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New Jersey is the home state of music icon Bruce Springsteen and it has pristine beaches and old-timey boardwalks along the Jersey Shore, but it’s also a great place tostart a business.
被称为“花园州,新Jersey’s landscape includes bucolic farmland and a beautiful coastline; it has bustling cities and sprawling suburbs. The population that lives there is host to a sizable immigrant community (23% in New Jersey versus the national average of13.7%), and the state has a wide cross section of economic levels. The business landscape is dotted with small, independently owned businesses and chain stores, and a multitude of industries, from clean energy to manufacturing. Its geography and population has attracted large multinational pharmaceutical companies like Merck and Johnson & Johnson—both headquartered in New Jersey. Renowned universities like Princeton and Rutgers also call it home.
For these reasons, starting a business in New Jersey, whether you’re selling services or a product through a physical shop or website, is a good choice. Parts of New Jersey are near New York City, but the cost of New Jersey commercial real estate is much cheaper. If you’re starting a business in New Jersey, here’s how to navigate the ins and outs.
Start a business in New Jersey
1. Choose a business idea
If you’re already researching starting a business in New Jersey, your business ideas have probably taken shape. However, it’s important to distinguish between passion and talent—making artisanal ice cream, or helping friends with their IT problems—and the pragmatism needed for a profitable business.Developing a businessis challenging. To clarify your business idea, pick a suitable name and write abusiness planto work through your business idea’s hurdles. Ask yourself:
- Is the product or service in demand?
- Is it filling a hole in the market? Or solving a problem?
- Is there a broad customer base?
2. Name your business
There are creative and legal aspects to take into consideration whennaming a business. On the creative side, choosing a business name is often a puzzle to solve:
- Does the name explain the business?
- Does it need to?
- Will potential customers find your business through the name?
- Is it too clever, boring, obscure, or cute?
On the legal side, check to see if a business with the same or similar name doesn’t already exist in New Jersey, through the state’sbusiness name search portal. It’ll save you from confusing customers—or worse yet, receiving acease and desist letter.
一些创意and legal considerations to keep in mind when naming your business:
- Does the name include the correct abbreviation or structure designation?If you form a limited liability company, or LLC, in New Jersey, the name must include “LLC” or “Limited Liability Company” when registering, say, “Periwinkle Paws LLC.”
- Is the domain name available?Make sure your chosen domain name is available. Even if you are not going to launch immediately, it’s good to own the domain name. Domain registration fees vary depending on a variety of factors, like the domain itself and the URL extension, but typically cost around $20 to $40 per year. You can search for andregister your domain on Shopifyor through other domain registration services likeGoogle DomainsorGoDaddy.
- Can the business name be trademarked?Business owners can apply to theNew Jersey Department of the Treasury, Division of Revenue and Enterprise Servicesfor state trademark protection for $50, or theUS Patent and Trademark Commisionfor federal protection. Costs vary depending on factors, but start at $250 to $350.
Using a DBA in New Jersey
In New Jersey, if a business owner wants the public-facing name of their business to be different from its registered business name, it must also register adoing business as(DBA)。例如,假设你想要开放的多combination gym/tanning salon/laundromats up and down the Jersey Shore and register your business as “GTL Living and Services, LLC,” but decide to name your first location Seaside Heights GTL—you are going to have to file a DBA. The DBAForm C-150Gcan be filed with theNew Jersey Division of Revenue and Enterprise Servicesand costs $50. Theapplicationincludes details like the date and state of incorporation, the type of business, and the date and state of incorporation.
3. Create a business plan
Abusiness planis a document that helps you outline and forecast the basics of your business, like financing and a desired customer base. While writing your business plan, you might see your business ideas validated or realize there are gaping holes—and there may be far less anxiety if those issues are addressed before launch.
Although a business plan doesn’t have to be a tome, it should be easy for potential investors or bank loan officers to read. There aretemplatesavailable for your first drafts, and reviewingexamplescan help clarify its essential elements.
Basic elements include:
- Summary of business.Brief statement describing the business.
- Business structure.Identify whether the business will be a sole proprietorship, LLC, or corporation.
- Company description.Provide more details about the business, like will it be a physical or virtual shop? Will the business offer products, services, or both?
- Market analysis.Explain why the products or services are needed, and why customers will purchase from your business.
- Sales strategy.Describe how the business plans to sell its goods or services, and the marketing strategy.
- Operations plan.Outline the operational aspects of the business, like staffing or order fulfillment.
- Financial plan.Outline the funding plan and financial projections for the business. Some business owners include a recent financial history; others only focus on future financing.
4. Choose a business structure
There are four main types of business structures: sole proprietorships, partnerships, LLCs, and corporations. The type of businessstructureimpacts an entity’s taxes and the owner’s exposure to liability in different ways.
Sole proprietorship
One person owns a business in asole proprietorship. The sole proprietor is personally responsible for any of the business’s debts, liabilities, and paying taxes. A sole proprietorship is unincorporated.
- Liability.The owner of a sole proprietor business is legally responsible for its debt and liability, including those caused by the actions of an employee.
- Tax.Sole proprietors pay taxes for their business’s profits through their personal tax returns. They file a1040 Schedule Cfor business income and expenses/profits or losses. These are typically filed as estimated quarterly taxes. Sole proprietors pay a self-employment tax of approximately 15.3%, which includes Social Security and Medicare taxes.
General partnerships
Ageneral partnership, as the name implies, is a business partnership between two or more people. New Jersey does not require a formalized agreement for the formation of a partnership.
- Liability.In a general partnership, all partners are liable for any debts or liabilities of the business, including if just one partner is sued.
- Tax.通过伙伴关系是通过通过收入ugh the business (considered a “pass-through entity”) and taxed as personal income for each partner. For state taxes, partners need to file aNJ-1065 formwith the New Jersey Treasury, Division of Taxation.
Limited liability company (LLC)
AnLLCis a type of business where the business entity itself is separate from the owner, or owners (sometimes called members). If an LLC is owned by two or more people, they can create an operating agreement, which is a legal document that outlines how the business will operate. It’s especially useful if there are disagreements among owners or if calamity strikes, such as a member’s untimely death or prolonged illness, and the business decides to close.
- Liability.An LLC business owner is not personally responsible for a company’s debts or liabilities if the business is sued. Additionally, an LLC’s business finances are unattached to the owner’s personal banking, so assets like homes can’t be touched.
- Tax.An LLC can be taxed as a sole proprietorship or corporation. An LLC is considered a pass-through entity, so taxes are passed through the LLC and paid through an owner’s personal taxes.
C Corporation
Corporations, taxed by the IRS underC corporationrules offer the same degree of personal asset protection as LLCs but are generally more work to incorporate and maintain. C corporations raise funds by selling stocks, which makes the management responsible to shareholders and responsible for keeping them abreast of business updates. C corporations are not pass-through entities, meaning the corporation is taxed separately from its owners and that it is subject to state and federal corporate tax.As of 2022, the corporatetax rate in New Jersey is variable: 9% for corporations with net income over $100,000; 7.5% for corporations with a net income between $50,000 and $100,000; and 6.5% for corporations with net income less than $50,000.
Getting an federal employer identification number (EIN)
Some business structures incorporated in New Jersey need to register with the New Jersey Department of the Treasury. But before they do, they might need to obtain a federal employer identification number (EIN). It is free and can be acquired through theIRS online. Sole proprietors can use their Social Security numbers (SSNs) instead of an EIN if not hiring employees.
Incorporating in New Jersey
After obtaining an EIN, businesses can register online at theNew Jersey Department of the Treasury. (Sole proprietors can use an EIN or SSN to register.) A business entity’s public record filing can be conducted by a business owner with a New Jersey address or a registered agent, which can be a New Jersey resident or service appointed by the business owner.
There are a few differences in the process for registering a business in New Jersey, depending on the type of business structure chosen.
- Sole proprietorships. File the tax/employer registration Form NJ-REG online at theNew Jersey Department of the Treasury.
- LLCs.File a Certificate of Formation, also called Certificate of Authorization, online to get an Entity ID with the state atNew Jersey Department of the Treasury, which costs $125. File the tax/employer registration form NJ-REG online at theNew Jersey Department of the Treasury.
- General Partnerships.File the tax/employer registration Form NJ-REG online at theNew Jersey Department of the Treasury.
- Corporations. File a Certificate of Formation, also called a Certificate of Authorization online to get an Entity ID with the state at theNew Jersey Department of the Treasurywhich costs $125. File the tax/employer registration form NJ-REG atNew Jersey Department of the Treasury.
After registration, business owners will receive a New Jersey state tax ID number and, if applicable, a Certificate of Authorization to Collect Sales Tax.
5. Obtain a business license and permits
If your New Jersey business is regulated by the state in some way, you may need some type of license, permit, or certificate to operate. This can include any business from restaurants and ecommerce businesses to consultants and onsite inspectors. The New Jersey Business Action Center provides anonline guidewith a comprehensive list of licenses and permits, searchable by profession.
Nearly all food-related businesses need to contact their localNew Jersey Department of Healthoffice for licensing and inspections, while those embarking on a locksmith career need a license from theBoard of Examiners of Electrical Contractors.
Businesses that want to contract with New Jersey public entities, from local governments to public schools and universities, or want to apply for state grants or tax credits will need a business registration certificate (BRC). Applications are found online at theNew Jersey Division of Revenue.
6. Examine insurance options in New Jersey
Business owners in New Jersey will find their insurance policy needs vary depending on their businesses. For example, an LLC operating in a physical space might need fire insurance, and other businesses using cars need several types of auto insurance. Some other types of insurance coverage for LLCs in New Jersey are:
- Liability insurance.All businesses should have liability insurance. This coverage helps protect a business against lawsuits. Generally, a small business might pay $300 to $5,000 a year for liability insurance. Policies can be purchased through private insurance brokers or agencies like Progressive or Allstate.
- Workers’ compensation insurance.All New Jersey businesses with employees–except for those covered by federal programs–are required to carry workers' compensation insurance
- Employer liability.If an employee sues their employer for a work-related injury or illness. Also required if a business has employees.
- Health insurance.This is optional insurance coverage for businesses in the state.
- Auto insurance.If the business requires driving.
7. Understand financial considerations
In an ideal world, all business owners have enormous savings to use when they start a business that turns a profit from the start. But that is a rare occurrence, most business owners need capital in the early stages of the business and before launch.
There are multiple ways to get this needed capital, including:
- Applying for a loan through a bank or CDFI (community development financial institution)
- Through available New Jersey grants, crowdfunding, and money raised through friends and family
- Other funding resources that offer quick access to capital
Launching a business can be a stressful time. To help prepare, LLC owners can calculate the dollar amount needed to stay afloat—taking rent, insurance payments, utilities, and possibly wages—into consideration. Then, budget accordingly.
8. Market your business
Marketing is often an enjoyable aspect of business ownership, as it combines creative messaging with a dash of sociology and group psychology. What makes your business appealing to customers over other businesses? How do you want customers to feel when they enter your retail space, whether physical or virtual?
A comprehensive marketing plan requires several key components:
- Consumer base.Identify potential customers.
- Market research.Focus on the target audience and how to reach them.
- Market strategy.Create a marketing strategy with a visual brand identity, including a logo, found on all collateral; use social media campaigns, advertising, strategic partnerships, and events to reach customers.
- Retention.Attentive customer service keeps customers returning.
Starting a business in New Jersey FAQ
Is there a filing fee to register an LLC in New Jersey?
Yes, in New Jersey the filing fee is $125 to register an LLC.
Is there an S corp tax in New Jersey?
Yes, there is an S corp tax in New Jersey. The various levels of a business’s gross receipts and taxes expected to be paid are found on theNew Jersey Treasury’s Division of Taxation website.
Do I need to pay payroll tax?
If your employee is a resident of New Jersey and subject to the state’s taxes, then yes, you need to pay payroll tax. In New Jersey, the required withholding rate is 6.2% for Social Security, and 1.45% for Medicare.
Do I need to pay unemployment insurance tax?
If you employ one or more people each week (not including independent contractors) over 20 different weeks, or have a payroll of $1,500 a quarter, you are required to pay unemployment insurance tax. Employers must register with theNew Jersey Department of Labor & Workforce Development.