Definition

What is an LLC?

A limited liability company (LLC) is a business entity that combines a partnership’s taxation and flexibility with a corporation’s legal advantages. This is the sole reason it has become a very popular option for small businesses not wanting the complex corporate structure but interested in benefiting from the tax savings.

The Limited liability company structure protects your personal assets as they cannot be seized to pay for debt related to business or legal rulings. Moreover, LLC owners or members are not responsible for the losses and liabilities. 

Forming an LLC in New Jersey is the best of both worlds for the owners because they enjoy limited liability and single taxation. Just like a partnership, the profit generated is only charged to the owners, not businesses, and the owners can earn more profits while not being liable for the company’s debts. 

The management structure of an LLC in NJ is very flexible. If you are planning to form an LLC in New Jersey, you may come across a limited number of owners unless it has operating agreement permits. If the company wants to admit new owners, they must obtain a universal agreement beforehand in New Jersey.

Advantages

Advantages Of an LLC In Georgia

Starting a new business in New Jersey will bring you close to the community and open numerous possibilities for you and the residents. In the long run, it can become a thriving entity that may boost the state’s overall success.

If you have an LLC in New Jersey, you will be entitled to the following benefits.

Disadvantages

Disadvantages of Starting a Georgia LLC

While there are many advantages to forming an LLC in NJ, some disadvantages also exist.

LLC Formation

How to Form an LLC in Georgia

If you are interested in forming a limited liability company in New Jersey, don’t be overwhelmed because it is easy. You just need to follow the following steps, and you will be good to go.

1. Choose a unique name for your business
2. Choose a registered agent in Georgia
3. Get the license
4. Certificate of formation
5. Receive the certificate
6. Make an operating agreement
7. Get your EIN

Choose a unique name for your business

Before registering your limited liability company in New Jersey, you must choose a specific name. Keep in mind that the name should comply with the naming requirements of New Jersey state.

Here are some of the most important requirements that you need to follow:

• The business name should include the word LLC or limited liability company.
• Your company’s name should be different from existing New Jersey companies. If you are unsure that the name is unique, you can search for it on the Secretary of State’s website.
• The name of your business should not contain any words used by the government, like treasury, FBI, or CIA.
• Adding words like Union, attorney, lawyer, or bank may require you to submit additional licenses, paperwork, and documents.

URL Availability

Even if you think that you will have no use for a web page in the future, you may change your mind and think about starting a web page for your business. So, to be safe, buy your web domain name before finalizing your company’s name.

If you are not ready to register your company yet but think that your name might get taken, you can pay a small fee and reserve it beforehand. In New Jersey, the names can be reserved with the fee for 120 days, along with submitting a form to the State authority.

Choose a registered agent in New Jersey

You must have a registered agent for your limited liability company in New Jersey. This entity or person is the one who is authorized to receive legal documents, notices, and service of process on your behalf. Even if your registered agent is a person or an entity, it must meet the below-mentioned criteria. 

• The registering agent must provide registered services and have an address in New Jersey. 
• The entity or the agent must be available on-site and should be able to receive documents during business hours.

Get the license

No matter which industry your LLC is associated with, it must have a business license in New Jersey before starting a business.

Certificate of formation

To register your limited liability company properly in New Jersey, you must prepare and file a certificate of formation with the New Jersey Treasury Department, Division of Revenue and Enterprise Services Commission. The certificate of formation is a document that establishes your limited liability company officially by telling the basic information about the company. 

The following information is required to create your certificate:

• LLC name
• Address and name of your agent
• A general statement about the reason why you need to form this LLC
• A period over which your company will exist is factual or indefinite.
• The date of dissolution of an LLC
• How will it be managed by the members or the managers?
• The person forming the company has to sign articles.

Once the articles are accepted, the LLC becomes a legal entity.

Receive the certificate

The state will issue a certificate that will confirm the existence of your limited liability company. This certificate lets the company get a business bank account, business license, and employer identification number.

Make an operating agreement

A New Jersey operating agreement is a document that tells about how your company is going to conduct business. There is no need to file this agreement in New Jersey, but you should have this in place to let all the members and employees know about the company and how it works. It should include information about the purpose of the business, the way losses and profits will be divided, and the company’s management.

Get your EIN

EIN, or employer identification number, is a 9-digit number given to your company by the Internal Revenue Service to identify the company’s taxes. This number helps manage and file taxes at the federal and state level. It also allows the company to open a business bank account and hire employees.

After that, register your LLC to get a legal foundation to start a business and keep your company compliant and active on the state’s website. This may include making tax payments, filing annual reports, and maintenance of a registered agent for your business.

If your business is registered, you can obtain licenses and permits required to operate, apply for business credit cards and purchase business insurance.

Types of LLC

Which type of LLC is ideal for me?

In New Jersey, there is only one main type of Limited Liability Company (LLC) available for business owners to form. However, an LLC in New Jersey can be further customized based on the management structure, taxation, and specific industry requirements. Some common customizations include:

1. Single-Member LLC: This type of LLC is owned and managed by a single individual, providing liability protection and simplified taxation.
2. Multi-Member LLC: In this type of LLC, there are multiple owners (called members), and the ownership can be divided into different percentages based on the agreement between the members.
3. Manager-Managed LLC: In a manager-managed LLC, the daily operations and decision-making authority are delegated to one or more appointed managers, who may or may not be members of the LLC.
4. Member-Managed LLC: In a member-managed LLC, all members actively participate in the day-to-day operations and decision-making of the business.
5. Professional LLC (PLLC): A PLLC is a type of LLC designed for licensed professionals, such as doctors, lawyers, and accountants. This structure allows these professionals to form an LLC while adhering to their industry-specific regulations.
6. Series LLC: Although not available in New Jersey, some states permit the formation of a Series LLC, which allows for the creation of separate “series” or divisions within a single LLC, each with its own assets, liabilities, and management structure.

When forming an LLC in New Jersey, you can choose the appropriate management structure and taxation options based on your business needs. It is essential to consult with a legal or tax professional to ensure your LLC is set up correctly and complies with all state and federal regulations.

LLC Taxes

Applicable LLC taxes in Georgia

Forming a limited liability company is a very lucrative option for any business. However, you will be required to pay federal and state government taxes. In New Jersey, there are different types of taxes that you need to pay, such as:

Single Member LLC

The Federal tax status for a limited liability company in New Jersey depends upon the number of owners and members it has. A single-member company is usually taxed as a sole proprietor, whereas a multiple-owner company is taxed as a partnership. In the case of proprietorship taxation, the owner is responsible for reporting and paying the taxes via the personal income tax return.

Multiple Member LLC

If the LLC has two or more members, it is the tax reporting entity. So each member will be issued a K-1 to report their profits. The K-1 is attached to the personal income tax of each owner.

Corporation LLC

Besides the taxes mentioned above, you can ask the IRS to tax your company like a corporation.

LLC/C-Corp Taxation

In the case of an LLC C-Corp, the company is treated like a C- corporation only for Federal taxes. It is not common because this company has to pay double taxation. However, if a company decides to be taxed like a C-Corp, the state honors the decision and taxes you accordingly.

LLC/S-Corp Taxation

Companies usually opt for S- Corp taxation if the purpose is to save money on self-employment Taxes. Any established company with a net income of more than $65,000 per year can benefit from this type of taxation, but it is not a good idea for beginners.

State Income tax

The New Jersey Division of Taxation collects state income taxes. The state follows a progressive income tax which means that with the increase in income, the tax rate also increases.

The New Jersey state tax for non-residents and residents lies between 1.4% to 10.7% of their earnings.

Federal Self-Employment Tax

If the LLC has two or more members, it must pay a $150 partnership fee for each member. For LLCs with members residing outside the state, payment is made on their share of income in New Jersey, which is 9%.

Local Taxes

Some counties and cities in New Jersey impose taxes such as 1% payroll taxes or 9% taxes on room rentals, entertainment, and beverages. Any LLC in its home location must pay the local taxes applicable to conduct its business.

Unemployment Insurance tax

The employers have to pay unemployment taxes between 2.8% and 0.6%.

Workers Compensation Tax

Employers must also pay worker’s compensation taxes at an average rate of 1.45 per $100 payroll.

Costs

Cost of forming an LLC in Georgia

So how much does it cost to form a limited liability company in New Jersey?

The cost of an LLC in New Jersey can vary depending on your business type. Here is the breakdown of expenses incurred:

It’s important to note that there may be additional costs and expenses involved in running an LLC, such as maintaining a separate bank account, obtaining business permits and licenses, creating a business website, and securing business insurance. The actual costs for these aspects may vary depending on individual circumstances and business requirements.

Comparisons

Is LLC The Best Entity For Me?

Maybe, LLC isn’t the right entity for you. Maybe it is a C-Corp. Only way to find out is to directly compare them all.

FAQ

Frequently Asked Questions About Starting An LLC In New Jersey

Here are the most commonly asked questions about forming an LLC business in the state of New Jersey: