re uncertain about how to go about it, then it’s strongly recommended that you consider using TaxJar.
As the owner of a New Jersey-based LLC, you may very well be responsible for paying and filing additional taxes. This varies based on the industry that you’re in and the way you generate income. For example, you may be responsible for federal unemployment taxes, state unemployment taxes, Worker’s Compensation, payroll taxes, capital gains taxes, state franchise taxes, use tax, sales taxes, dividend taxes, excise taxes or other taxes. It is your responsibility to determine what type of taxes your particular LLC is responsible for.
Additionally, the payment for some of these taxes may be due throughout the year when estimated tax payments are due.
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 to avoid penalties and fees.
9. Opening up a New Jersey Bank Account
When you open a bank account for your LLC, make sure that it is separate from your personal bank account. Having a separate bank account helps you to avoid commingling funds.
Having a separate bank account is also important for protecting your personal assets and exposing your personal funds and investments.
Once you have received an EIN number from the IRS, you can open up a checking account in your business name.
Having a separate business account for your New Jersey-based LLC also allows you to better streamline your accounting and tax records.
Since banks located in the New Jersey area have various rules and regulations, you should find out as much information about the bank before opening up an account.
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Some important information that you should find out beforehand consist of the following:
- What is the minimum deposit amount required to open an account?
- What is the minimum balance requirement?
- What are the monthly maintenance fees (if any)
- What’s their online banking policy?
- What’re their policies regarding debit and credit cards?
If you are in need of a business credit card you may also consider searching for a new credit card at www.creditcards.com
Paperwork Needed to Open a Bank Account in New Jersey
When opening a bank account, you will need the following documents:
- A copy of your confirmation letter containing your EIN Number issued to you from the IRS
- Your Business registration certificate
- A copy of your photo ID such as your driver’s license or passport
- A copy of your Operating Agreement (if needed).
- If your LLC has multiple members, each member who will be a signer on the account will need to be present at the time the bank account is opened.
To better prepare yourself, you should call the bank in advance to find out what is needed to open an account.
10. Setting up Your New Business Phone Number
Now that you have set up you’re new LLC, you can set up your business phone number.
Phone.com has affordable plans and the option to purchase a local or 800 number.
Another 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.
Upon implementing all of the steps outlined above, you should now be able to successfully set up a New Jersey-based LLC in the order provided. However, uf all of this is too overwhelming, contact us today and we’ll provide you with the right professional who can assist you with setting up your LLC. Check out the next guide on New Mexico LLC formation.