LLCs in New Jersey will need to pay taxes at the state and federal levels (and sometimes local). With each, there are multiple elements to consider, so we’ll address them separately below. Show
Federal Taxes By default, if your LLC consists of one person, it’s taxed as a “Disregarded Entity,” meaning it’s taxed as a sole proprietorship. This means that profits aren’t taxed at the business level, but only when they “pass through” to become your income. If your LLC has more than one member, it’s taxed as a general partnership by default, which also means the income is taxed at the individuals’ level and not the business’s. This avoids the “double taxation” that corporations pay, in which profits are taxed at the corporate level and again when they’re paid out to the owners (“shareholders”). Single-member LLCs don’t have to file a separate federal return for their LLC; they report the LLC income on their personal income tax return (Form 1040). But LLCs with multiple members must file a separate federal return for the LLC, Form 1065. Then each LLC member reports their share of the profits on Schedule K-1 and attaches it to their own personal federal tax return. LLCs can also elect to be taxed as corporations. Some LLC members choose to classify their businesses as an S corporation or a C corporation for federal tax purposes, which can be advantageous in some cases. In particular, many LLCs elect to be taxed as S corporations because it can lower their self-employment taxes. You can learn more on our What Is an S Corp? page. There are also a few other forms of federal taxation to keep in mind. For example, LLC members will usually need to pay self-employment taxes on their share of the company’s profits. Self-employment taxes are the taxes that go toward Social Security and Medicare. State Income Taxes If your LLC is taxed as a sole proprietor or partnership for federal income tax purposes, you’ll be taxed the same way for New Jersey state income taxes. In other words, the business wouldn’t pay state income taxes, but the individual members. If you elect to have your LLC taxed as a corporation, you’ll have to pay New Jersey’s corporate income tax. New Jersey Partnership Taxes LLCs with multiple members that are taxed like a partnership for federal tax purposes must file a New Jersey partnership return, Form NJ-1065, and each member must pay a $150 tax. Your multi-member LLC is required to issue Schedule NJK-1, Form NJ-1065, to each member. This does not apply to single-member LLCs. New Jersey Sales Tax If you’re selling taxable goods or services, New Jersey expects you to collect sales tax on them and remit those taxes to the state. If, when you registered your business, you indicated that you would be collecting this type of tax, the state of New Jersey will send you a New Jersey Certificate of Authority for Sales Tax. This is your permit to collect tax and issue and receive exemption certificates. The New Jersey Certificate of Authority must be displayed at your place of business. New Jersey’s sales tax rate is 6.625%, though this could be lower if you’re doing business in an Urban Enterprise Zone. By law, you must file a New Jersey Sales and Use Tax Quarterly Return with Form ST-50 every three months even if no tax was collected during that particular quarter. Local Taxes You may owe taxes to your county, municipalities, and other tax districts (fire, school, etc.). Revenues for a city or town come largely from property taxes, which a business owner may be responsible for paying based on the property they own or lease within that jurisdiction. You’ll need to check with your local tax authorities to make sure you’re paying all the taxes you owe. Other Taxes We wish we could say that your business’s tax liabilities are limited to what we list in this article, but we can’t. New Jersey has a wide range of taxes, including specialty taxes like admissions surcharges, tobacco and vapor product tax, occupancy tax for hotels and motels, and many more. The Department of the Treasury’s Division of Taxation can give you more information. Even for business entities like LLCs, taxes can get very complicated. We strongly recommend consulting a tax professional. They can keep you out of trouble with tax collectors and potentially find tax savings you weren’t aware of. A limited liability company (LLC) offers liability protection and tax advantages, among other benefits for small businesses. LLC formation in New Jersey is easy. Just follow these eight steps, and you'll be on your way. 1. Name your New Jersey LLCYou'll need to choose a name to include in your articles before you can register your LLC. Names must comply with New Jersey naming requirements. The following are the most important requirements to keep in mind:
See a complete listing of New Jersey's naming rules. Additional considerations:
2. Choose your registered agentNew Jersey requires you to appoint a registered agent for your LLC. A registered agent is the person or entity authorized to receive service of process and other official legal documents and notices on behalf of your LLC. A registered agent can be a person (including yourself or an employee of your LLC) or an entity that offers a registered agent service. They must meet the following criteria:
3. Obtain a New Jersey business licenseAn LLC in operating in certain industries must obtain a New Jersey business license before conducting business in the state. You can check this link to determine if your industry requires a business license. 4. Prepare and file your Certificate of FormationThe Certificate of Formation (commonly called Articles of Organization in other states) is a document that officially establishes your LLC by laying out basic information about it. This may be referred to the Public Records Filing on the New Jersey website. Prepare your Certificate of Formation and file it with the New Jersey Department of Treasury, Division of Revenue & Enterprise Services Commission to register your New Jersey LLC properly. Though it sounds like a big job, that simply means filling out a relatively simple online form and submitting it. You can also send it by mail. To prepare your certificate, you'll usually need the following information:
Once you file your Certificate of Formation, the secretary of state will review the filing. If the articles are approved, the LLC becomes a legal business entity. 5. Receive a certificate from the stateThe state will issue you a certificate that confirms the LLC formally exists after the LLC's formation documents are filed and approved. This certificate will allow the LLC to obtain an Employer Identification Number (EIN), business licenses, and business bank account. 6. Create an operating agreementAn operating agreement is a document that outlines the way your LLC will conduct business. New Jersey doesn't require an LLC to file an operating agreement, but it is an essential component of your business. Having a readily accessible, written operating agreement is helpful for various reasons, including settling disputes that may arise over financial agreements and other potential litigation. Without an agreement in place, the courts make determinations based on state law, not necessarily what is in the best interest of the LLC and its members. The operating agreement can include, but is not limited to, the following:
7. Get an Employer Identification NumberThe nine-digit Employer Identification Number (EIN) is assigned by the Internal Revenue Service to identify your LLC for taxes. You can obtain your EIN by mail or online through the IRS. The purpose of an EIN is to assist with the following:
Next stepsRegistering your LLC gives you a legal foundation to conduct business. Plan to keep your LLC compliant and in active status on the state's website. This might include making quarterly tax payments. All New Jersey LLCs are required to register with the New Jersey Department of Revenue regardless of whether they collect a state tax or have employees. New Jersey LLCs are required to file an annual report. The report is due on the last day of the anniversary month of the LLC's formation. You also need to maintain a registered agent for your business. What type of licensee represents the insurance company?An insurance agent represents one or more insurance companies and sells their policies for a commission.
Which of the following is included in the term insurance related conduct quizlet?*The term "insurance-related conduct" includes acts related to insurance transactions, such as selling, soliciting, negotiating and binding insurance policies; processing claims; or transmitting funds between the insured, producers, premium finance companies and insurance companies. 4. An unfair trade practice.
Which of the following has the authority to make and enforce rules and regulations to implement and carry out the purposes of the insurance laws of New Jersey?In accordance with the administrative procedure act, the commissioner has authority to make it in for schools and regulations to implement carry out the purposes of the insurance laws of New Jersey.
Which of the following is another term for an authorized insurer?An authorized insurer is an individual or company that meets a state insurance department's standard and is authorized by the responsible authority to do business in the given state, also known as an admitted insurer.
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