How to start a business in New Jersey

If you’re starting a business with the intent of taking on investors, New Jersey can be an attractive state in which to locate your HQ. 

“Generally speaking, New Jersey is a very wealthy state with a number of wealthy individuals,” said Joanna Adu, Partner at Lyons & Associates, P.C. “As New Jersey is not a ‘retirement’ state, these individuals are looking for investment opportunities.”

While the steps vary slightly depending on your entity type, here’s the general order of operations you’ll need to follow: 

1. Start with a business plan.
2. Choose your entity type.
3. Name your business.
4. Register your business entity.
5. Apply for an employer identification number (EIN).
6. Register your business with the New Jersey Department of Revenue.
7. Apply for required licenses and permits in New Jersey.
8. Open a business bank account.

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8 steps to register your business in New Jersey

1. Start with a business plan

A business plan is a good idea even if you’re not seeking investors, but it becomes imperative if you want someone to buy into your business. Your business plan will tell investors how you plan to turn a profit and how you plan to address any obstacles you may encounter along the way. 

You can use a traditional business plan, but if you’re seeking venture capital funding you may benefit from a lean startup plan, which typically includes: 

• Key partnerships you’ll establish to run your business, including services like manufacturing, credit card processing and subcontracting.
• Ways your business will differentiate itself to gain a competitive edge.
• Key resources, like your intellectual property, staff or capital.
• A clear and concise value proposition that outlines what you’re bringing to the market that competitors are failing to provide.
• How your business will interact and communicate with its customer base.
• Who will be included in your target market. The more specific, the better. You can find your ideal customer by completing market research before you write your business plan.
• A plan for cost structure, which defines whether you’ll lean toward cutting costs or maximizing value (presumably at a higher cost for your consumers).
• A section defining all potential revenue streams, like direct sales, membership fees and selling advertising space.

2. Select a business entity 

Selecting a business entity determines which paperwork you will have to fill out with the state, along with your business’s tax structure. Your business type can also determine who can invest in your business. Your business may start out small under one structure and then change its entity type as it grows. 

“LLCs are easy to form and are extremely flexible when it comes to ownership and management,” said Senior Counsel David Trombadore at Lyons & Associates, P.C.. “Both C and S corporations have a greater level of formality. That’s not to say corporate entities are obsolete. Corporate forms are required as a business expands beyond management by a handful of owners or managers.”

	PROS	CONS
Sole proprietorship	Zero startup costs when it comes to registering with the state. No forms to file.	No limited liability protection. Business owner subject to the employer and employee portion of FICA taxes. Cannot have investors.
LLC	Relatively easy to set up, though you will have to register with the state. Limited liability protection.	Business owner subject to the employer and employee portion of FICA taxes. While the number of investors is not limited, you cannot attract venture capital dollars.
S corp	Limited liability protection. Ability to reduce FICA taxes for the business owner. Can avoid the double taxation of a C corp.	Limited number of investors. The nationality of investors is limited.
C corp	Strongest liability protection for the business owner. Ability to deduct the costs of fringe benefits offered to employees. Number and nationality of investors is not limited.	Profits subject to double taxation. Stricter federal oversight and paperwork requirements, which makes the business more expensive to operate.

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For more information on whether to choose an S corp or a C corp, read our comparison guide. If you’re choosing between an LLC and a corporation, read our C corp vs. LLC guide.

3. Choose a business name

In New Jersey, you’ll have to pick a name that is different from and not similar to any existing business names registered in the state. You can look up names using the state’s business name availability tool to determine name availability. The name should also not be protected from national infringement and be marketable. Read our business naming guide for more information.

If you aren’t quite ready to register your business (along with its name), you can pay a $50 fee to reserve the name for six months by filling out and submitting a name reservation form.

4. Register your business entity 

You can register your business with the state of New Jersey online. There is a $125 fee whether you’re registering an LLC or a corporation. It only takes a few minutes to complete the application and you can download your new business’ paperwork within one business day. Starting an S corp requires a different process. Read our guide on starting an S corp to learn more.

Note: While you’ll be asked for an employer identification number (EIN) on the registration application, it’s an optional step you can skip. You can’t actually get an EIN until you have your certificate of formation or authority from the state. But once you do, it’s really easy to secure your EIN for free. 

5. Apply for an EIN

An employer identification number (EIN) identifies your business for tax administration purposes. It is also often requested when opening a bank account, engaging investors and applying for business licenses and it is required to hire employees. 

To apply for an EIN, visit the IRS website between 7 a.m. and 10 p.m. EST Monday through Friday. The entire process usually takes less than 10 minutes, and your EIN is generated and provided on the form’s submission confirmation page.

6. Register your entity with the New Jersey Department of Revenue

New Jersey requires all businesses to fill out form NJ-REG. This form registers your business with the Department of Revenue and Enterprise Services, which oversees state taxes. While sole proprietorships don’t have to register with the state, they do still have to file form NJ-REG.

The submission of this form will generate a New Jersey tax ID number, a number that can be used to complete some financial tasks such as paying your taxes, applying for grants and loans and opening a business bank account. You will also receive a business registration certificate with this tax ID number included. Display this certificate in your place of business. 

7. Apply for required licenses and permits in New Jersey

While there’s no general business license requirement in New Jersey, a litany of industries require you to register at one level or another. For example, pet stores have to register with their municipality, and plumbers have to register with the New Jersey Division of Consumer Affairs. You can find out what licenses might be required for your industry using New Jersey’s licensing and certification guide. 

8. Open a business bank account

In business law, courts can use something called the ‘alter ego doctrine’ to remove your LLC’s or corporation’s liability protection. This is a result of the company ‘piercing the corporate veil’ or mixing your personal and business finances. 

For that reason, to keep your personal and business finances separate, one of the very first things you should do after you’ve registered your business is open a business bank account. It’s not just deposit accounts that can hurt you, though — you’ll want to make sure all your business cards are business credit cards, too. 

Read our best business checking accounts and best business credit cards lists to find the right solutions to meet your needs. 

Find the best company formation services for New Jersey Best LLC services of 2023

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LegalZoom

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Via LegalZoom’s website

Free version available

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Lowest published package price

$249

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Northwest Registered Agent

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Via Northwest’s website

Free version available

No

Lowest published package price

$39

Live chat

Yes

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