New Jersey is a small, densely populated state that shares many of its people, and much of its culture, with nearby New York City. It’s also home to prestigious universities and historical landmarks, all of which present opportunities for many different kinds of businesses. People starting their own LLCs there need to have a good idea, drive to succeed, and a bit of luck.
First, though, you have to get started. That means you will have a budget and pay upfront to start your New Jersey LLC. We’re here to help you figure out where you need to spend your money, as well as other purchases you’ll want to make that can make your life easier, both now and in the future.
This article will help you make a budget for starting an LLC in New Jersey.
- The required costs for every LLC
- Extra costs we recommend you incur
- The different ways you can form your LLC, as well as the pros and cons of each
Total New Jersey LLC Cost – $125
Forming an LLC in New Jersey only requires that you file a certificate of formation. That simple filing will cost you $125. Unlike other states, which require you to file a separate paper stating the name and address of your registered agent, here you will do that as part of your certificate.
The New Jersey Division of Revenue and Enterprise Services manages these filings, and you can find its fee schedule here.
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How Much it Costs to Start a New Jersey LLC – the Basic Costs
You can’t get started until the certificate is filed. Even after that, there are many more things new owners need to think about. Most of them cost money, so you should figure out your needs and budget accordingly. Here, we will outline what you should think about spending if you want your LLC to have the best start it can have.
Certificate of Formation Filing Fee – $125
The certificate of formation is the single most important legal document of your LLC. Without it, your LLC doesn’t exist. Once it has been filed, though, your LLC can do business, pay taxes, and take any other legal action. Thus, you need to make sure the certificate is done first.
The easiest way to file the certificate is online, using the Division of Revenue’s Business Formation website.
If you have a complicated business or ownership structure, you may want to hire an attorney to draft a more detailed certificate. If that’s the case, though, you are probably already aware of your needs. Thus, the forms and questions available on the state website will be fine for most people.
New Jersey LLCs – Optional Costs to Consider
$125 may be all you need to get started, but you shouldn’t stop there. There are many other costs you should also plan for to give your LLC the best start it can get.
Expedited Filing Service – $25 to $1000
Once you have filed your certificate, it will take a while for the state to process it. The state can routinely take from two to four weeks to finish your filing. You might not have that kind of time, or you may just not want to wait to get started.
The state does offer a few options for expedited service. You can pay any of the amounts listed below to ensure that the New Jersey Division of Revenue processes your certificate in less time.
- Within 8.5 business hours: $25
- Same-day service: $50 (fax filing only)
- Within 2 hours: $500
- Within 1 hour: $1000
Business License – $10 and up per year
Your New Jersey LLC may need a license depending on what kind of business it does and where it is located. Your best bet is to check with your local city and county governments. The City of Newark, for example, has a website that you can visit to determine whether or not your LLC needs a license to operate.
Note that the price varies greatly depending upon the type of business. A Newark bowling alley, for example, only needs a $25 business license. A pet shop would only cost you $10. But a live entertainment theater costs $365, and an arcade will set you back at least $1500.
Thus, it’s important to do your research ahead of time once you have decided where you want to open up shop.
Registered Agent Fee – about $100 per year
When you file your certificate, you’ll have to name your LLC’s registered agent so that the state and the public can timely communicate with you. This is important if someone sues your LLC. A lawsuit may not sound like fun, but you must know exactly when it happens, or your business will be at risk.
Because your agent’s details are included in your certificate, you don’t pay an extra fee to the state to name an agent. Still, you should think about hiring a company to serve as your LLC’s agent.
Many owners are tempted to serve as the agent themselves, thinking they can save a couple of bucks. This is not a good idea because it involves making your address public and always being available just in case someone wants to sue your company.
It’s simpler to hire a New Jersey registered agent service for your LLC. These registered agent companies usually charge $100 per year and cover all your agent needs. It’s money well spent.
Operating Agreement — Variable
An operating agreement sets down the rules of your LLC. It says how the people in charge should do their jobs, when meetings must be held, how members can enter and exit the company, and almost any other matter that affects your business.
New Jersey won’t force your LLC to have an operating agreement, but we strongly recommend that you think about it. Without a written contract, you have much less control over what happens to your company when something unexpected happens.
If you choose to have an LLC operating agreement, you don’t have to file it with the state. You can write it yourself, but unless you are a lawyer or know exactly what it’s supposed to look like, we don’t recommend that option.
A lawyer is an expensive option. They would likely charge you an hourly rate. While a lawyer’s agreement would be thorough, spending hundreds (or even thousands) on a contract for a small business is probably overkill. If you use an LLC formation service, you can have a good agreement drafted, though, for as little as $39.
DBA Filing Fee – $50 for five years
When you name your LLC, you might not get the exact name you want. Perhaps the best name is taken or doesn’t comply with state law. Or perhaps the name on your legal papers is fine, but it turns out there's another company with a similar name and you need to make it clear that you are a separate business.
This is a common situation, and it has an easy fix. You will need an Alternate 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 a DBA, you will have to go back to the Division of Revenue and file a certificate of registration for your DBA.
The Division of Revenue offers a form certificate for this purpose. 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.
Name Reservation Fee – $50
Maybe you have a good plan and the perfect name for your LLC, but you’re not ready to start just yet. If you want to make sure that you can use a certain name when you are ready, you can file an Application for Reservation of Name with the Division of Revenue for $50.
Once you have successfully applied, you have the right to the reserved name for 120 days.
Domain Name – about $20 per year
In this day and age, small businesses need to be on the Internet. The first step in creating a good website is to get your domain name. While this might have been pricey in the past, it is now quite affordable.
You should lock down your domain name as soon as possible, even if you don’t have plans for a website right now. If you don’t, a competitor could buy your ideal domain and similar-sounding domains to block you from using them. Domain squatters also sift through newly registered LLC names and will buy their domains only to relist them with huge markups.
In general, a domain ending in .com will be more expensive than a .net or .info domain, and some names will likely be taken, meaning you will have to do some searching (and maybe compromising).
A domain name from GoDaddy.com or a similar registrar may cost you between $20 and $50 per year, with regular specials and sales where you can get substantial discounts.
Register With the State Tax Office – Free
Before you open your doors, your LLC must register so it can pay state payroll taxes, unemployment insurance, and other withholdings. Though there is not a separate fee for this, it’s a key step you can’t forget.
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.
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 (see the next step) 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 New Jersey 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.
Getting a Federal Employer Identification Number (“EIN”) – Free
An EIN is a number created and assigned by the Internal Revenue Service to a business for paying taxes. (Think of an EIN as a social security number for a business.) Some LLCs need them, and some don’t. In New Jersey, you’ll need an EIN to register with many state offices.
Regardless of whether the IRS says you need one, we recommend that you get an EIN. Many banks won’t allow your company to have its own business bank account without one. Having an EIN can also simplify the process of getting credit.
You can apply online and get an EIN for free in minutes, or you can apply for one through the mail or fax. Whatever you do, don’t pay someone else to get an EIN for you. It’s too easy to pay someone else to do it unless it is part of a broader service package.
Foreign LLC Qualification Fees – about $100 per extra state
If your business takes off, that’s great! You may want to expand to new locations. If one of those places is in another state, you’ll have to pay to do business there. You won’t have to re-form your company, but you will have to register as a foreign LLC with the Secretary of State there and pay extra fees.
The exact fees will depend on the state in which you are registering. As a rule of thumb, expect to pay about $100 in filing fees to register your limited liability company in another state.
Writing Formation Costs Off
Because it takes money to start your business, you can write off many, if not all, of your costs on your federal taxes for a deduction. The IRS has a lot of guidance on this matter, and you should compare your specific costs to the materials on the IRS website.
Keep in mind that, in most cases, a limited liability company is taxed by the IRS as a pass-through entity. Generally speaking, LLC owners can deduct up to $5,000 of their business startup expenses in the first year.
New Jersey does not allow the same federal business deductions as the IRS. They do not, however, charge a franchise tax to the LLC directly.
Tony wants to open a bowling alley in Newark with his company, Dragon’s Den Bowling Alley LLC. For the first year, he will run the entire operation himself, without hiring any other workers. He just found the perfect-sized space for his business, so he needs to form his LLC right away and get the lease signed as soon as possible.
Tony expects that he may allow his friend Greta to buy into the Dragon’s Den next year when she sells her current business. Because of that, he needs a detailed operating agreement describing how people can purchase an interest in the LLC. He also had a custom sign made for the alley calling it “Tony’s Dragon Den,” so he will need a DBA.
Tony’s LLC formation costs are as follows:
- New Jersey Certificate of Formation filing fee: $125
- 2-hour Expedite Fee for Certificate of Formation: $500
- Newark bowling alley business license: $25
- Operating Agreement: $39
- Resident agent fees: $100
- DBA fee: $50
- Web domain costs: $50
Tony has elected to have his LLC taxed as a pass-through entity by the IRS. This means that he will claim both his business income and deductions on his personal federal tax return. (Because his company is a single-member LLC, Tony must file a Form NJ-1040 and can’t write off his business expenses against state tax.)
Tony’s startup costs, which will form his deduction, total $839. His taxable income before the deduction was $40,000, which puts him in the 12% income tax bracket. With the deduction, Tony’s taxable income will be reduced to $39,161. That saves him $100.68 in federal taxes.
Keep in mind that if Tony had more than $5,000 in expenses, he would likely be able to claim those starting in the second year of his business.
Cheapest Way to Start an LLC in New Jersey
While we have given examples of the costs you will incur, you can get better deals by tailoring your costs to the needs of your company. Sometimes, this might mean you need to spend a bit more. Pay attention to your needs and budget accordingly.
Formation Service – $39 + state fees
A business formation service is a popular and inexpensive way for new LLC owners to get started.
These companies are dedicated to helping entrepreneurs bring their visions to life. They have not only the knowledge of all the state laws you need to know, but also forms, documents, and procedures to make your life as easy as possible.
Formation services are quick and complete ways to handle formation needs for most LLCs.
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
While formation services can be great for most people, they are not always the best choice. Some cons for these services are:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry (e.g., recreational cannabis), you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Attorneys are licensed, reliable, and powerful resources for business formation. They are also quite expensive. Attorneys in the New Jersey/New York City area can be among the most expensive in the country. A business owner like Tony, above, can’t afford the hundreds, or likely thousands of dollars a lawyer will charge.
Wealthier business owners may feel differently. Also, if you are starting a dispensary in line with the 2023 legalization of marijuana in the state, you would need a lawyer to make sure you're doing everything right. For that reason, some owners choose to go this route.
Despite the expense, sometimes hiring a lawyer is the best choice.
- Lawyers help you manage risk. An LLC with complicated legal issues needs a lawyer. New Jersey is one of the states that has legalized gambling, for example. If your LLC is joining this industry, you would be wise to consult a lawyer who specializes in gaming law.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
For most people, getting an attorney comes with considerable downsides that outweigh any benefits.
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very caring people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Many people, after searching the Internet for the information they need, decide to try forming their new LLCs themselves. This process can give you a lot of personal expertise, but remember that time is money. If you are spending hours on your business formation, that’s time you’re not spending on the substance of your business.
In most instances, then, it is more cost-effective to just pay an LLC formation service, with confidence that everything has been done correctly, rather than try to reinvent the wheel yourself.
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t figure out the value of your time, a DIY solution is the cheapest option.
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation. And that’s not money you will be able to write off.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that then costs them more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even more challenging for you.
Annual New Jersey LLC Fees: How Much Will it Cost to Maintain your LLC?
Even after you’ve formed the LLC, there are annual costs for which you will have to budget. These include both government fees and amounts paid to third parties, like:
- Local Business License, depending on exact location: varies; can range from a minimal amount to well over a $1000 depending on the type of business and where you run it
- Annual report fee: $75
- Registered agent fee: $100
- Domain name: $20
How Much are LLC Taxes in New Jersey
First, you’ll be happy to know that New Jersey does not charge LLCs a franchise tax. Generally speaking, businesses that are not single-member LLCs and make less than $50,000 per year will pay a 6.5% income tax, and those that make between $50,000 and $100,000 will pay 7.5%. Above that, the tax rate is 9%.
On the federal level, the IRS will tax your LLC as a pass-through entity, meaning that the income will be taxed on a member’s personal tax return.
You will, however, have to pay other taxes associated with your business. For example, if your LLC hires workers, you will have to pay employment taxes. If it sells goods and services (and it almost certainly will), you'll also have to collect sales and use tax.
New Jersey LLC Formation Costs Quick Links
- City of Newark — Business Licenses
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- New Jersey Division of Consumer Affairs — Licensed Professions and Occupations
- New Jersey Division of Revenue — Application for Reservation of Name
- 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 — Exemptions and Deductions
- 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 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 Formation Costs FAQs
How much does it cost to start an LLC in New Jersey?
The minimum cost is $125. You must pay at least this amount to file your LLC’s certificate of formation with the state.
What is the cheapest way to start an LLC in New Jersey?
A do-it-yourself approach will have the lowest price tag, but it isn’t the cheapest in terms of your time. The best balance of price and time, for most people, is to use a formation service.
Do I need to hire an attorney to form an LLC in New Jersey?
No. Most people will not need to invest the considerable expense and time of hiring a lawyer. A formation service or a DIY approach will work for most business owners.
Can I pay to form an LLC more quickly in New Jersey?
Yes. Formation services will generally complete formation tasks faster than business owners acting on their own. For an extra state fee, the New Jersey Department of Revenue will also process any document you file within a shorter amount of time, up to $1000 for a one-hour turnaround.