Whether you’re a Jersey local or not, starting a limited liability company (LLC) in New Jersey is a great idea.
New Jersey’s proximity to New York offers big-city access without the exorbitantly high cost of living. And the local talent pool and customer base are growing as people relocate across the border.
Starting an LLC in New Jersey can help you cater to the booming local crowd. It also helps reduce your risk with personal liability protection. And it keeps your taxes simple.
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Table of Contents
- Step 1: Name your LLC
- Step 2: Select a registered agent
- Step 3: Draft and submit the Certificate of Formation
- Step 4: Get a certificate of LLC registration from the state
- Step 5: Create an Operating Agreement
- Step 6: Get an Employer Identification Number (EIN)
- Costs to set up an LLC in New Jersey
- Last steps
Step 1: Name your LLC
LLC formation in NJ begins with name selection.
Business naming is full of creative thoughts and marketing concerns. But you must also mind the legal requirements. Generally, the name of your New Jersey LLC must be different from other businesses. You want to avoid anything too similar to existing companies.
Your LLC name must also include Limited Liability Company or a similar abbreviation. People need to know they are doing business with an LLC.
All New Jersey LLC names must avoid:
- Terms related to government agencies, like the FBI, IRS, or Treasury
- Restricted words such as bank, trust, or insurance, unless you have the permission
- Other prohibited names with obscenities or criminal activities
New Jersey has two tools to help you pick a name. The Business Name Search on the NJ Secretary of State's website that lists existing business names. The Business Name Availability helps determine if a specific name is available for your use.
Use both to make sure your name doesn’t infringe on an existing business.
You can choose to reserve your LLC name for up to 120 days. This can give you time to tackle other New Jersey LLC formation needs without worrying about someone taking your desired name.
To do so, file an Application For Reservation of Name. The state fee is $50.
It’s possible to do business using a different name than the LLC’s legal name.
Some business owners like to use this tool to use a name that’s more closely related to the product or service. You may need to use one if you bring an LLC from another state into New Jersey, but the name is already in use here.
New Jersey calls this a doing-business-as (DBA) name. Other states call it a trade name or fictitious name.
You can register a DBA in New Jersey by filing a Registration of Alternate Name. The fee is $50. You can file the form online, by mail, or in person.
Step 2: Select a registered agent
Part of forming your New Jersey LLC is selecting a registered agent.
A registered agent receives important documents for the LLC. This might include lawsuit documents, service of process, or tax notices. Any official correspondence from meaningful persons or organizations, including the New Jersey Secretary of State.
The registered agent must have a physical address in New Jersey, not a P.O. Box.
You may serve as your own registered agent for free. However, most businesses use a third party as the designated agent. It provides more privacy and offers a lot of convenience. Companies don’t want a process server showing up at their offices. Finding out about a lawsuit in front of an important client could be devastating.
Also, your agent must be available during normal business hours to receive mail and papers. That can make it hard for small businesses to travel or take time off.
Registered agent services providers in New Jersey charge about $50-$300 per year.
Step 3: Draft and submit the Certificate of Formation
When you’re ready to get down to business, it’s time to file your Certificate of Formation. This exciting step is what legally forms your LLC. Other states call it the articles of organization.
To tackle this monumental task, submit a Public Records Filing for New Business Entity to the New Jersey Division of Revenue. Corporations and limited partnerships use this form too. So to form an LLC, you will skip over some fields.
You can complete and submit this form online, by mail, or by fax. Online filing is done through New Jersey’s Online Business Formation portal.
You will need to provide the following information:
- LLC’s name
- Name and address of each LLC organizer
- Street address of the New Jersey registered office
- Street address of the principal place of business
- Name and address of the registered agent
- LLC duration (perpetual unless you provide a different period)
The filing fee is $125. The processing time if you file online is 1-2 days. If you file by mail or fax, the processing time can be 2-3 weeks.
If you file by fax or in person, the processing time can be expedited by paying additional fees. For same-day processing, the cost is $100.
Step 4: Get a certificate of LLC registration from the state
After New Jersey approves your LLC formation, you’ll get a Certificate of Formation. This is also called a Certificate of Authority. This is an important document that you want to keep with your business records.
It also provides your Entity ID, a 10-digit number used in New Jersey to identify your business records.
These New Jersey LLC records are public information. They are separate from your confidential tax records.
Step 5: Create an Operating Agreement
An operating agreement governs the LLC. It’s an internal contract between members that lays out a lot of details about how the LLC functions and handles situations. It should be signed and dated upon forming the LLC.
An operating agreement also establishes:
- The rights and duties of members and managers
- Ownership percentages and contributions
- Activities of the LLC, including distribution of profits or losses
- Ways to add or remove members
- Method for dissolving the LLC
- Procedure for handling various disputes
Your LLC will use New Jersey law when the operating agreement doesn’t address an issue. It’s also possible New Jersey law will override the operating agreement in certain circumstances. But a well-drafted agreement serves as the primary set of rules for your LLC.
You are not required to file it with New Jersey authorities. Give a copy of the operating agreement to all members and keep at least one with the LLC records.
Multi-member LLCs should strongly consider making one. A written operating agreement can provide greater liability protection for the LLC and its members than New Jersey law.
It also helps investors understand the business and prevents internal conflict.
Step 6: Get an Employer Identification Number (EIN)
You need to get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). New Jersey requires you to provide this detail when forming your LLC.
An EIN is the business equivalent of a Social Security number. It is necessary to hire employees and handle certain taxes.
The application process is free and straightforward. You can get an EIN online in minutes.
Costs to set up an LLC in New Jersey
Business owners can plan on spending $125 to start an LLC in New Jersey. This is the cost of filing the Certificate of Formation, a mandatory step.
The costs of forming an LLC in New Jersey could also include reserving a name ($50), registering a DBA name ($50), or using expedited services (cost varies).
If you hire a registered agent, that could add a few hundred dollars to your LLC formation expenses. You may have costs associated with consulting an attorney or CPA, especially for an operating agreement.
Give yourself a round of applause for forming a New Jersey LLC. But then put those hands back to work to knock out these final details.
Open a bank account
To operate your new business successfully, you need a business bank account.
It not only helps with record-keeping, but it’s also crucial to your LLC’s legal benefits. If you mix your personal finances and your LLC gets sued, courts could determine the LLC isn’t a separate entity. You could be personally on the hook.
Business bank account fees vary depending on the amount of activity in your account and the deposit cash. Plan to pay $0 to $35 monthly.
Permits and licenses
Some businesses will need additional permits or licenses. The specific permits required vary based on factors such as the industry and location of your business.
To determine the permits and licenses relevant to your LLC, you can use the New Jersey Business Action Center's Permitting Wizard tool.
You’ll also want to review the city and county needs. For example, you can find a long list of business licenses and permits from the City of Newark.
Annual report/tax filing
All LLCs in New Jersey must file an annual report with the New Jersey Division of Revenue and Enterprise Services. This report confirms or updates the company's business information on record with the state and costs $75.
Annual reports can be filed online through the New Jersey Division of Revenue and Enterprise Services website.
Push forward by heading right over to the New Jersey Business Search tool to see if your LLC is available. By wrapping up the items on this list, you will set yourself up for success. Forming a New Jersey LLC provides the foundation needed to thrive.
This material is provided for informational purposes only. The provision of this material does not create an attorney-client relationship between Paul Donovan and/or Donovan Legal PLLC and the reader, and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel. Do not take action in reliance on the contents of this material without seeking the advice of counsel.
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