How to Start an LLC In New Jersey

A limited liability company, commonly abbreviated as "LLC," is a business entity that new business owners can establish in New Jersey. This legal structure has several upsides, including personal asset protection, tax savings, and operational flexibility. As a result, it is a popular choice among starting entrepreneurs, especially those running medium- or higher-risk businesses, according to the US Small Business Administration.

New LLCs in New Jersey must organize under the Revised Uniform Limited Liability Company Act (N.J.S.A. 42:2C-1 to -94). This law, also known as "RULLCA," stipulates how LLCs can be formed and operated in the state.

Generally, a business owner will have to go through these six steps to create an LLC in New Jersey:

• Step 1: Name the LLC
• Step 2: Appoint an LLC Registered Agent
• **Step 3: Review Filing Requirements **
• Step 4: Form the LLC
• Step 5: Request an Employer Identification Number (EIN)
• Step 6: Register for Taxes

The New Jersey Department of Treasury's Division of Revenue and Enterprise Services (DORES) oversees the LLC formation process in New Jersey. Besides receiving business filings from potential LLC owners, the office also preserves records on all LLCs operating in the state. The public can access certified and non-certified (plain) copies of LLC records through the Division's Business Records Service portal.

What is an LLC?

An LLC is a hybrid legal structure that blends the best characteristics of a corporation and partnership. Like a corporation, a limited liability company is deemed a legal entity distinct from its owners ("members"). Thus, an LLC can sue and be sued separately from the members and has the power to do all things necessary or convenient to carry on its activities, ultimately limiting the owners' liability to business debts and claims. Further, an LLC borrows a unique feature of the partnership business structure that lets the owners report business profits or losses on personal income tax returns (known as "pass-through taxation").

Per Section 42:2C-4 of the New Jersey RULLCA, limited liability companies can be created for any lawful purpose—it does not have to be for profit.

Step 1: New Jersey LLC Name Search

The first step in starting an LLC in New Jersey is selecting a business name. This name represents the business and distinguishes it from others. Therefore, it must be unique to the business and compliant with the Garden State's naming requirements.

Per N.J.S.A. 42:2C-8, an LLC's name must contain the following identifiers:

• The words "limited liability company" or
• The abbreviation "L.L.C." or "LLC."

The word "Limited" can be shortened to "Ltd.," and "Company" can be abbreviated as "Co."

To check the availability of a preferred name, one should access the Business Name Search portal provided by the Division of Revenue and Enterprise Services. There is no fee for this service.

Upon determining that a name is available, a person can register their business immediately (explained below) or reserve the business name prior to filing formation documents with the New Jersey Department of Treasury's Division of Revenue and Enterprise Services. Name reservations are allowed only for 120 days in New Jersey, and it costs $50 per request.

Aside from confirming the availability of a business name within New Jersey, it is also necessary to ensure the chosen name does not infringe on any existing trademarks. This can be confirmed through the United States Patent and Trademark Office (USPTO). One may also request an experienced lawyer's assistance.

Step 2: Choosing an LLC Registered Agent in New Jersey

Under Section 42:2C-14 of the New Jersey Revised Uniform Limited Liability Company Act, all LLCs operating in New Jersey must appoint and continuously maintain a registered agent.

An LLC registered agent (also called an "agent for service of process') is an individual or company that serves as an LLC's legal point of contact. The agent receives official documents, demands, or notices on the company's behalf.

LLC registered agents in New Jersey must satisfy the following requirements:

• Be a state resident and 18 years or above (if an individual) or be in good standing on the State Treasurer's records (if a corporate entity)
• Maintain a New Jersey physical street address (called a "registered office') where legal correspondence can be delivered
• Be available during normal business hours to accept official mail

A limited liability company designates its registered agent on business formation papers submitted to the Division of Revenue and Enterprise Services.

Members of the public looking for a New Jersey LLC's registered agent can request the company's status report or business standing certificate via the Division's Business Records Service portal. It costs $6.25 per status report and $25 per standing certificate.

How Do I Change my Registered Agent for my LLC in New Jersey?

To change the registered agent for a New Jersey LLC, an authorized person must file a statement of change with the state's Division of Revenue and Enterprise Services. This statement must contain the names and business addresses of the past and present registered agents. The form can be submitted via the Division's Business Change Services portal. The fee to change an LLC registered agent in New Jersey is $25.

Business owners can contact the Division at (609) 292-9292 for inquiries about the process or complete the agency's contact form.

Step 3: LLC Filing Requirements in New Jersey

To register an LLC in New Jersey, one or more persons (known as the "organizers" of the LLC) must file business formation/authorization documents with the Division of Revenue and Enterprise Services. This requirement applies to both foreign and domestic LLCs.

Officially, the term "Formation" is used to refer to the registration process for domestic business entities (new business entities in New Jersey). In contrast, the term "Authorization" refers to the registration process for foreign entities (businesses formed outside New Jersey). Nonetheless, all LLCs need to file a Business Formation application to be formed or authorized to transact business in New Jersey.

New Jersey's filing requirements are explained below.

Certificate of Formation/Authorization

A Certificate of Formation/Authorization is a legal document that carries basic information about a business entity, such as:

• The LLC's name and type
• Purpose
• Registered agent information
• The address of the LLC's principal place of business
• The names and street addresses of the LLC's members or managers
• The management structure the LLC will adopt (whether it will be member-managed or manager-managed)
• The date upon which the company will be dissolved (if applicable)

The Certificate of Formation/Authorization is the primary document needed to form or authorize an LLC in New Jersey. DORES provides both fill-in-the-blank (online) and paper copies of this document for applicants.

Certificate of Good Standing

This filing requirement applies only to foreign (out-of-state) LLCs seeking to conduct business affairs in New Jersey. The document is obtained from the home state's business filing office and submitted with the Certificate of Formation. It proves that a foreign entity has satisfied all statutory filing requirements in its home state and is in good standing on the state's records.

Operating Agreement

An operating agreement is recommended for LLCs (especially those with more than one member) for the following reasons:

• It summarizes the ownership and management structure of the business
• It defines the rights, powers, and duties of each member
• It details the activities of the LLC and the conduct of those activities

Although the New Jersey legislature (N.J.S.A. 42:2C-11 to -13) outlines the scope, function, and limitations of operating agreements signed in the state, an operating agreement is not a filing requirement for LLCs. Rather, it is an internal document that simplifies an LLC's operation and helps members avoid potential disputes or confusion. LLC members can draft this document themselves (several templates are available online) or with the assistance of an attorney.

LLC Statement of Information

A Statement of Information, known as an "Annual Report" in New Jersey, is not part of an LLC's initial filing requirements. However, each LLC in New Jersey must file an annual report to comply with the state's business regulations. The report informs the state of any changes to an LLC's vital information, such as changes to the company's registered agent or principal place of business.

Do You Need a New Jersey Address for LLC?

Yes, limited liability companies operating in New Jersey must have a local address. New Jersey has two address requirements for LLCs conducting business affairs in the state: the company's organizers must provide a primary location where the company operates (its principal place of business) and a registered office address.

The company's main business address must be a physical street location, but it does not have to be a New Jersey or even a United States address. However, each New Jersey LLC must maintain a registered office locally (the registered office address must be a physical street address).

How to Get a Virtual Address for LLC in New Jersey

LLCs in New Jersey can list a local or international address as their main company address on formation papers submitted to the state. A company that does not have a physical address in New Jersey but wants to maintain a local physical presence or its privacy (as principal office addresses are public records) can opt for a virtual address service.

A virtual address, sometimes called a virtual business address, is a physical street address where companies can receive general business mail and packages. The address can be provided on the company's formation paperwork as its main office location and can be used to file taxes.

Several third parties offer virtual address services in New Jersey. It is easy to find these businesses with a simple internet search. Services offered by a virtual address provider often surround mail processing, scanning/forwarding, and shredding. However, some providers offer complementary services for an additional fee, such as cloud storage, local business phone services, and conference room leasing. As such, it is necessary to compare pricing and plans to determine what works best for the company and is within its budget.

It is important not to confuse a virtual office with a registered office (the business address of a registered agent). A registered office is where legal mail is received by a registered agent on a company's behalf. In contrast, a virtual office address is where regular (non-legal) business mail can be sent to a company. Moreover, a registered office cannot be designated as a company's principal office.

Notably, some registered agents offer general mail scanning/forwarding services, as it is not uncommon for persons to accidentally send general mail to a company's registered agent. However, since that is not the registered agent's responsibility, the cost of those services (if offered) is often more substantial, and the client may not receive a customized service like that a virtual address service may provide.

Step 4: How to File for an LLC in New Jersey

Any limited liability company setting up base in New Jersey must file a Business Formation application with the state's Division of Revenue and Enterprise Services. DORES has both paper and online application options.

Individuals without an internet connection, who prefer paper business filings, or who are ineligible to file online (see below) should submit a completed paper application by mail or fax to DORES. The Business Formation Application form (Public Records Filing) is available in the Division's Business Registration Forms and Information packet (see page 23).

Below are the relevant addresses for submissions:

Regular Mail:

New Jersey Department of the Treasury

Division of Revenue & Enterprise Services/Corp. Filing Unit

Po Box 308

Trenton, NJ 08646

Fax: (609) 984-6851

Over-the-Counter (only for expedited requests):

33 West State Street, 5th Floor

Trenton, NJ 08608-1214

It costs $125 to file a paper business formation application for an LLC in New Jersey. An LLC organizer can opt for expedited services (hand delivery or non-USPS courier/express mail delivery) for an additional fee. (See pages 21 and 22 in the packet).

Acceptable methods for paying filing fees for LLC paper applications include:

• Cash.
• Check or money order payable to the Treasurer, State of NJ.
• Credit card (MasterCard, Visa, Discover, or AMEX). Credit card payments must include the cardholder's name/address, the card number, and the expiration date.

How to Create an LLC Online in New Jersey

The New Jersey Division of Revenue and Enterprise Services provides a Business Formation Service to file a Certificate of Formation or Authorization for an LLC. The service streamlines the registration processes for domestic and foreign LLCs. Therefore, whether seeking formation or authorization, an LLC's organizer does not need to fill out a separate form and only needs to follow the system prompts to input the correct business information where indicated.

The cost of filing a Certificate of Formation or Authorization online in New Jersey is $125, payable by credit card or eCheck through the Business Formation Service portal.

Note: Not everyone can file formation paperwork online in New Jersey. Anyone who reserved a business name cannot file via the online portal. The same goes for someone who would like to use a name less than four characters long for their LLC or use characters like # ! ? $ or / in their LLC's name. Such parties must file a paper application by mail or fax.

Can You Have Multiple Businesses Under One LLC in New Jersey?

Yes. Limited liability companies in New Jersey can create alternate names to transact business under different names without establishing a new entity.

An alternate name is a business name that an LLC, limited partnership, or corporation can register after formation or authorization to legally conduct business affairs under a name other than its formation name. More information about alternate names (plus fees involved) is available on the New Jersey Treasurer's website.

Although New Jersey allows entities to create Doing Business As (DBA) names, such monikers are available only under specific conditions in New Jersey. Accordingly, only foreign (out-of-state) entities can register a DBA with the New Jersey Department of Treasury's Division of Revenue and Enterprise Services—and only after ensuring their exact registered business name is unavailable in the state.

Note: New Jersey does not recognize the "series LLC" model, another approach to having multiple businesses under one LLC in several states. In a series LLC, several entities (called "cells" or "series") are established under one "parent" or "master" entity. The cells operate independently, keep separate records and bank accounts, and are isolated from each other in their obligations and liabilities.

How Long Does it Take to Set Up an LLC in New Jersey?

There is no fixed timeframe to set up an LLC in New Jersey. The speed at which LLC organizers can begin and complete the process depends on the application method, the accuracy/completeness of submitted documents or information, and the filing office's workload.

Generally, online business formation filings have a fast turnaround time. People who submit formation paperwork over-the-counter or via fax can also have their documents processed faster, as the Division of Revenue and Enterprise Services offers same-day or expedited service for such requests. Expedited service requests have an 8.5 business hour processing timeline and cost $25 per request for LLCs. Meanwhile, same-day processing costs $50 per filing request.

Step 5: How to Get an EIN for LLC in New Jersey

An EIN, short for "Employer Identification Number," is a nine-digit identifier the Internal Revenue Service assigns to identify businesses for federal tax purposes. Businesses can obtain an EIN (also called a Federal Employer Identification Number or FEIN) from the IRS online, via mail, fax, or telephone (only for international applicants).

Online applications are submitted via the IRS EIN Assistant platform, and it takes up to 15 minutes for an applicant to receive their EIN. Fax and mail applications require the completion and submission of Form SS-4. Fax applications typically have a four-day processing time, and mail applications may take two to four weeks. Below are the relevant addresses:

Address for individuals with a legal residence, principal place of business, or principal office/agency in the United States:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

Address for persons with no legal residence, principal place of business, or principal office/agency in the United States:

Internal Revenue Service

Attn: EIN International Operation

Cincinnati, OH 45999

Fax (within the U.S.): (855) 215-1627

Fax (outside the U.S.): (304) 707-9471

Each applicant must provide the name of their LLC's principal officer (the party responsible for the business) and the officer's taxpayer identification (Individual Taxpayer Identification Number, Social Security Number, or EIN).

Limited liability companies in New Jersey must obtain an EIN after filing formation paperwork with the State Treasurer's office.

Step 6: Do LLCs Pay Taxes in New Jersey?

Yes, LLCs pay taxes in New Jersey. After establishing an LLC or obtaining authorization to transact business in New Jersey, an LLC organizer or other authorized person is expected to complete the state's Business Registration process. This action registers the company with the New Jersey Division of Revenue & Enterprise Services (DORES) for state tax purposes.

How Are LLCs Taxed in New Jersey?

Limited liability companies in New Jersey are treated as a partnership for state tax purposes (N.J.S.A. 42:2C-92). This means that the standard partnership taxation rules will apply to the entity: the LLC will not be regarded as a separate taxable entity, and the LLC's profits or losses will be passed directly to the members.

However, suppose the LLC is classified otherwise for federal tax purposes. In that case, it loses the New Jersey default tax setting (i.e., partnership), and the company will be taxed in the same manner as it is at the federal level.

Tax Benefits of an LLC in New Jersey

LLCs generally have several tax benefits afforded to them, such as:

• Tax Flexibility: LLCs can choose how they want to be taxed by the federal and state governments. Generally, LLCs in the United States can be taxed as corporations, partnerships, or disregarded entities. The IRS website has more details about these tax classifications.
• Pass-through Taxation: Limited liability companies are classified as partnerships by default in New Jersey. As a result, members can avoid paying taxes twice at the individual and corporate/business entity levels (also known as "double taxation"). Instead, members can report company profits or losses on personal tax returns, depending on how much income they receive.
• Business Expense Deductions: LLCs can deduct various business expenses on tax returns, including equipment purchases, marketing costs, health insurance, charitable donations, and office supplies.
• Tax Savings: LLCs treated as partnerships or disregarded entities can realize substantial tax savings, as they do not have to pay taxes at the business level.

Do You Have to Renew LLC Every Year in New Jersey?

No. New Jersey does not require LLCs to renew their formation or authorization papers yearly. However, it is a mandatory requirement for each New Jersey LLC to file an annual report with the state (N.J.S.A. 42:2C-26). The report is due yearly on the last day of the month the LLC completed its formation or authorization. Filing costs $75. Failure to file the annual report for an LLC can result in the revocation of the authority to conduct business affairs in the state.

How Much Does It Cost To Start an LLC in New Jersey

The cost to start an LLC in New Jersey is unique to each business entity. However, here are common costs an LLC business owner may encounter:

• Name Reservation Fee: New Jersey does not charge business owners to check a business name's availability through the Division of Revenue and Enterprise Services (DORES). However, it costs $50 to reserve an LLC name with the Division. This fee does not apply to LLC organizers filing formation paperwork immediately after they confirm a business name's availability.
• Registered Agent Fee: LLCs in New Jersey must maintain a registered agent in the state. The agent can be an individual or another business. Companies may save money by hiring an employee or family member to carry out the role. However, those opting for a professional registered agent service often pay between $99 to $300 per year.
• Business Formation Fee: It costs $125 to submit LLC formation paperwork to DORES. Note that while New Jersey requires LLCs to file a business registration application to register for taxes after formation or authorization, there is no fee to apply.
• Legal Fee: LLC owners do not need to retain an attorney to start or complete their business formation process in New Jersey. The state's filing process is simplified and can be completed by persons with non-legal backgrounds. However, for a newbie to the business filing process, seeking professional help to ensure legal compliance may be advisable. One may also require an attorney's assistance to draft an operating agreement and for other legal or tax considerations. The cost of hiring an attorney varies.

Besides these amounts, there are costs to obtain state or local licenses/permits and, of course, the business startup costs.

Can You Form an LLC In New Jersey For Free?

No, one cannot form an LLC in New Jersey for free. At the very least, a business owner seeking to form or authorize an LLC in New Jersey must pay the state's $125 filing fee. This fee is non-refundable and is not subject to any waiver agreements.

How to Start an LLC in New Jersey For Free/At Minimal Cost

It costs money to form an LLC in New Jersey. However, a business owner can take some steps to reduce the cost implications. For one, the individual can complete the initial filing process themselves, allowing them to save on fees charged by legal professionals or LLC filing service providers. There are a number of online guides, including on the State Treasurer's website, that educate new LLC business owners on the state's filing requirements and procedures.

Additionally, the business owner can designate themselves or a trusted employee to be the company's registered agent or to handle other compliance matters instead of using a paid service. This can minimize expenses for the business.

What Businesses Should Consider Forming an LLC in New Jersey?

The LLC structure can be a great fit for small to medium-sized businesses in New Jersey. Entrepreneurs who have significant personal assets and are concerned about those assets being exposed to lawsuits or claims can also benefit from organizing as a limited liability company. The same goes for persons who want their business income to be taxed at the individual level (where they can enjoy a lower tax rate) than at the corporate level.

What are the Benefits of An LLC in New Jersey

Below are some benefits of forming an LLC in New Jersey:

Asset Protection: Owners of an LLC have limited liability protection. Thus, they are not personally liable for the company's debts or obligations. Creditors cannot go after or seize the owners' assets (houses, cars, personal savings, etc.) to satisfy debts incurred by the business.

Simplicity: LLCs are easy to form and operate less rigidly than corporations. The members are not legally mandated to hold regular meetings and keep written minutes of those meetings, as seen with corporations. Further, there is minimal paperwork involved with maintaining the business structure.

Flexibility: An LLC is flexible in its management and ownership structure. The LLC's owners can choose a member-managed or manager-managed structure to run their business. Further, LLCs can choose how they are taxed (as a partnership, corporation, or disregarded entity).

Credibility: Forming an LLC adds more credibility and professionalism to a business venture than a partnership or proprietorship. This makes the business attractive to potential investors and makes it easier for the owners to raise capital.

Indefinite Existence: LLCs formed in New Jersey have perpetual duration. The business entity continues to exist even if some or all owners die or transfer their membership interests.

How Does an LLC Work in New Jersey

Limited liability companies in New Jersey can be foreign or domestic entities owned by one or more parties. Whereas an LLC owned by one person is called a "single-member" LLC, an LLC with more than one member is a "multi-member" LLC. Members can be natural persons or other business entities (for example, partnerships, corporations, trusts, or associations).

LLCs in New Jersey can also be manager- or member-managed. A member-managed LLC is one whose daily operations are overseen by one or more members. Meanwhile, a manager-managed LLC is run by at least one manager appointed by the company's members.

New Jersey LLCs maintain their active status by satisfying state requirements, including filing a yearly report with the Division of Revenue and Enterprise Services.

LLC VS S Corp in New Jersey

An LLC and an S corporation (S Corp) are legal structures business owners can establish in New Jersey. Although these business entities share some similarities, they also have significant differences.

Like an LLC, an S corporation is taxed as a "pass-through" entity. This means the shareholders (the owners) can pass their share of business profits or losses on personal tax returns. After all, an S corporation is a C corporation that has elected (with the filing of IRS Form 2553 and NJ Form CBT-2553) to not be taxed separately from the owners.

However, federal law caps the number of owners an S corporation can have to no more than 100 shareholders. Further, an S corporation must be a domestic entity, have only one class of stock, and may not be a partnership, corporation, or non-resident alien shareholder. These limitations do not apply to LLCs.

Compared to an LLCs, S corporations (all corporations generally) have more paperwork requirements. Nevertheless, LLC and S corporations in New Jersey are formed or authorized by submitting a Certification of Formation/Authorization to the Division of Revenue and Enterprise Services.

LLC vs. Sole Proprietorship in New Jersey

A sole proprietorship is the most basic business entity that can be created in New Jersey. It is wholly owned and operated by one individual. A primary advantage of a sole proprietorship is its inexpensiveness to set up and operate. Also, a sole proprietor does not have to file with the state to form their business (as it is an unincorporated business), and any profit or loss is reported on the business owner's personal tax returns.

Like a sole proprietorship, one person can own an LLC, but there is no limit to the number of members an LLC can have. The owner(s) of an LLC can also pass their share of profits and deduct losses on personal tax returns. However, unlike an LLC that grants limited personal liability to the owner(s), the owner of a sole proprietorship assumes full responsibility for the company's assets and liabilities. Legally, there is no separation between the owner of a sole proprietorship and the business itself. As such, creditors can reach for the owner's assets to satisfy business debts or claims.

Another distinction between an LLC and a sole proprietorship is that securing funding for a sole proprietorship is more difficult than for a limited liability company.

LLCs in New Jersey can exist indefinitely, but a sole proprietorship exists until the business is sold or the owner dies.

LLC vs. Corporation in New Jersey

A corporation, sometimes called a C corporation, is the most complex business entity entrepreneurs can form in New Jersey. Shareholders of a corporation enjoy certain advantages, such as limited personal liability, transferable ownership, specialized management (which often follows a hierarchical structure), and continuous existence.

Similarly, LLCs in New Jersey have continuous existence and provide members with limited liability, but owners have more flexibility in the management and ownership structure. Additionally, state law does not restrict the number of owners LLCs and C corporations can have.

However, one disadvantage of a C corporation is the issue of double taxation. Unlike an LLC that passes profits and losses through its owners, a corporation is taxed as a separate legal entity. As a result, the owners must pay taxes on their dividends, and the corporation must also pay taxes on its income.

Furthermore, while New Jersey does not mandate LLCs to create an operating agreement to define their purpose, operations, and member responsibilities, the state requires corporations to create bylaws for the same reasons.

Business License vs. LLC in New Jersey

In New Jersey, a business license permits a business to operate within a specific jurisdiction. Federal, state, and local government agencies issue these licenses.

On the other hand, an LLC (limited liability company) is a business entity formed under state laws to conduct business affairs. The LLC business structure sets forth how a business will be run and the rights/obligations of the owner(s).

Typically, a business license is needed when all or part of the firm's activities (for example, selling food or alcohol) are regulated by a government body. However, one must select a business structure (say, an LLC or sole proprietorship) to obtain a business license.

Do I Need a Business License if I Have an LLC in New Jersey?

Yes. Limited liability companies in New Jersey are more likely to require at least one business license than not. However, the applicable license varies by the company type and its region of operation.

LLC owners can search the state government's Licensing & Certification website to determine the compulsory permits, licenses, and certifications and the relevant issuing government agencies.

How to Dissolve an LLC in New Jersey

Upon agreement to dissolve an LLC in New Jersey, members must file for dissolution with the Division of Revenue and Enterprise Services. (The operating agreement, if drafted, should contain the terms for dissolution.)

The dissolution process for a New Jersey LLC can be completed online using the Division of Revenue's Business Endings and Cancellation service, accessible through the Online Annual Report and Change Services platform.

Note:

• An applicant will require their company's 10-digit entity ID, business structure type (in this case, LLC), and formation/authorization month and year.
• LLCs applying for dissolution must have a good standing status on the state's records. This means a company should not have been revoked or voided for noncompliance with annual reporting or tax requirements. The online system checks these obligations.
• A fee applies to file for LLC dissolution in New Jersey.

Additionally, an LLC must cancel its tax registration with the Division of Revenue's online Change Tax/Employer Registration Records service and file final tax returns via the Division of Taxation's website. More information about completing these procedures is available on the state's Closing Your Business webpage.

Besides the state procedures for dissolution, LLC members must also handle the distribution of pending assets and settle any other outstanding obligations of the business.