Starting your own business is exciting, but to launch a successful business, it’s important to get started in the right direction. Each state has its own unique regulations and requirements for businesses, especially those starting up. In this article, you will learn the steps to starting a business in New Jersey.
14 Steps to Start a Business in New Jersey
To start a New Jersey business, you’ll need to follow the same step-by-step guide as any other state. However, there are a few specific things you need to do to register your business in New Jersey, and you’ll also need to familiarize yourself with the rules and regulations that apply to businesses in the state.
- Determine Your Business Name
- Write a Business Plan
- Choose a Business Structure
The first step to starting your own business is to determine your business name. Your business name must be unique and distinguishable from other businesses. It is good to search the web and the New Jersey database for business names that are similar to yours to ensure that your desired name is available.
Check the New Jersey Division of Revenue & Enterprise Services Business Name Search to see if your business name is available.
The next step in starting any New Jersey business is to conduct market research and write a business plan. This document will outline your business goals, strategies, and how you plan to achieve them. It’s important to be realistic in your planning and to include all the necessary information, including financial models. A well-crafted business plan can help you secure funding from investors or lenders, and it can also be used as a roadmap for your business.
Before you start a New Jersey business, it’s important to choose the legal structure that is right for your company. There are several different structures available, and each has its own set of benefits and drawbacks.
Each structure determines how profits are taxed, who can invest in the business, and how much control each owner has over their respective portion of the business. You should consider all of these factors when choosing a structure for your company.
The most common business entities are:
- Sole Proprietorship – An informal business structure where there is a single owner who owns and operates the business. Advantages of this structure are the ease of setup and flexibility, while disadvantages are that assets are held personally, all profits are taxed as personal income, and there is no separation between the owner’s assets and the business assets.
- General Partnership – A partnership is another informal business structure where two or more people own and operate the business. Advantages of this structure are that it’s easy to setup and there is no requirement to file any legal documents with the state, but disadvantages include that all partners share personal liability for company debts and decisions, profits are taxed as personal income, and each partner has unlimited liability (meaning they are personally responsible for all business debts).
- Limited Liability Company (LLC) – An Limited Liability Company is a formal business structure where the owners of the company are referred to as “members.” An LLC offers its owners limited liability protection, meaning personal assets are protected from business debts and liabilities. Advantages of an LLC include that it offers tax advantages, managerial flexibility, protection from creditors, and ease of setup. The main disadvantage of a Limited Liability Company is that it requires filing articles of organization with the state, which entails paperwork and a filing fee.
- C Corporation – The final formal business structure is a C corporation. A corporation is considered a different legal entity, so like an LLC, you have personal asset protection from business debts and liabilities. Advantages of this company include limited liability for shareholders, separate taxation from the owners, and ease of setup. The main disadvantage of a C corporation is double taxation for shareholders (dividends are taxed as personal income and then also as corporate income).
- S Corporation – An S corporation is a special type of C corporation where the company meets certain requirements for tax elections. Advantages of an S corporation are similar to advantages of a C corporation, but the main disadvantage is that the shareholders must be US citizens.
Find the appropriate registration forms for your chosen business structure on the Office of New Jersey Department of State website.
Choose a Business Location
Once you’ve chosen a business structure, it’s time to choose a location. In general, the best place for a small business is near where its customers or employees live or work. A central location will make it easier to meet with your clients, and also be more convenient for your customers.
Small businesses can open in commercial office spaces, but they are usually very expensive. A better option is a retail space or shared office space that offers short-term leases or month-to-month leases. Make sure the space has the appropriate equipment and utility services for your business.
Business Licenses and Permits
Before you can form your New Jersey business, you will need to determine your legal business structure, secure your location and physical address, obtain a federal employer identification number (EIN), and identify a registered agent. You can easily file for an EIN through the IRS website here.
Then complete the business formation process through the New Jersey Department of Treasury Online Business Entity Filing portal. After approval, you will receive a NJ Tax ID and a Certificate of Authorization to collect sales tax, if applicable.
Next, you will register your business with the NJ Division of Revenue and Enterprise Services (DORES) for income, sales and/or employee withholding tax purposes, depending on what is required for your business. Complete the NJ-REG Form here.
Depending on your legal structure, you may be required to file income taxes more frequently than annually. Refer to the New Jersey Tax Guide here for more information.
If you are selling taxable goods and/or services, you must collect Sales & Use Tax from your customers. Learn more about the state filing requirements in the Sales Tax Guide here.
If you plan on hiring employees, there may be additional forms and processes that you must complete to verify the employee’s eligibility to work and file the appropriate employee withholding and employer payroll taxes. Learn more about the requirements of hiring employees here.
There are additional New Jersey labor, workers’ compensation, and non-discrimination laws that your business may have to comply with. Visit the New Jersey Department of Labor and Workforce Development website here for more information.
Open a Business Bank Account
Once your business is set up, you need to open a business bank account. Opening this type of account will help keep your personal and business expenses separate. Keeping your funds separate also helps maintain good credit for the business’s financial needs, such as receiving accounts receivable or obtaining loans.
To open a business account, you will need to provide the required paperwork for your business structure, including articles of incorporation. The best option is usually to use an existing personal checking or savings account as the initial funding source for your new business account, so it’s important to choose a financial institution that provides accounts with low minimum balances and monthly fees.
Learn About Intellectual Property Ownership
When starting a business, it’s important to understand the various ways in which you can protect your intellectual property (IP). Types of intellectual property include trademarks, patents, trade secrets, and copyrights.
It’s crucial to have a strategy to protect your intellectual property before you start selling your products or services. Without the proper protection, it may be easy for someone else to copy your work and sell their own version of what you’re offering at a lower price.
In New Jersey, you are required to file any trademarks both at the state and federal level. Copyrights and patents are filed only at the federal level through the United States Copyright Office or the United States Patent and Trademark Office.
You can learn more about protecting your intellectual property here.
Get Business Insurance
Once you’ve launched your business, it’s important to get the right type of insurance. It isn’t always easy to know which types of insurance you need and where to find them at affordable prices.
It’s very helpful to speak with an independent agent who specializes in small businesses. An independent agent can advise you on what types and amounts of insurance are best for your business.
The most common types of business insurance include:
- Property insurance: Covers damage to the property of others or your own business, such as fire and natural disasters
- Commercial Auto insurance: Helps cover vehicles used in the course of doing business, including cars and trucks
- Workers’ compensation insurance: Pays employees who are hurt on the job or have a work-related illness or injury
- Liability insurance: Helps pay for any injuries and property damage your business may cause to others
There are other types of insurance you may want to consider, including product liability insurance and business interruption insurance. Be sure to discuss all your options with your insurance professional.
Establish Your Accounting and Tax Filing System
It’s important to make sure you are keeping accurate records of all the money you earn and spend in your business. This will help you keep track of your earnings and ensure that you’re meeting your tax obligations correctly. Keep the following types of information in an accounting system:
- Your business bank statements
- Receipts for expenses incurred for business use
- Logs of income earned from various sources, including personal savings or loans
If you need help with setting up an effective accounting system, ask for assistance from a tax professional. It’s often best to hire an accountant who is familiar with working with small businesses.
Create a Marketing Plan
It’s not enough to simply start a business – you also need to make sure you are getting the word out about your products or services. A marketing plan will help guide all your decisions related to promoting your new company, including what type of promotional tools to use and how much money should be spent on advertising.
The most basic steps in creating a marketing plan include:
- Deciding what you are trying to achieve
- Identifying your target audience
- Developing ways to reach your target market
- Creating a budget for advertising and other promotional tools, including the types of media to use when advertising (radio, television, print, digital)
Read more about creating a great marketing plan.
Obtain Funding For Your New Jersey Business
One of the biggest challenges that entrepreneurs face is raising enough money to get their businesses off the ground. While you can always bootstrap your business, borrowing money from friends and family, or even asking customers to pay early, often isn’t enough capital to grow a successful company.
If you need additional funds, there are a number of options available:
- Banks and credit unions: Look for small business loans, lines of credit, and/or a business credit card
- Venture capitalists or angel investors: Find investors who will give you an infusion of cash in exchange for part ownership in your company
- Crowdfunding platforms: Make a pitch on online platforms such as Kickstarter or GoFundMe to raise small sums of money from many people
For more information on these funding options, read our Ultimate Guide to Startup Funding.
Recruit and Hire Employees
Businesses with only the founder working full-time often find it difficult to achieve success. Hiring employees can provide your company with the additional labor and expertise necessary for growth. It’s important to:
- Choose the right type of employee (entry-level, supervisory, or managerial)
- Complete a background check on potential workers
- Establish a fair rate of pay
In addition, you’ll need to draft a job description and provide the appropriate training for each employee to help them do their jobs well.
In addition to the federal, state, and local requirements that all businesses must adhere to in order to legally operate, there are certain laws that you must follow as a New Jersey business owner. For example, for any employee working more than 30 hours per week, the employer is required to offer accrued paid sick leave. Learn about your employer responsibilities under the New Jersey law here.
One of the most important ways to succeed in business is by staying organized. Having an effective system for managing your money, marketing plan, and employees will help ensure that your small company continues to grow. We’ve outlined the essentials of staying organized below:
Financial organization: Use an accounting system to keep track of your business expenditures, income, and tax records. Set up a separate bank account for your company so you can easily transfer funds between accounts. Keep an itemized list of all equipment purchased for the company in case it may need to be replaced or repaired at some point.
Organization of your marketing plan: Create a document where you can keep track of all promotional tools being used to advertise your business, including details such as the date each item was purchased and its estimated lifespan. Having this information readily available makes it easier for you to budget for future advertising expenses or replacements.
Employee organization: Create a file where you can keep track of all employees’ contact information, job descriptions, and training hours. This information will be helpful for recruiting new workers in the future or if any former employees need to be contacted.
Open for Business
Once you’ve created a solid business plan and obtained the proper permits, licenses, and funding for your business, you will be ready to open your doors.
For more information on starting a business in [state], visit the New Jersey Department of State website.
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