How to Start an LLC in New Jersey: Steps, Cost, Annual Report

How do I start an LLC in NJ, step by step?

Check the name, file a Certificate of Formation online ($100), get a free EIN from the IRS, then file NJ-REG to register for New Jersey taxes. New Jersey's Getting Registered page lists the EIN before the certificate, but the IRS says to form an LLC with the state first or the EIN application may be delayed. This order meets both:

1. Search the name with the state's business name search.
2. File the Certificate of Formation through the Division of Revenue and Enterprise Services' online formation service.
3. Apply for the EIN online from the IRS. For a one-owner LLC, see EIN for a single-member LLC.
4. File NJ-REG online. The Division of Taxation says to register at least 15 business days before opening (Starting a Business in New Jersey).
5. Put the annual report month on the calendar and settle the tax setup: one owner, two or more, or an S corporation.

What makes it not simple: spouses as the two members (a partnership return, not Schedule C), a second member joining a one-owner LLC (it becomes a partnership that day, 26 CFR 301.7701-3(f)), three or more members (a per-owner fee every year), a member who lives outside New Jersey (tax the LLC may pay for that member), an S corporation election (extra registration steps), and any missed NJ-1065 or annual report.

What to gather: the LLC name; the registered agent's name, New Jersey address and email; a card or eCheck for the fee; the responsible member's SSN or ITIN for the online EIN (without one, see EIN without an SSN). After approval: the 10-digit entity ID, the EIN, the New Jersey tax ID, each member's ownership share and state of residence, and the formation date. For what to do in the first weeks, see after you form your company.

How do I file the NJ Certificate of Formation, and what does it cost?

File it online with the Division of Revenue and Enterprise Services. The registry fee schedule lists $100 for an LLC certificate of formation; check the total shown at checkout before paying. The online service asks for the business name and type, the registered agent's details including an email for agent notices, and payment by card or eCheck.

The registered agent can be you or someone else, but must have a New Jersey address (NJ Business Portal). See registered agent for the choices.

Approval gives the LLC a Certificate of Formation showing its entity ID, a 10-digit number that identifies its business records (NJ Business Portal). Note it with the formation month: the annual report is due that month every year, and the state's reinstatement service asks for both. Reserving a name before filing is optional and costs $50. For the tax terms members should agree on, see operating agreement tax terms.

What is NJ-REG, and what do I get from it?

NJ-REG is New Jersey's tax and employer registration, filed after the Certificate of Formation (Getting Registered). It gives the LLC a 12-digit New Jersey taxpayer identification number, usually the EIN followed by "000" (Starting a Business in New Jersey). Use it on every New Jersey return and payment.

Whether your sales are taxable is covered in when you must collect sales tax. NJ-REG is also the employer registration; see setting up payroll before the first paycheck. Sales tax collected and income tax withheld from pay are trust fund taxes: a person with the duty to pay them for the LLC can be held personally liable if they go unpaid (Division of Taxation).

When is the NJ LLC annual report due, and what does it cost?

Every year by the last day of the month the LLC was formed, for $75 (NJ Business Portal; fee schedule). File it through the state's annual report service. The duty is the LLC's even if no reminder arrives. The same service offers free reminders and warns that private mailers offering to file it for a fee can look official.

An LLC that misses the report two years in a row is moved to the state's inactive list. It stays an LLC and its members keep their limited liability, but another LLC may then take its name (N.J.S.A. 42:2C-26; reinstatement page). Reinstatement means paying the current and all missed annual report fees, a reinstatement fee and a late filing fee. An LLC reinstating more than two years after it went inactive must also get a tax clearance certificate (annual report service). Other states' fees are in LLC annual fees and reports by state.

Single-member LLC: where does the income go on the NJ return?

On the owner's NJ-1040. A single-member LLC files no New Jersey business income tax return; the owner reports its profit on NJ-1040, or NJ-1040NR as a nonresident (Starting a Business in New Jersey).

By default the IRS disregards a one-owner LLC, so a business's profit generally goes on the owner's Schedule C (IRS). On the NJ-1040, that profit runs through Schedule NJ-BUS-1, Part I, to line 18, net profits from business, with a copy of Schedule C enclosed. A net business loss is not entered on line 18 and cannot reduce wages or other income, because New Jersey does not let a loss in one income category offset another (NJ-1040 instructions). A single-member LLC cannot elect New Jersey's pass-through business alternative income tax (BAIT FAQ).

Two or more members: when is the NJ-1065 due?

By the 15th day of the fourth month after year-end (April 15 for a calendar-year LLC), but the Division's instructions put a short first year at the federal Form 1065 date, March 15 for a calendar-year LLC. An LLC with two or more members is a partnership for federal tax by default (IRS) and must file NJ-1065 if it has any New Jersey-source income or loss or any New Jersey resident member (NJ-1065 instructions). The NJ-1065 is not only an information return: a filing fee and tax can come with it.

Spouses who own the LLC together are two members, so it files a partnership return, not a Schedule C (IRS); see spouse and family LLCs.

Each member gets a Schedule NJK-1; a resident member reports the share on NJ-1040 line 21 (NJ-1040 instructions). If any member lives outside New Jersey, the LLC generally must pay tax on that member's share, in installments during the year, on Form NJ-CBT-1065; the member files a New Jersey return and claims that tax as a credit (NJ-1065 instructions).

• First year. An LLC formed after January 1 has a first tax year shorter than 12 months. The NJ-1065 instructions say any short-period return is due by the federal Form 1065 due date (IRS), a month before the usual New Jersey date. The statute itself (N.J.S.A. 54A:8-6(b)) sets the 15th day of the fourth month for every tax year, so filing by the earlier date meets both. Whether a short first year with little activity must file is in first tax year of a new company.
• Extension. A federal extension on Form 7004 gives a five-month New Jersey extension; attach a copy to the NJ-1065. An LLC that owes the filing fee also files PART-200-T with payment by the original due date, and gets the extension only if at least 80% of the fee shown on the return was paid by then. There is no extension of time to pay the fee.
• Late return. The instructions list a penalty of $100 for each month or part of a month an NJ-1065 is late. The federal Form 1065 has its own per-partner penalty; see late partnership return penalty relief.

An LLC with two or more members can also elect BAIT each year by the 15th day of the third month after year-end (BAIT FAQ); see pass-through entity tax by state.

What is the New Jersey partnership filing fee?

An LLC taxed as a partnership with more than two owners and any New Jersey-source income or loss pays $150 per owner, up to $250,000, with the NJ-1065 by the 15th day of the fourth month after year-end. At the same time it pays an installment of 50% of that year's fee, which is credited against the next year's fee (NJ-1065 instructions; Form NJ-1065).

• A two-member LLC owes no fee but still files the NJ-1065.
• On a final return, the installment is zero.
• Penalties and interest apply whenever the fee is paid after the original due date, even with a filing extension.
• If the LLC never filed, the Division has no time limit to bill the fee.

S corp election in New Jersey: does the state need its own?

Not under current law. A federal S corporation is treated as a New Jersey S corporation unless all shareholders choose C corporation treatment. New Jersey requires it to be registered with the Division of Revenue and Enterprise Services as a corporation filer, to give proof of federal S status (IRS notice CP261 or 385C) and to file a Shareholder Jurisdictional Consent (TB-105). An LLC can upload the IRS notice and the consent while filing NJ-REG, or send them later through the state's S corporation election system or with its first Form CBT-100S. An LLC first registered as a partnership filer must change its registration type first (FAQ). Form CBT-2553, still listed on some state pages, is for periods before the law changed. Deadlines and late fixes are in state S corporation election; choosing S status at formation is in S corporation from day one.

How much does it cost to form an LLC in NJ in year one?

A one-owner LLC pays $100 to form and $75 each year after in state filing fees, before income tax on profit.

Example

These examples are illustrative; figures are in US dollars.

Jersey City consultant, one owner

A consultant forms a single-member LLC in May and pays $100. The EIN costs nothing, and NJ-REG follows. The first $75 annual report is due by May 31 of the next year, and each May after. Profit of $60,000 goes on the owner's federal Schedule C and through Schedule NJ-BUS-1 to NJ-1040 line 18. No NJ-1065 and no partnership filing fee.

Three-member Newark LLC formed March 1

All three members live in New Jersey, and the LLC uses a calendar year, so its first tax year runs March 1 to December 31.

• Year 1: formation $100.
• Year 2: the first year was short, so the first NJ-1065 is due by March 15, the federal Form 1065 date. With it the LLC pays the $450 fee (3 × $150) plus a $225 installment (half of $450): $675. The $75 annual report is due by March 31.
• Year 3: the second NJ-1065 shows a $450 fee, less the $225 installment already paid, plus a new $225 installment: $450 due by April 15, plus the $75 annual report.

Two-member LLC that elects S corporation status from day one

Both members sign federal Form 2553 and file it within 2 months and 15 days after the LLC's first tax year begins. On NJ-REG the LLC registers as a corporation filer. When the IRS acceptance notice arrives, it sends a copy and the Shareholder Jurisdictional Consent through the state's S corporation election system. It files Form CBT-100S each year instead of NJ-1065 and pays at least the $375 minimum tax, even for a short first year. If a member does not sign the consent, the company must meet New Jersey tax requirements on that member's behalf.

Different for you?

• Three or more members, or a member outside New Jersey: the per-owner fee, nonresident tax and BAIT choices start in year one; get business formation help to set it up and business tax return help for the yearly NJ-1065. Owners abroad: US LLC for non-residents.
• Two or more members: the federal Schedule K-1 reports each member's capital account, so the books must track it from day one; see partner capital accounts and get bookkeeping help.
• You want S corporation status: see S corporation from day one and state S corporation election, then business formation help to set up the registration.
• The LLC may elect BAIT: compare states in pass-through entity tax by state, then plan the yearly election with business tax return help.
• An NJ-1065 or federal Form 1065 was missed: see late partnership return penalty relief and get help filing the late business returns.
• Annual reports were missed: see LLC annual fees and reports by state before reinstating.
• Not sure a federal ownership report applies: see BOI report: who still files.
• Forming outside New Jersey: start with how to form an LLC.