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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Forming an LLC in New Jersey follows a similar process to those of other states, however, some of the terminology used is different. For example, the state refers to an LLC’s organizational filing as a “Public Records Filing for New Business Entity” rather than the more common “Articles of Organization” or “Certificate of Formation.”
To avoid a misstep in the filing process, follow these steps to start an LLC in New Jersey, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in New Jersey step-by-step
1. Select a name for your New Jersey LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of New Jersey:
- An LLC’s name must be distinguishable from the names of existing businesses on file with the New Jersey Division of Revenue & Enterprise Services.
- An LLC’s name must contain “Limited Liability Company” or “L.L.C.” at the end.
Check your LLC name’s availability in New Jersey
After deciding on a name that satisfies New Jersey naming requirements, confirm that it’s available in the state with the New Jersey Business Search.
Reserve your LLC name with the New Jersey Division of Revenue & Enterprise Services
Reserving your LLC name is a good idea because it prevents another New Jersey business entity from using it before you legally organize in the state.
File an Application for Reservation of Name with the New Jersey Division of Revenue & Enterprise Services online in order to reserve the LLC name for up to 120 days. The filing fee is $50.
2. Designate a registered agent
As in every U.S. state, forming an LLC in New Jersey requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in New Jersey OR if the individual or business is based out-of-state, they must have a business office in New Jersey.
3. Make a Public Records Filing
An LLC is created in New Jersey through the filing of a Public Records Filing for New Business Entity with the New Jersey Division of Revenue & Enterprise Services.
The public records filing must include the following information:
- LLC name
- LLC’s general business purpose
- LLC’s dissolution date (if not perpetual)
- Registered agent name and address
- Signature of an authorized LLC representative
Foreign LLC registration
An LLC originally formed outside of New Jersey that intends to do business in the state must first register with the New Jersey Division of Revenue & Enterprise Services.
Follow these steps to do business in New Jersey as a foreign LLC:
- Comply with New Jersey LLC naming restrictions and confirm that your LLC name is available in the state using the New Jersey Business Search.
- Appoint a New Jersey registered agent.
- Complete a Public Records Filing for New Business Entity with the New Jersey Division of Revenue & Enterprise Services online or by postal mail. The filing fee is $125 (plus $3.50 credit card fee).
- The filing must include a Certificate of Good Standing from the LLC’s state of origin.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in New Jersey, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your New Jersey LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
File annual reports
All LLCs active in New Jersey (including foreign LLCs) must file an annual report with the New Jersey Division of Revenue & Enterprise Services every year. The report is due each year during an LLC’s anniversary month (the month containing the date when an LLC was organized or became authorized to do business in the state).
An LLC must file its annual report online with the New Jersey Division of Revenue. The filing fee is $50.
Register to pay state taxes
All LLCs active in New Jersey must register with the New Jersey Division of Revenue regardless of their business type or whether or not they have employees. Additionally, all New Jersey LLCs are required to pay an annual minimum tax of $125 for each LLC member.
Obtain business licenses and permits
Certain New Jersey LLCs may require one or more state or local business licenses, permits, or certifications depending on the nature of their business and where they are based.
Use the Business.NJ.Gov Startup Guide to find out which occupational licenses and permits your LLC needs to operate in the state. For information on how to fulfill local business licensing requirements, contact a city clerk or local government representative in the municipality where your LLC’s principal office is located.
New Jersey LLC checklist
An LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing businesses on file with the New Jersey Division of Revenue & Enterprise Services.
- Must contain “Limited Liability Company” or “L.L.C.” at the end.
Formational documents and filing fees:
- Application for Reservation of Name – $50 filing fee (optional)
- Public Records Filing for New Business Entity – $125 filing fee plus $3.50 credit card payment fee (required for both New Jersey and foreign LLCs doing business in the state)
- An LLC is created in New Jersey through the filing of a Public Records Filing for New Business Entity with the New Jersey Division of Revenue & Enterprise Services.
Additional legal obligations:
- File annual reports – Required for all LLCs doing business in New Jersey
- Register to pay New Jersey state taxes – Required for all LLCs doing business in New Jersey
- Obtain state and local business licenses – Required for certain types of LLCs