New Jersey is an excellent place to start a business as it is a major transportation hub, has a diverse culture, and is in need of products and services. One of the most popular business structures to choose when starting a business is the Limited Liability Company (LLC). This type of business structure provides personal protection for its members (owners) by not holding them responsible for any business debts.
New Jersey LLC formation is done by registering with the New Jersey Division of Revenue, however, there are a few steps to follow before officially having an LLC registered. The walkthrough below provides a step-by-step guide to assist in setting up an LLC in New Jersey easily.
Step 1: Register a New Jersey LLC Name
Naming a New Jersey LLC comes with certain rules in order for the name to be legal. The first thing to do is to make sure that the name is not similar or the same as any other business name registered in the state. A name search can be done through the New Jersey Secretary of State website.
An LLC in New Jersey must have the term “Limited Liability Company” or one of its abbreviations (LLC or L.L.C.) within the name. Special words like “bank” or “university” require approval from the state as they may imply a service that requires certain licenses in order to operate.
The LLC may also not use any words that can be confused with it being a government agency. More naming rules can be found on the New Jersey Secretary of State’s website. This is also a good time to secure a domain name.
Step 2: Appoint a New Jersey Registered Agent
New Jersey requires all LLCs’ to have an appointed registered agent to receive legal documents and notices on behalf of the business. This may be an individual within the LLC or a business entity, but they must be available at all times during regular business hours. The registered agent must also be in possession of a physical New Jersey address. A post box number does not qualify as an address.
Step 3: Create a Business Plan
This step is legally not a requirement, but it is highly advised for any business to draft a proper business plan. Often called an “operating Agreement”, the document outlines how the business will be managed as well as details of the owners, business processes and rules. An Operating Agreement usually includes:
- Members percentage ownership
- Rights and responsibilities of members
- Profit and loss distribution
- How and when meetings will be held
- Buy-out and sell-out rules
It should also include all clauses and regulations for dissolving the business as well as how the business will be managed (member-managed or manager-managed).
Step 4: File a Certificate of Formation with the New Jersey Secretary of State
The filing fee is $125 and the following information needs to be on hand when filling out the form.
- Name of the LLC
- Purpose of the LLC
- LLC formation Date
- Name and address of the registered agent
- Signature of the member filing the form
The certificate can be filed online and a copy of the certificate will be immediately available. A mailed copy will be received in about 10 business days.
Step 5: Comply with Tax Regulations and Obtain Relevant Licenses
The first action to take is to apply for an EIN from the IRS. This will enable the LLC to register for taxes, open business bank accounts, hire staff and apply for credit. New Jersey LLCs’ are subject to both state and federal income tax. All LLCs’ are required to register for state taxes with the New Jersey Division of Revenue.
Certain professional industries like attorneys will require special licenses in order to transact in New Jersey. All Licensing information is available on the NJ Business Action Center website.
Now that your New Jersey LLC is formed it is time to think about insurance. General liability insurance can protect the company fairly well, but if you have company vehicles or staff, commercial vehicle insurance and health insurance options might also be needed. This is also the time to start thinking about marketing strategies and social media accounts to boost interest in the business in order to start trading and making profits.