How to Start a Business in New Jersey
If you’re wondering how to start a business in New Jersey, you may already know the New Jersey Economic Development Authority (NJEDA) offers a variety of financial programs designed to help small businesses. That said, you may still have some questions such as: How do I make money? What taxes do I have to pay? And, more importantly, how do I protect my assets? In this comprehensive guide, we’ll dive into everything you need to know for how to start a business in New Jersey.
Ready to Start a Business in New Jersey?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get New Jersey Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
File a New Jersey Annual Report
Apply for Trademarks
1. Pick a Business Structure
The most common type of business entity is a sole proprietorship. If you don’t register with the state and start selling handmade bath products at local craft fairs, you’ll be doing it as a sole proprietor. But, a sole proprietorship doesn’t offer any liability protection. So, if someone sues your business because some bath salts potentially caused a rash, then your personal assets will be at risk.
If you want liability protection, you’ll need to start an LLC or corporation.
New Jersey Limited Liability Company (LLC)
An LLC is a business entity that combines the characteristics of a corporation and a sole-proprietorship or partnership. LLCs are also considered a separate entity from you, the business owner, which means you won’t be held personally responsible for any company debts. Starting a New Jersey LLC requires you to submit paperwork to the New Jersey Division of Revenue and Enterprise Services (DORES).
New Jersey Corporation
A corporation is a business entity with a more organized management structure than an LLC. For example, corporations must appoint a board of directors to oversee the business. With a corporation, you can issue stock certificates, which will help attract top investors. You’ll also benefit from liability protection. To form a corporation in New Jersey, you’ll need to file paperwork with the New Jersey Division of Revenue (DORES) and pay the $125 filing fee.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about a New Jersey nonprofit?
In New Jersey, you can start what’s known as a domestic non-profit corporation if your business purpose focuses on benefiting humanity or a specific group. New Jersey nonprofit incorporation requires you to file a Certificate of Incorporation and pay $75.
Want to learn more? Check out our Nonprofit Guide.
2. Name Your Business
When naming a business in New Jersey, you can’t choose a name identical or similar to an existing New Jersey business.
When you start an LLC or corporation, your business name must also meet the following requirements:
- Include appropriate identifiers such as “LLC” for limited liability companies or “Inc.” for corporations.
- Not use words such as “police,” “department of state,” or other words used to describe government agencies.
- Not use words or abbreviations that imply a false business purpose (such as charity)—unless your business is a nonprofit.
- Can’t use a word or phrase that implies it’s being formed for any other purpose than what’s indicated in your business formation papers.
How do you find out if your business name is available? You can check by searching the New Jersey business database before you file.
Can I reserve a business name in New Jersey?
You sure can! You can do this online through the Business Charter Amendment Service. The reservation costs $50 and lasts for 120 days.
What is a DBA?
A DBA (also called an alternate name) is any name your business uses besides its legal name. The legal name of your business if the one listed on your formation documents.
To register an alternate name, you’ll need to file a Certificate of Registration of Alternate Name and pay $50.
Only business entities (such as corporations and LLCs) can use alternate names. If you’re in a sole proprietorship or partnership, the state allows you to use a trade name that’s registered in the same county as your business.
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
If you’re a sole-proprietor or part of a general partnership, you don’t need to worry about filing formation paperwork.
However, if you want to form a New Jersey LLC or corporation, you’ll need to file paperwork with the New Jersey Division of Revenue. The state highly encourages people to file online. But, you may file by paper. If you file a paper form, you’ll use the same form whether you’re forming an LLC or corporation. It’s called the Public Records Filing For New Business Entity.
Note: The information you list on your formation paperwork will become part of the public record. This means that the names and addresses you provide will be posted online for anyone to find.
What is a registered agent?
A registered agent is an individual or business entity responsible for accepting state and legal mail on behalf of your business. The state also requires your registered agent to have a physical New Jersey address, be available during regular business hours, and notify you when important documents are received. However, most business owners don’t want to be tied to their desks all day. For this reason, many companies choose to hire a registered agent to act as their business’s point of contact.
How can I keep my information off the public record?
The best way to keep your private information off the public record is to keep it off public documents altogether. To do that, you’ll need a registered agent who will list their address on this form instead of your own. (Hint: we do that!)
4. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the New Jersey Division of Revenue and Enterprise Services. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.
Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.
Here are the major internal documents you need to organize for LLCs and corporations:
New Jersey LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft an New Jersey LLC Operating Agreement template that you can use as a solid foundation.
New Jersey Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by law in New Jersey (see NJ Rev Stat § 14A:2-9 (2021).
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted a New Jersey Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about New Jersey nonprofit bylaws.
5. Get New Jersey Business Licenses
New Jersey doesn’t require all businesses to obtain a license. Whether you’ll need a business license depends in large part on what type of services your business offers. In addition, your city or county may have additional licensing requirements.
New Jersey State Business License
New Jersey only requires a handful of professions to obtain a business license. For instance, if you’re a boiler operator, you’ll need a license from the Department of Labor and Workforce Development’s Office of Boiler and Pressure Vessel Compliance.
If all this seems complex, the State of New Jersey makes it a little easier through its Licensing and Certification Guide. This lets you search for any necessary licenses, permits, and certifications that your business may need.
Professional Business Licenses
Professional services are ones that require specialized training or education to perform safely. For instance, if you want to be a veterinarian, you need to complete a veterinary program and get a specialized degree. New Jersey also requires veterinarians to get a professional business license.
To obtain a professional license in New Jersey, you must apply to the specific board that regulates your specific industry. For veterinarians, that’s the State Board of Veterinary Examinations under the Division of Consumer Affairs.
Local Business Licenses
Whether or not you need a local business license boils down to two factors: where your business is located and what kind of business you’re running. For instance, the state’s largest city, Newark, requires a local business licenses for companies such as bakeries, dance halls, and shoe shine parlors.
Learn more about How to Get a Business License.
How do I get a New Jersey business license?
You’ll fill out an application that requests basic information about your business, like its name, entity type, and address. You can submit the New Jersey business license application online, by mail, or in-person.
How much does it cost to get a New Jersey state business license?
That varies depending on the type of business license. An architect applying for a license would pay $75, for example, while a cosmetologist would pay a $50 application fee for an examination and another $100 fee for an endorsement, as well as licensing fees of either $90 or $45, depending on where they are in the state’s two-year licensing cycle.
How do I get a professional license in New Jersey?
You’ll need to submit an application to the board or division that regulates your profession. For architects, that’s the New Jersey State Board of Architects. The application will also likely require information on any training or education you’ve gone through that makes you qualified for your chosen profession. You may also need the names of references who can vouch for your work.
How do I get a local business license?
The process for obtaining a local business license will vary between cities and counties. For example, in Newark, you can apply via the city’s Online Business Portal.
6. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
LLCs and corporations will need to provide the bank with their formation documents, operating agreement or corporate bylaws, EIN, and in some cases, a Corporate Resolution to Open a Bank Account or LLC Resolution to Open a Bank Account.
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
If you’re planning to hire employees or independent contractors, you need to set up payroll. To do so, you’ll need to:
- get an EIN
- register as an employer with New Jersey’s Division of Revenue and Enterprise Services and find out what state payroll taxes you must pay
- determine whether you’re hiring employees or independent contractors
- prepare the forms your employees will fill out
- choose a payroll service or software
- decide on a payroll schedule
Setting up payroll can feel overwhelming, which is why a good payroll service (or software) can be really helpful when you reach this step. In fact, many payroll services will automatically withhold payroll taxes, file state and federal returns on your behalf, and pay your employees either by check or direct deposit.
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What's the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn everything you need to know about hiring independent contractors.
How do I get a New Jersey Taxpayer Identification Number?
You’ll get this after you file the initial paperwork to form your business. New Jersey requires you to first have a federal EIN and list it on your initial paperwork. Once you do, you’ll be assigned a 12-digit New Jersey Taxpayer ID Number.
7. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.
But do you really need business insurance? That depends on a variety of factors. But New Jersey only requires workers’ compensation insurance. Here’s what you should know about that type, as well as some other types of business insurance that are optional in New Jersey.
Workers’ Compensation Insurance
If you’ve got employees, you’re pretty much always going to either need to buy workers’ compensation insurance or be approved by the state for self-insurance. The only exceptions are if your business is covered under federal laws rather than state ones, or if you’re participating in casual employment. You can get insurance from any private company authorized to write such policies in the state, so just shop around and pick a company that makes sense for you.
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers' compensation insurance in New Jersey?
The insurance requirement excludes members or partners of an LLC. However, it doesn’t exclude corporate officers in corporations who perform services for the company in exchange for financial consideration.
This doesn’t mean owners can’t be included on an insurance policy. In fact, it’s a good idea to include owners in case they’re injured on the job. If an owner is part of the insurance policy, that means they won’t have to pay for bills out of pocket.
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
In New Jersey, you need to pay both local and state taxes, as well as a corporate income tax.
Corporate taxes in New Jersey have three tiers. The tax rate starts at 6.5% for businesses with a net income of less than $50,000 a a year and maxes out at 9% for businesses with a net income of over $100,000. However, your tax burden isn’t solely determined by the state. You’ll also have federal and local taxes.
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. You’ll have to pay the 15.3% federal self-employment tax rate. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-corp instead.
- Corporations. Corporations are taxed as C-corps by default. This means that corporations pay the 21% federal corporate tax rate and the applicable New Jersey corporate tax rate.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I'm self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-corps, but LLCs can also apply for C-corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in New Jersey, the corporate tax rate ranges from 6.5% to 9%.). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-corp tax election.
Local New Jersey Business Taxes
In some New Jersey cities, you’ll also need to pay local taxes. Jersey City is a good example of this, as it charges a payroll tax. Employers must pay 1% of their gross payroll amount to the city, with the money going toward local schools. Not every city has such a tax, but you’ll want to check with government officials in your municipality to ask about any local tax obligations.
9. Build Your Business Website
If you want the good people of New Jersey to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“email@example.com”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
10. File a New Jersey Annual Report
New Jersey requires LLCs and corporations to file an annual report confirming that both your address and registered agent information are up to date. The report must be filed at the end of your anniversary month. So if you officially formed your business on June 20, 2022, your annual report would be due no later than June 30, 2023. There’s a filing fee of $75. If you pay with a credit card, there’s an additional $3 credit card fee. If you pay with an electronic check, there’s an additional fee of $.50 cents.
Read more about How to File a New Jersey Annual Report.
What if I don't file an annual report in New Jersey?
If you fail to file your annual report for two years in a row, the state will move to administratively dissolve or revoke your business. And if that happens, you’ll have to apply for reinstatement with the state, which is not an easy process. It also means you’ll have to pay reinstatement fees. All in all, it’s much easier to just file your annual report when it’s due.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the State of New Jersey or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in New Jersey is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in New Jersey.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register for a trademark in New Jersey?
You’ll need to submit an application to register your trademark and pay a $50 filing fee. The application should include a drawing of the trade or service mark, plus three examples of how your business is already using the trademark. New Jersey also wants to know the first date you used that trade or service mark in the state, as well as if you’ve used it elsewhere.
What if you’re in a hurry to register your trademark before someone else? You’ve got a couple of options to expedite your service. Paying $15 extra will guarantee a processing time of 8.5 business hours from the date of receipt. Or you can pay $100 extra for same-day service, although this option is only available if you make the filing in person.
You can also search the New Jersey Trade/Service Mark Database to find out what marks have already been claimed in the state. Also keep in mind that registering your trademark in the State of New Jersey only protects it within the state’s borders. It does nothing to protect your trademark on a national level.
Can I register for a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.