How to Start a Business in New Jersey

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.

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.

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.

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.

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.

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.

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.

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.

Liability Insurance

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.

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.

Federal 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.

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.

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 protected]”).
• 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.

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.

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.