New Jersey might be a small state, but it has a thriving population and business community. If you’re here, you’re thinking about starting a business in the Garden State. Forming a New Jersey LLC comes with a lot of rules. Many of them aren’t clear, and it can be difficult to tell if many even apply to you.
While it may seem overwhelming at first, all you really need to get through the process is a good guide. That’s what we will give you here, in clear and easy-to-digest steps.
In this article, you’ll find all the information you need to start an LLC in New Jersey, including:
- Tips on drafting and filing the documents you need for your New Jersey LLC formation
- Guidelines for staying within state and federal law
- The actual laws and rules you need to follow
Step 1: Name your New Jersey LLC
Before you can jump headfirst into the business world, you have to take care of the basics. That means naming your new LLC. New Jersey Revised Statutes section 42:2C-8 has the rules that you need to pick a good name that complies with the law.
Words You Have to Use
Let’s get the basic part out of the way first. Your LLC must have the words “limited liability company” in its name. You can use an abbreviation if you want; “LLC” and “L.L.C.” are both fine. If you like, you can also use “Ltd.” for “limited” and “Co.” for “company”.
The next basic rule is that your company’s name must be distinguishable from the names of any other companies doing business in New Jersey. Though section 42:2C-8 doesn’t give specific examples like the statutes of some other states, as a basic matter, your name has to add concrete words to make it clear your company is unique.
You might have your heart set on the name “Garden State Waste Disposal, LLC.” When you search for the name, though, you find a corporation named “Garden State Waste Disposal, Inc.”
In that case, adding a word to make “Tony’s Garden State Waste Disposal, LLC” will likely be enough to comply with the law.
Words You Can’t Use
Section 42:2C-8(c) cautions you against picking a name that is forbidden by any other New Jersey law. While this seems like a broad rule, the thing to keep in mind is that if your LLC name lists a specific type of business or activity, make sure you have legal permission from the state before you use that name.
The big rule is this: if you need a license to do your job, double-check with the Secretary of State to make sure your company name complies with the law.
Research the LLC Name You Want
New Jersey is a densely populated state with lots of businesses, so it may not be as easy as you think to pick a good, unique LLC name. Fortunately, the Division of Revenue has two business search engines on the Internet. The first will let you search for all existing businesses with a certain word or phrase in their name.
The second business search engine was designed specifically to find an available name for a new company. With this search engine, you can put in one of two words, and the website will show you the various businesses that might have names too similar to the one you are thinking of using.
That way, you have a single list to which you can compare your LLC name to make sure it is not too similar to any other business in the state.
New Jersey DBA: Using an Alternate Business Name
As you can see, picking a name that works for your company and complies with New Jersey law is not always easy. Maybe the name that is on your company’s formation documents is not the name you want hanging on the sign outside your office. Or maybe you want to make sure the public knows that you are the owner of your shop.
This is a very common situation, and it has an easy fix. You will need an Alternate Name name under New Jersey Revised statutes section 42:2C-9. This is also known as a DBA (“doing business as”) name for your LLC.
To get the alternate name, you will have to file a certificate of registration of the alternate name with the Division of Revenue. That certificate must contain the following:
- Your LLC’s name
- The state where it was formed (New Jersey)
- The date your LLC was formed
- The alternate name you want to use for your LLC
- A short statement saying what your business will be doing with the alternate name
- A statement that your LLC will use the alternate name in New Jersey
- A statement that your LLC has not used the name in New Jersey before, or if it has, the month and year that it started doing so
The Division of Revenue offers a form certificate that you can use here. Also, keep in mind that you must pay a $50 state fee at the time of filing. Once you have registered, you can use the New Jersey DBA/alternate name for five years.
Step 2: Appoint a Registered Agent for your LLC
The next thing you need to do is decide upon a registered agent for service of process. New Jersey Revised Statutes section 42:C-14 requires your LLC to name both the agent and an office where that agent can be reached, though the office need not be where your company does business.
Service of process is a legal term for business letters or legal papers. In other words, your agent is there for the state or the public to communicate with you.
Registered agents are vital to have if your LLC is sued. When that happens, the person suing your LLC needs to deliver the paperwork to your registered agent in compliance with New Jersey law. If they can’t find your agent, you might lose the lawsuit by default judgment. (A default judgment happens when you lose because you didn’t respond.)
The law allows your agent to be any New Jersey resident or a person who can transact business in the state. Many first-time business owners try to be their LLC’s registered agent.
They don’t see why they should pay someone else to do the job. This is not always a wise choice.
Seasoned owners often hire a registered agent company. This company lets the LLC use its address as the registered office and agent. That way, the agent gets your important letters and service of process. Then, that information is passed on to the LLC’s members (i.e., the LLC owners).
You might be thinking that the job doesn’t sound hard enough to justify hiring someone else. Being your own agent can be tempting for a few reasons:
- It’s cheap: You’re not paying someone for something you can do yourself.
- It’s simple: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important papers personally.
Those are solid points. But there are also a lot of reasons not to do it yourself, and not all of them are obvious:
- No privacy: Your name and address will be published on the Secretary of State’s website.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: Agents must be open for service during all business hours. They don’t get time off.
- Business interruptions: If your agency address is the same as your business address, your clients may be interrupted by people serving lawsuits. That could be embarrassing or hurt your reputation.
- It’s your fault if you miss something: You always have to make sure your agency address is correct and up to date. If you make a mistake or miss something, that’s on you.
Registered agent companies are an easy way to avoid these issues. They aren’t pricey, either. They usually cost around $100 per year. Their name and address, not yours, are listed on the Internet. Depend on your agent to make sure you don’t miss anything. That way, you can focus on your business.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
A registered agent company can also help if your LLC will do business in multiple states and you need to register as a foreign LLC. Just find a company that does business in all those states, pay them a single fee for multiple agents and offices, then let them worry about the details.
Step 3: File Your New Jersey LLC Certificate of Formation
No matter how much prep work you do, there is no LLC unless you form it. That is why you need a certificate of formation. It’s a kind of birth certificate for your company that lets it do business, sign contracts, and do all the things you need it to do.
New Jersey Revised Statutes section 42:2C-18 contains the information you need to get this important document finished and filed with the state.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my New Jersey Certificate of Formation?
Section 42:2C-18 is much simpler than the formation statutes of some other states. Your certificate only needs a handful of things:
- Your LLC’s name
- The name of your registered agent
- Your registered agent’s street and mailing address
You can also include any other matter in the certificate. The one exception is that you can’t limit the authority of an LLC member or manager in this document. (If you want to publicly limit someone’s authority, you will need to file a separate statement of authority.)
Unless your certificate says differently, your LLC will be formed when it is filed with the Division of Revenue and your LLC has at least one member.
New Jersey LLC Filing Fee
The current New Jersey fee schedule lists a $125 filing fee for your LLC’s certificate of formation. You can file it with the state online using the Division of Revenue and Enterprise Services’ business formation website.
New Jersey LLC Processing Time
Processing time for a certificate of formation varies, but it’s normal for the process to take from two to four weeks. You might not have that kind of time, or you may just not want to wait.
In that case, the state does offer a few options for expedited service:
- Within 8.5 business hours: $25
- Same-day service: $50 (fax filing only)
- Within 2 hours: $500
- Within 1 hour: $1000
New Jersey’s current expedited service options require you to file your documents either over-the-counter or by fax.
Step 4: Draft your New Jersey LLC Operating Agreement
Operating agreements are contracts between you and the other members of your LLC.
New Jersey won’t require you to have one, and if you do, it doesn’t have to be in writing. But it is a very good idea to take some time and make a solid contract. As you run your business, the unexpected will happen. Your LLC will need a strong, well-planned road map to guide it through those times.
A good operating agreement is up to date and has all the important facts about your company. For example, your LLC might have six members. Each one of you, however, will probably have a unique role in the company. The contract states each person’s job and how it should be done.
Perhaps the most important thing to keep in mind is that, if you don’t have an operating agreement, New Jersey Revised Statutes section 42:2C-11(b) says what happens to your company will be decided by the law. Drafting a contract is how you take control of your LLC’s future.
The law states that New Jersey operating agreements should cover a few broad areas:
- The relationships between members: Is one of you in charge? What are the separate areas of responsibility?
- The relationship between members and the LLC: What duties does each member owe the company and vice versa?
- The rights and duties of a manager: Do you have a non-member manager appointed? How are they hired or fired?
- The LLC’s activities: What is the company’s purpose? What does it have the power to do?
- How to amend the contract: When your company’s needs change, how do you change the operating agreement?
Some other specific matters you might wish to address include:
- Which members can sign contracts or checks for the LLC
- How members can leave the LLC
- How new members can join
- How and when profits are paid to members
- Procedures for annual company meetings and votes
- How the LLC should be taxed
- What happens when the business ends (dissolution)
Subsections (c) through (g) of the statute also list several things that your LLC can’t do. In general, you can’t use the operating agreement to prevent your company from suing or being sued. In most cases, you also can’t try to avoid the duties you or other members have to each other or the LLC under the law.
If you have a specific legal question about something you need the contract to do, you should consult a licensed New Jersey lawyer about how to do it in a way that complies with the law.
Unlike your LLC’s certificate of formation, you don't file your operating agreement. It is just a contract that exists for the use of your company. A well-drafted operating agreement should be read and referred to often as you make decisions about your business.
Step 5: Get an EIN (Employer Identification Number) for Your New Jersey LLC
The IRS keeps track of your personal income tax information using your social security number. LLCs report tax information too, but they don’t have social security numbers. Therefore, the government uses EINs as a way to track many companies’ information for tax purposes.
Not all LLCs need an EIN, but many do.
To see whether your LLC needs an EIN, ask yourself these three questions:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If the answer to any of the above questions is yes, you will need an EIN.
The good news is that it’s not hard at all to get an EIN. The IRS has a detailed website on the topic and allows you to apply online. The whole application process takes about five minutes.
Because it’s so simple, you should never pay anyone to get an EIN for you unless they are throwing it in as an added benefit to a bigger service package.
Step 6: Register your New Jersey LLC for New Jersey Tax & Employer Purposes
Your LLC is formed and you have your EIN, but you’re not quite ready yet to do business in New Jersey. Now, you have to register your business so that you can pay state payroll taxes, unemployment insurance, and other withholdings.
Also, if your business plans include selling goods or services, you will have to collect sales tax. In that case, you need to get authorization to collect sales tax as part of your registration process.
Business registration has historically been done through the NJ-REG form, but you can now go to the NJ Division of Revenue’s website to register online.
You will need both your EIN and a New Jersey Business Entity ID number to finish this step. You should have gotten the latter when your certificate of formation was filed. You can also find it if you search for your LLC’s name on the business search website.
After you’ve registered, you’ll get a Business Registration Certificate (BRC), with another number that you will need to complete your state taxes in New Jersey.
First Tasks After Registering your New Jersey LLC
Congratulations! You have formed and registered your LLC. But you’re not ready to start doing business just yet. There are a few more things good business owners will do first.
Open a Business Bank Account
Your LLC needs a separate bank account. Here’s why:
- Accounting: You’re in business to make money. You can’t tell if you’re making money unless you know exactly how much your company spends and deposits every month.
- Credit: Even successful companies need to borrow money. You don’t want to use your personal credit, though, for a business expense. Keeping your company’s money separate helps build up company credit.
- Personal Asset Protection: Keeping your company’s money separate from your own is the whole point of even forming an LLC instead of operating a sole proprietorship. Without a business bank account, you risk losing that personal liability protection.
Part of running a business is doing proper accounting. You must keep detailed financial records about your business, its expenses, and its income. That’s not possible if you mix your own information and money with that of the business. Having a company bank account is the best way to keep your LLC’s books.
Getting credit for your business is probably not a big concern now, but you’ll be thinking about it someday. When you need new equipment or your LLC is making a big purchase, your new business entity should borrow its own money. Borrowing money for the LLC with your personal credit is a financial risk you should not take.
The biggest reason for an LLC bank account is the legal protection. The purpose of forming an LLC is that if someone sues it, your own assets are not at risk. This company/individual separation is called the corporate veil. (Even though an LLC is not a corporation, it's still called a “corporate” veil.)
If you treat your company’s assets like your own, the veil can be pierced, and you can lose that precious legal protection. So, for example, if you are taking the company’s money and using it to pay your household bills, someone who sues the LLC could collect their judgment from you personally!
Mixing business and personal assets is risky. Don’t do it. Go to the bank now and open up an LLC bank account.
Get Business Insurance For Your New Jersey LLC
A healthy business is like a healthy body. You do everything you can to make sure it stays that way, but accidents happen. You purchase health insurance to keep yourself healthy and control costs when something bad happens. It’s the same way with insurance for your business.
Here are some types of insurance you should think about for your LLC:
- General liability insurance: You’ll need this if there's an injury on your property. It pays for judgments and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Workers compensation insurance: If your LLC has anyone working for it other than its members, you need to have workers’ compensation insurance.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your New Jersey Company Compliant
Now that you’re done with the basic stuff, you can get started. Keep in mind, though, that state and local laws impose other requirements on your LLC. You will have to make sure that you stay current.
New Jersey Business Permits and Licenses
The state of New Jersey does not require a general business license, but the city and/or county where your LLC is located probably does. The state also has a long list of professions for which an additional license is required. Check the list to see what the steps are for your particular line of business.
New Jersey Tax Requirements
Though New Jersey does not have a separate franchise tax, it does require LLCs to file a Form NJ-1065. Single-member LLCs are treated as individuals, and therefore should file a Form NJ-1040 (for New Jersey residents) or 1040-NR (for non-residents).
Federal LLC Tax Filing Requirements
The IRC treats LLCs as pass-through entities. In other words, the federal government does not tax the LLC directly. Instead, it taxes income on members’ personal tax returns unless you and your accountant choose to do otherwise. Profits or losses from your LLC should be on Schedule C of your personal tax return.
Annual Report and other Filing Requirements
New Jersey Revised Statutes section 42:2C-26 requires your LLC to file a report every year. It must have this information:
- Your LLC’s name and address
- Your registered agent’s name and address
- The name and addresses of the managing members (or of the non-member managers, if your LLC has them instead)
There is a $75 fee for filing your LLC’s annual report.
New Jersey Business Formation Quick Links
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- New Jersey Department of Labor and Workforce Development — Workers’ Compensation Insurance Requirements
- New Jersey Division of Consumer Affairs — Licensed Professions and Occupations
- New Jersey Division of Revenue — Business Name Availability
- New Jersey Division of Revenue — Business Name Search
- New Jersey Division of Revenue — Business Registration
- New Jersey Division of Revenue — Fee Schedule
- New Jersey Division of Revenue — Online Business Formation
- New Jersey Division of Revenue — Form C-150G (Registration of Alternate Name/DBA)
- New Jersey Division of Taxation — Information About Collecting Sales Tax
- New Jersey Division of Taxation — Partnership (and LLC) Tax Information
- New Jersey Division of Taxation — Tax Return Form NJ-1040
- New Jersey Division of Taxation — Tax Return Form NJ-1040NR
- New Jersey Division of Taxation — Tax Return Form NJ-1065
- New Jersey Revised Statutes section 2A:15-30.1 (Service of Process on Business Entity)
- New Jersey Revised Statutes section 42:2C-8 (Naming an LLC)
- New Jersey Revised Statutes section 42:2C-9 (Alternate Business Name/DBA)
- New Jersey Revised Statutes section 42:2C-11 (Operating Agreements)
- New Jersey Revised Statutes section 42:2C-14 (LLC Registered Agents)
- New Jersey Revised Statutes section 42:2C-18 (Certificate of Formation)
- New Jersey Revised Statutes section 42:2C-26 (LLC Annual Reports)
New Jersey LLC FAQs
How much does it cost to start a New Jersey LLC?
It costs $125 to file your certificate of formation. If you want to expedite your filing, the fee will run an extra $25 through $1000, depending on how quickly you need it done.
What is the processing time to form my New Jersey LLC?
Processing time can take between 2-4 weeks. You can shorten that to as little as an hour if you are willing to pay an extra fee.
What are the benefits of a New Jersey LLC?
A New Jersey LLC protects your personal assets while giving you favorable tax treatment. You can also use an operating agreement to customize your business structure, so it best serves the needs of you and the other LLC members.
Where do I check if my New Jersey LLC name is available?
Use the online Business Name Availability Search from the Department of Revenue.