As the home to numerous Fortune 500 companies and a melting pot of diverse communities and industries, New Jersey has become a sought-after location for aspiring entrepreneurs and small business owners.
Before diving into the entrepreneurial waters of New Jersey, however, it's crucial to have a well-thought-out business plan and an understanding of your target market. But, a dream and a plan are just the beginning.
In New Jersey, as with any state, you have to navigate many regulatory requirements. From choosing and registering your business name to understanding New Jersey-specific business rules and taxes, there’s a lot to account for. In this article, we'll guide you through the foundational aspects of compliantly starting a business in the Garden State.
1. Name your business
Selecting the perfect business name is a pivotal step for entrepreneurs in any state. But, you need to make sure your chosen name complies with New Jersey regulations. Consider doing the following:
- Check name availability: Before settling on a name, conduct a name search with the New Jersey Division of Revenue and Enterprise Services to ensure it's available. To lock in your business name officially, you'll typically need to file a certificate of formation for New Jersey LLCs or New Jersey corporations. It's also wise to run a search on the US Patent Trademark Office website to avoid potential trademark issues.
- Reserve the name: If your chosen name is available, consider reserving it with the State of New Jersey. While this step isn't mandatory, it can provide peace of mind as you prepare other aspects of your business. There's a nominal fee associated with this reservation, typically lasting for a set period.
- Register a domain name: These days, having an online presence is non-negotiable. Once you've locked in your business name, it's a smart move to secure a matching domain name. Numerous platforms, like GoDaddy or Namecheap, allow you to check domain availability and register online. If you’re planning on using social media, be sure to secure matching social accounts as well.
- File a Fictitious Business Name or “DBA,” if needed: In New Jersey, if you plan to operate under a name different from your official registered business name, you'll need to file a DBA or "Doing Business As" name. This step ensures that the public can identify the real owner behind a business name. The process involves submitting a registration form to the New Jersey Division of Revenue and Enterprise Services and paying the associated filing fee ($50 for online filings and $58 for in-person filings).
2. Explore your funding options
Securing the right funding is crucial when you start a business. The good news is that the Garden State provides several avenues for entrepreneurs to get the necessary capital. Here’s an overview of some of the available resources:
- New Jersey Business Action Center (NJBAC): This state-run agency offers financial incentives and programs to help startups and small businesses thrive. Their initiatives cater to a wide range of sectors, from technology to manufacturing.
- New Jersey Economic Development Authority (NJEDA): The NJEDA provides various loan programs for small businesses and startups, including microloans for those who might not qualify for traditional bank loans. They also offer a Small Business Fund for businesses that have struggled to secure funding elsewhere.
- Federal loan programs: The Small Business Administration (SBA) provides loan programs for businesses at various stages. For instance, the 7(a) loan program can be used for a myriad of purposes, from working capital to equipment purchases. New Jersey entrepreneurs can consult with the local SBA district office for guidance and resources.
- Local grants and loans: Many counties and municipalities in New Jersey offer local grants and loan programs to stimulate economic growth in the area. It's worth checking with your local chamber of commerce or economic development agency to see what opportunities are available in your area.
- Crowdfunding and angel investors: Platforms like Kickstarter and Indiegogo can be invaluable for businesses looking to test their business idea or product in the market. Furthermore, New Jersey boasts a vibrant community of angel investors and venture capitalists who are constantly on the lookout for promising startups.
- Bank loans and credit cards: Traditional bank loans are a common choice for many business owners. For short-term needs or to build credit, consider a business credit card.
3. Decide on your business structure
Choosing the right business structure is a pivotal moment in the beginning stages of your business. In New Jersey, the business structure you opt for determines many things, from tax purposes to how much personal liability you bear. Here’s a rundown on some common business types:
What is it?
A business owned and operated by one individual
✔ Simple setup
✔ Full control over the business
✔ Direct tax benefits
✘ Unlimited personal liability
✘ Difficult to raise capital
New Jersey LLC (Limited Liability Company)
Combines characteristics of a corporation with a partnership or sole proprietorship
✔ Limited liability protection
✔ Flexibility in management
✘ More complex
✘ Subject to state fees and public record regulations
An agreement where two or more individuals manage and operate a business
✔ Easy formation
✔ Shared responsibility
✘ Joint and individual liability for business debts
Corporation (C-Corp, S-Corp, New Jersey Corporation)
Legal entities separate from their owners
✔ Limited liability
✔ Easier to raise capital
✘ Complex setup
✘ Potential double taxation for C-Corps
Limited Partnership (LP)
Partnership with both general and limited partners
✔ Limited liability for limited partners
✔ Ability to raise capital
✘ General partners have unlimited liability
4. Register your business in New Jersey
Starting a business in New Jersey is an exciting venture, but before you can legally operate, you'll need to register your business with the New Jersey Division of Revenue and Enterprise Services. Registration provides legitimacy to your business, ensures you pay the correct state taxes, and protects your brand and name within the state.
Here's a simple breakdown of how to register various types of businesses in New Jersey and their associated costs:
How to register
File a trade name with the county in which you will operate. This route requires minimal registration, primarily if you’re using a trade name.
Typically around $50
New Jersey LLC
File a Public Records Filing for a New Business Entity with the Division of Revenue and Enterprise Services and a Certificate of Formation. You might also need to complete Form NJ-REG to be tax compliant.
New Jersey Corporation (C-Corp, S-Corp)
General Partnership (GP)
File a Partnership trade name with the Division of Revenue and Enterprise Services.
Limited Partnership (LP)
File a Certificate of Limited Partnership with the Division of Revenue and Enterprise Services.
5. Decide on a registered agent
In New Jersey, as in all states, every business entity is required to designate a registered agent. A registered agent acts as the state's main point of contact for your business, receiving legal papers, state documents, tax notices, and any other official communications on behalf of your business. If you reside in the state of New Jersey, you can be your own registered agent—but that comes with the hassle of handling the paperwork listed above.
An alternative is to hire a registered agent service. In New Jersey, this usually costs anywhere from $50 to $150 a year. The pricing depends on the scope of the service and length of engagement.
6. Apply for an Employer Identification Number
An Employer Identification Number (EIN), also referred to as a Federal Employer Identification Number (FEIN), is akin to a Social Security Number for your business. It's essential for various business activities, such as filing your taxes, opening a bank account for your business, and hiring employees.
You’ll need an EIN before you can hire your first New Jersey employee. The quickest way to get one is by filling out Form SS-4 on the IRS website.
7. Get up to speed with Business Tax Credits
New Jersey offers a variety of business tax credits to reduce the overall tax liability of businesses operating within the state. These tax credits are intended to incentivize business growth, job creation, and economic development. Some of the popular credits include:
- Grow New Jersey Assistance Program: Aimed at encouraging economic development and job creation.
- Research & Development Tax Credits: Offered to businesses that invest in R&D activities within the state.
- Film and Digital Media Tax Credit: For production companies that shoot in New Jersey.
- Urban Enterprise Zone Tax Credits: Aimed at stimulating economic activity and job creation in urban centers.
Always check with the New Jersey Division of Taxation for the most current information on business tax credits.
8. Stay on top of filing requirements and taxes
New Jersey businesses must regularly file documents with the state in order to maintain good standing. You can check the New Jersey Business Action Center to keep track of deadlines for business-related filings.
Typically, businesses are required to file an annual report. The annual report filing fee is $75, and it’s due each year on the final day of the month in which you finished your business formation.
Don’t forget: Businesses must file their taxes, too! There are three primary types of taxes that need to be filed (depending on your business structure). These include income tax, sales and use tax, payroll and wage withholding, and specialty tax (if applicable).
Here’s some more detail on tax filings for specific business types:
- Sole proprietorships: Income and losses are reported on the owner's personal tax returns. File form NJ-1040 (Individual Income Tax Return) on or before April 15 of every year.
- LLCs and partnerships: These are considered "pass-through" entities. While they might file an informational return with the state, the actual income tax is reported on the owner’s personal tax returns. File form NJ-1065 (Partnership Return) on or before April 15 of every year.
- Corporations: These entities are subject to a 9% corporate tax rate on net income in New Jersey. File form CBT-100 (Corporation Business Tax Return) on or before April 15 of every year.
9. Find a payroll solution
When hiring employees or contractors in the Garden State, there are numerous regulations and intricacies to consider.
Firstly, it's pivotal to correctly classify your employees and contractors. This distinction is crucial for appropriate compensation, and to avoid potential penalties or fines. Keeping tabs on New Jersey's labor laws is essential too—for instance, understanding any state-specific overtime rules and recognizing the current minimum wage, which can fluctuate. To simplify the process of paying employees, consider adopting modern payroll software. A platform like Rippling removes the manual work of running payroll. With functionalities like Rippling Time & Attendance, employees’ hours get tracked automatically. Hours that get approved sync seamlessly to payroll, and Rippling calculates net pay and taxes in seconds.
For businesses with a broader horizon, Rippling also makes global operations smoother:
- Seamlessly manage payments across varying tax jurisdictions and even currencies—in a single pay run.
- Efficiently pay both hourly and salaried employees, as well as contractors.
- Manage your global team, systems, and data all in one place.
10. Support and scale your growing business with Rippling
As your business evolves, so will your HR demands. During these times, integrating an HRIS (Human Resource Information System) can be a game-changer. This software seamlessly manages and optimizes tasks like recruiting, employee onboarding, payroll operations, benefits administration, and more.
Embracing an HRIS early on paves the way for scalable growth, especially for those with global aspirations. And Rippling has everything you need to oversee your global workforce.
- Manage and compensate your employees, regardless of whether they're in Newark or across the globe.
- Navigate local, state, and federal compliance regulations confidently, with plans of action for potential pitfalls.
- Consolidate various benefits—be it health coverage, 401(k), or commuter benefits—under one umbrella. Plus, automate routine tasks like enrolling new employees, updating deductions, and managing COBRA.
- Maintain updated recruiting data at your fingertips, from vacant positions to recent hires. Plus, automate every phase of the hiring process.
- Rely on a centralized platform for HR metrics, policies, and more.
FAQs about setting up a business in New Jersey
Do I need a business license in New Jersey?
In New Jersey, depending on the nature and location of your enterprise services, you might need a business license or permit. It's essential to verify this with the New Jersey Division of Revenue and Enterprise Services and the municipality where your business is set up.
Do I need a business bank account when launching a business in New Jersey?
While not legally required, keeping personal and business finances separate is a hallmark of a well-structured business entity. A business bank account aids small business owners in tracking expenses, managing finances, and addressing tax obligations efficiently—while protecting their personal assets.
Do I need to get business insurance?
Depending on the nature of your business, several types of insurance might be either mandatory or strongly recommended:
- General Liability Insurance: Covers legal hassles due to accidents, injuries, and claims of negligence.
- Property Insurance: Protects your property from damage due to fire, vandalism, theft, etc.
- Professional Liability Insurance: Protects businesses against malpractice, errors, and negligence in services provided to customers.
- Workers' Compensation: Covers medical treatment, disability, and death benefits if an employee incurs an injury or dies as a result of their job.
While these are the most common types, depending on your business model and industry, other specialized insurances might be needed.
What are New Jersey’s state payroll taxes?
There are several state payroll taxes in New Jersey:
- Unemployment Insurance (UI): employer and employee contributions
- Temporary Disability Insurance (TDI): withheld from employee wages
- Family Leave Insurance (FLI): withheld from employee wages
- Workforce Development/Supplemental Workforce Funds: paid by the employer
For detailed information and rates, consult the New Jersey Department of Labor's tax guide.
How often do I need to renew my business registration in New Jersey?
In New Jersey, all businesses—whether it's a corporation or sole proprietorship—are typically required to file an annual report each year on the final day of the month in which you finished your business formation.
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.