How to form an LLC in New Jersey in 6 easy steps
You have several business structures to choose from when starting your business in New Jersey. Ultimately, your decision comes down to which structure best fits the needs and requirements of your organization.
One of the most frequently established business structures is the Limited Liability Company, or LLC, which offers small business owners great flexibility in terms of legal protections and taxation options. If forming a New Jersey LLC is the best option for your small business, the following 6 steps will help guide you to a smooth, successful launch.
1) Check if your business name is available
Naming your LLC is the first step to transforming your business from an idea to reality. But before you become too attached to a particular name, it’s essential to verify your business name is not already in use by another New Jersey business.
To make sure your desired LLC name is available, you’ll need to conduct a business name search using the New Jersey Business Name Database on the New Jersey Division of Revenue website. Searching for keywords in addition to the full name you’re considering will help provide you with the landscape of any potential competitors in your industry.
With your business name vetted and available, you’ll then need to decide how you want your LLC designation to appear at the end of your business name. In New Jersey, LLCs must end with “Limited Liability Company,” “LLC,” “L.L.C.,” or the abbreviations “Ltd.,” or ''Co.” as a designation. You must also make sure that your business name does contain words such as “FBI,” “Treasury,” or “State Department,” as these could confuse your company with a government entity. If you’re choosing to add restricted words to your name—such as “University,” “Attorney,” or “Bank”—you may need to file additional paperwork.
Once you’ve finalized the layout of your business name, it might make sense to secure the same domain name so that you have the option to set up a website. At the very least, purchasing the URL for your business name during your LLC formation will prevent others from doing so down the road.
If you’re unsure if you want to move forward with your business name but know that you for sure want to continue with the formation of your LLC, you can fill out an Application for Reservation of Name (form UNRR-1) with the New Jersey Division of Revenue and Enterprise Services, which will reserve the business name you’re considering. The application must be filled out online on the New Jersey Business Charter Amendment Service website along with a filing fee of $50 and will remain valid for 120 days.
2) Claim your name
Every LLC in New Jersey is required by law to select a registered agent who accepts documents for legal and tax purposes on behalf of your company. The registered agent should handle your LLC's business formation filing process, so it’s crucial to lock in this person or company before submitting your filing documents. The registered agent can be a resident of New Jersey or a formation service that’s legally allowed to conduct business in New Jersey, such as a registered agent service. Alternatively, if you live in New Jersey and possess a New Jersey street address, you can set yourself up as your own registered agent.
Your New Jersey registered agent will then need to file a Certificate of Formation—or Public Records Filing—with the New Jersey Division of Revenue, online or in-person, along with a $125 non-refundable filing fee. The form will ask you to provide information such as the name of your LCC, its purpose, date of formation, the name of the registered agent and its New Jersey street address (no P.O. Box), and a signature of an authorized representative—presumably your LLC’s registered agent.
What if you’re planning to use a different name to conduct business other than the name you used to file your LLC? In that case, you’ll need to file a Registration of Alternative Name with the New Jersey Division of Revenue and Enterprise Services to receive a trade name—also known as a fictitious name, or “Doing Business As” (DBA). You can file the form online or by mail along with a $50 filing fee. Upon acceptance, the form lasts for 5 years.
Suppose you already operate an LLC but in a different state. If you want to operate your New Jersey LLC under the same banner, you’ll need to complete additional filing requirements. First, you’ll need to register as a foreign LLC, which can be completed online for an additional $125 filing fee. You’ll then need to secure a Certificate of Good Standing from the home state in which your original LLC was formed, confirming the original LLC is legal and operating lawfully.
3) Write your operating agreement
Even though an operating agreement is not required when forming an LLC in the state of New Jersey, it’s still recommended because of how it clarifies your company’s mission and day-to-day operations, which can help mitigate future conflict between owners.
The LLC operating agreement can also act as a comprehensive document detailing the responsibilities of its members and how you should manage the company. It can also provide proof the LLC is, in fact, a separate entity in the event of any litigation. Creating an operating agreement for your LLC can also protect your personal assets because it can act like backup business insurance for personal liability. If your LLC is clearly established as an LLC, it will be hard for any potential lawsuits to find validity coming after your personal assets.
The process for creating an operating agreement is pretty straightforward and is worth investing the time required to write one, especially with the abundance of free templates available online. The necessary information contained within an operating agreement is similar to that of the Certificate of Formation. Usually, it includes: The purpose of your LLC, the names and addresses of all LLC members, how much each LLC member has financially contributed to the LLC, what share each LLC member owns of the LLC, the profit and rights each LLC member is entitled to, the process for admitting new LLC members, the process for electing a manager, voting procedures and meeting schedule, and any system for dissolution.
Without an operating agreement in place, New Jersey state law will govern how your LLC can and should operate, which may not align with the original vision you had when you started the company.
4) File your Statement of Information
While your operating agreement is optional, filing your Statement of Information—or annual report— in New Jersey is not. All LLCs authorized to conduct business in the state of New Jersey must file the report each year, which keeps your business’s information with the state up to date. After your first year, the report should be filed online with the New Jersey Division of Revenue Annuals and Change Services website, along with a $50 filing fee, and is to be paid by the last day of the month in which you registered the LLC. For example, if you registered your LLC on July 13th, your annual report is due by July 31st each year.
5) Pay your taxes
Deciding how your LLC will be taxed is one of its most significant benefits. You have the option of operating your LLC as a sole proprietorship business entity—utilizing your Social Security Number—or as a corporation. Each avenue provides different tax benefits and a different process for filing your taxes. Operating your LLC as a sole proprietorship is akin to being an S corporation, while operating your LLC as a corporation is like a C corporation.
For LLCs that have more than one member or for single-member LLCs that elect to be taxed as a corporation, a Federal Employer Identification Number (EIN) is required to be obtained from the Internal Revenue Service. The Federal Employer Identification Number—or Federal Tax Identification Number—is used by the IRS to monitor your state and federal tax reporting and can be applied for on the IRS website for free. The Federal Tax Identification Number is also necessary for setting up a business bank account and hiring employees. For single-member LLCs that will not be hiring employees and wish to be taxed as a sole proprietorship, you are not required to file for a Federal Employer Identification Number.
Regardless of your LLC’s tax filing designation, if you plan on hiring employees, or if you plan on collecting sales tax, all New Jersey LLCs must file a Business Registration Application—form NJ-REG—with the New Jersey Division of Revenue and Enterprise Services within 60 days of formation to receive their New Jersey tax identification number, which ensures you’ll receive all the necessary tax documentation.
6) Wrap up other regulation and sales tax requirements
Just a few finishing touches, and you’ll be well on your way to forming your brand new LLC in New Jersey.
If you’re planning to hire employees, you must report their hire date to the New Jersey New Hire Reporting Center within 20 days of their hiring. You’ll also be required to withhold state and federal income taxes and payroll taxes from their wages, and once your payroll reaches $1,000, you’ll have to start paying unemployment insurance taxes.
Depending on where in New Jersey you’re establishing your LLC, you may also need to secure a business license from the city or county. The local clerk from where your LLC conducts its business will be able to help you determine your licensing needs—if any—and you can also check the New Jersey Online License & Certification website for more information.
At this point, it might be best to explore opening a business bank account and business credit card to keep all of your LLC’s transactions organized and separate from your personal accounts. Separating your business and personal accounts will give you fewer headaches when filing your tax return and is less paperwork to sort through if your LLC is ever audited. To set up a business bank account or credit card, you’ll need your Federal Employer Identification Number, driver’s license, and Certificate of Formation.
Lastly, all businesses in New Jersey that have employees are required to purchase workers’ compensation insurance. For LLCs, members do not count as employees. Since sales tax and employee taxes can become overwhelming, hiring a business accountant or business attorney is the best way to ensure your LLC complies with all state and federal laws and abides by all state tax and federal tax mandates.
Get LLC insurance in minutes by following these steps
Forming your LLC can be a complex process, but procuring LLC insurance doesn’t have to be. While there are many options to choose from, Huckleberry helps you lock in the coverage you need by eliminating any guesswork. Here’s how they can help:
- Check out Huckleberry.com and select the “Instant Estimate” option. Within minutes you’ll receive different types of insurance coverage, specifically tailored to your business needs.
- Add your industry to help Huckleberry determine which insurance options are best for your unique LLC.
- Answer a few simple questions about your LLC to help Huckleberry customize your insurance offerings.
- In less time than it takes to plan an Atlantic City weekend trip, you’ll receive quotes for various small business insurance options.
- The quick rate estimator is a great way to get a ballpark figure on your insurance costs for when you’re on the go. Whether you’re shopping for insurance options like workers’ compensation insurance or professional liability insurance, Huckleberry’s calculator tool will quickly determine your estimated costs.
There are a few reasons you chose to establish your New Jersey business as an LLC, and one of them probably had to do with the legal protections that come with an LLC designation. Part of being a forward-thinking business owner is eliminating problems before they arise, and you can give yourself a legal leg-up by purchasing small business insurance.
From workers’ compensation insurance to general liability insurance to professional service liability insurance, Huckleberry has you covered. Having small business insurance can help put your mind at ease knowing you’re legally protected, allowing you to spend more time focused on growing the future of your business.