- Operating a Business in New Jersey
* Business climate * Annual Report * Business Taxes
* Hiring & Employees
* Financing * Management Resources * Business Associations * Media
* New Jersey Quick Facts, US Census Bureau
* New Jersey Small Business Profile 2019, US Small Business Administration
* US Bureau of Economic Analysis
- Annual Report-
Once a business has been established as a limited liability company or corporation, it has to submit an Annual Report to the New Jersey Department of the Treasury. The report includes designating a registered agent in New Jersey who is available during business hours to accept legal notices for actions like lawsuits or tax notices. The report is due on the last day of the month in the month in which the business was registered (LLC, Corporation etc) and requires a $75 annual filing fee. Failure to file can result in the revocation of the registration of the business.
Companies established and incorporated in other states or countries (designated as "foreign" even if established in another US sate) must register with the New Jersey Division of Revenue & Enterprise Services to obtain a Certificate of Authority from the state before commencing operations. Receiving a Certificate of Authority means the out-of-state business has the right to operate inside New Jersey's borders without incorporating as a new entity.
* New Jersey Online Annual Reports and Change Services
- Business Taxes -
Corporation Business Tax-New Jersey's corporate income tax is a business tax levied on the gross taxable income of most businesses and corporations registered or doing business in New Jersey and assessed on that portion of the net income allocable to New Jersey. Every New Jersey corporation acquires a taxable status beginning 1) on the date of its incorporation, or 2) on the first day of the month following its incorporation if so stated in its certificate of incorporation. Every corporation that acquires a taxable status in New Jersey must file a Corporation Business Tax return for each fiscal period, or part thereof, beginning on the date the corporation acquired a taxable status in New Jersey regardless of whether it had any assets or conducted any business activities.
Every corporation that elects to be a New Jersey S corporation must file a “New Jersey S Corporation or New Jersey QSSS Election” (Form CBT-2553) within one calendar month subsequent to the federal S corporation filing requirement. The minimum tax for C corporations is $500 with gross receipts up to $100,000 and for S corporations $375 up to $100,000. New Jersey has a flat corporate income tax rate of 9% of gross income. (In September 2020, legislation was enacted extending through December 31, 2023, the 2.5% surtax imposed on Corporation Business Tax filers with allocated taxable net income over $1 million.).
* Corporation Business Tax Online Filing and Payments
In addition to the New Jersey corporate income tax, New Jersey corporations must also pay the federal corporate income tax. Like the personal income tax the federal business tax is bracketed based on income level, with eight corporate tax brackets.. A Tax Foundation analysis released in July 2021 reported that New Jersey corporations pay the highest combined state and federal corporate income tax rate (30.1%) in the nation.
* Federal Tax Calendar, Internal Revenue Service
Sales and use tax-Businesses selling products and services subject to sales or use tax must file quarterly returns; the rate is 6.625% of the price at which the item is sold, but businesses located within Urban Enterprise Zones situated in 37 municipalities may charge half the rate, or 3.3125%, on most sales occurring within the UEZ.
* Sales and Use Tax Online Filing and Payments
* New Jersey Tax Calendar, NJ Division of Taxation
Local government taxes & fees- Typically, counties and municipalities do not charge business taxes directly. Revenues for the municipality come primarily from property taxes, which a business may be responsible for paying based on the property owned within the municipality. Apart from property taxes, there may be fees associated with owning a business within a municipality, including fire protection or mercantile licenses. Professional licenses issued by state boards also may be required for staff in such fields as medicine and healthcare; engineering; architecture; and others.
* Sales and Use Tax Online Filing and Payments
* Corporation Business Tax Online Filing and Payments
Tax identification numbers-All for-profit and non-profit corporations, LLCs, LLPs and LPs must obtain an employer identification number (FEIN) from the Internal Revenue Service. There also is a separate New Jersey tax identification number which has 12 digits and includes the Federal Employer Identification Number assigned by the IRS followed by a 3 digit suffix, or three zeroes when there is no suffix. Sole proprietors without a FEIN may use for the New Jersey tax ID number their personal Social Security Number of the primary business owner followed by three zeroes, but most analysts advise that the use of social security numbers be avoided for security reasons and that these firms also obtain federal and state identification numbers..
- Hiring and Employees
Hiring - Beyond the founders and other principals who become employees at the formation of the business, most firms seek to expand their workforce to fill special needs as the business grows. While hiring still relies on such traditional avenues as personal contacts and word-of-mouth recommendations, the hiring process, like so much else in the economy, has increasingly shifted to online resources. The state government, primarily through the Department of Labor & Workforce Development, provides online job search tools, but there are many other public and private web sites, some operated by media outlets which publish classified listings of jobs, where available jobs are posted along with applications for job seekers. Special executive and employee recruitment also is offered through global, regional and local firms sometimes labeled as "headhunters."
* State of NJ Employment Resources, Department of Labor & Workforce Development
* NJ.com (NJ jobs)
* NorthJersey.com (NJ jobs)
* Government Jobs in New Jersey, GovtJobs.com
* New Jersey Federal Jobs, FederalGovernmentJobs.com
Training - The state government's Employer Partnership Program helps defray the cost of training new employees and gives unemployed workers enhanced skills and permanent, full-time employment. Participants get a paid job, training, and an opportunity to learn a new skill, while the employer receives reimbursement for part of the participant’s salary. Federal training grants from the Employment and Training Administration of the US Department of Labor are typically funneled through state government and local nonprofit agencies,
Employee reporting - If there is at least one employee and wages paid of $1,000 or more in a calendar year, the business is considered as an employer required to register with the Division of Employer Accounts, New Jersey Department of Labor and Workforce Development, for unemployment insurance purposes to insure that employees are protected with unemployment benefits if they are no longer employed and qualify for benefits. The business may also be subject to the provisions of the Federal Unemployment Tax Act (FUTA) if it had covered employment during some portion of a day in 20 different calendar weeks within the calendar year, or had a quarterly payroll of $1,500 or more..
At that point, employers must provide quarterly wage reporting via form WR-30, and pay applicable Unemployment (UI), Workforce Development (WF), Temporary Disability (DI) and Family Leave Insurance (FLI) contributions quarterly via form NJ-927.The business also must have worker's compensation insurance to cover employees who may become injured or disabled due to work-related activities. The business founders also should consider whether private insurance should be obtained to offer supplemental disability or health benefits.
* Division of Employer Accounts, New Jersey Department of Labor and Workforce Development
* Payroll Taxes and Wage Withholding: Filing, Payment, and Reporting Service, New Jersey Division of Taxation
Unemployment Compensation- For businesses with employees, the New Jersey Unemployment Compensation Law places certain responsibilities on all individuals, groups of individuals, firms and organizations that employ one or more persons on a permanent, temporary or part-time basis, whether or not such employers are required to pay unemployment insurance taxes. The information includes the employee social security number, wages paid to an employee or former employee, and/or the reason why such person is no longer working for the business. Each calendar quarter, all employers, other than domestic employers, subject to the provisions of the Unemployment Compensation Law are required to file the “Employer’s Quarterly Report” (Form NJ-927) and “Employer Report of Wages Paid” (Form WR-30). Reports and tax contributions due must be filed and paid no later than the 30th of the month immediately following the quarter end.
Workers Compensation- All New Jersey employers, not covered by Federal programs, must have workers’ compensation coverage provided through a private insurance carrier or approval for self-insurance by the state Department of Banking & Insurance. All sole proprietorships operating in New Jersey must maintain workers' compensation insurance or be approved for self-insurance if any one or more individuals, excluding the principal owner, performs services for the business for prior, current or anticipated financial consideration; the remuneration includes cash or other compensation in lieu of cash such as products, services, shares of or options to buy corporate stock, meals or lodging, etc. Even out-of-state employers may need workers’ compensation coverage if a contract of employment is entered into in New Jersey or if work is performed in New Jersey. State law provides that failing to insure is a disorderly persons offense and, if determined to be willful, a crime of the fourth degree.
* New Jersey Online Annual Reports and Change Services
* Employer Handbook, NJ Department of Labor & Workforce Development
* Employer Taxes and Wage Reporting, NJ Department of Labor & Workforce Development
* Workers Compensation Insurance, NJ Department of Labor & Workforce Development
Minimum Wage & Overtime Wage Rate: The New Jersey State Wage and Hour Law establishes a minimum wage rate and overtime rate for all workers in New Jersey that are covered by the Act. As of January 1, 2021, New Jersey’s minimum wage is $12 per hour for most employees, which is $3.75 more than the current federal minimum wage. The New Jersey minimum wage will increase $1 every year until 2024. There are exceptions, however, for certain classes of employees: 1) High school or college students may be paid 85% of the minimum wage, for part-time work (up to 20 hours per week); 2) Tipped employees must be paid a minimum cash wage of $3.13 per hour, with the total minimum wage that a tipped employee earns must be greater than or equal to $11 per hour, including tips; 3) Agricultural employees may be paid 70 cents below the standard minimum wage; 4) Seasonal and small employers can pay their employees $10.30 per hour; 5) Employees ages 18 and under in certain occupations, such as in-home childcare, may be entirely exempt.
The law requires the payment of time and one half per hour for actual hours worked in excess of 40 hours, with certain exemptions. Effective October 29, 2018, the New Jersey Earned Sick Leave Law allows employees to accrue 1 hour of earned sick leave for every 30 hours worked, up to 40 hours each year. The law permits employers to create policies that provide additional leave time.
Health Insurance: Small businesses interested in obtaining health insurance plans for their employees have several state resources available to determine how to purchase health insurance. The Department of Banking & Insurance publishes a buyer's guide outlining the basic rules governing the purchase of health coverage by small employers in New Jersey. The department also offers information on Individual Health Coverage (IHC) and Small Employer Health (SEH).The state's health insurance marketplace is also available to employees searching for health insurance coverage.
* State of NJ Employment Resources, Department of Labor & Workforce Development
* NJ State Wage and Hour Law and Regulations, NJ Department of Labor & Workforce Development
Self-employment tax- This federal tax consists of Social Security and Medicare taxes primarily for individuals who work for themselves. The self-employment tax rate is 15.3%, consisting of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance) It is similar to the Social Security and Medicare taxes withheld from the pay of employees.
- Financing a Business -
Personal funds- Most startup businesses are financed through use of the founder's or founders' own money. This financing, however, is obviously constrained by the amount of money available, and many founders supplement their investment through such methods as obtaining personal loans through a home equity line of credit, retirement plans, insurance policies or a line of credit on a credit card. If the business fails, however, there is a risk that all personal assets may be lost, a risk demonstrated by research finding that most small businesses fail in the first five years of operation, thus jeopardizing the personal financial viability of its founder or founders.
In many cases, founders also resort to others, often friends or family members, to raise additional money. These arrangements, while frequently commenced informally on the basis of the good will forged by personal relationships, may later become divisive as disputes arise over the terms of the financing, such as whether it was intended as a loan or equity investment or whether the money also was intended to allow participation in decisions related to management or sale of the business. Business analysts strongly advise that the terms of these financing arrangements, even among close personal contacts, be detailed in documents reviewed by attorneys representing the respective parties.
Bank Loans & Credit Lines - For startup businesses, it is usually extremely difficult to obtain business loans and lines of credit from a bank since banks normally wish to review the cash flow of a business in decisions to extend credit. Bank financing thus is generally limited to ongoing businesses which are generating cash and can identify substantial assets as collateral. Banks and other commercial lenders also typically request personal guarantees by business founders or principals as a condition of extending credit. Required financial statements for a business loan include bank statements, balance sheets, income statements, and cash flow projections. In addition, most lenders require a current financial position statement including accounts receivable and accounts payable.
Factoring & Receivable Financing - Other forms of financing beyond traditional banking and finance firms include factoring, a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. The factor then will attempt to collect the receivable, assuming the risk that the amount due will not be paid in full. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.
- Angel investors -Some businesses with unusually high potential for growth may seek financing from Angel investors, private individuals or small groups who invest in businesses, usually by making an investment in exchange for an equity share of the business. Angel investors typically invest their own funds, filling the need for seed capital before a firm has grown to the point to attract venture capital provided through investment firms managing pools of funds beyond those of the principals. Obtaining Angel investments may significantly dilute the percentage of ownership of the founders, and also frequently provides for active participation of the investors in the management of the business, sometimes through membership on the board of directors. Angel investors also may exert pressure on the founders for an exit strategy which includes a relatively expedited return of investment through a public stock offering or a sale of the business, options which may conflict with the intentions of the founders. But Angel investors also can provide expertise, advice and contacts to help grow the business.
In January, 2021, the state government enacted legislation establishing the New Jersey Angel Investor Tax Credit Program providing tax credits against corporation business or gross income taxes based on a qualified investment in a New Jersey emerging technology businesses or in a qualified venture fund for the purposes of stimulating investment. The JumpStart New Jersey Angel Network was formed in 2002 with the support of the New Jersey Technology Council and the New Jersey Economic Development Authority to help early-stage companies, with about half of its $35 million in investment in New Jersey firms. investors at the Angel Capital Association.
- Venture capital- On a somewhat more organized level than Angel investors but with similar interests, venture capital firms typically fund emerging firms with the potential for significant growth in the anticipation that their investment at an early stage later will be rewarded with higher returns than other investment options. Apart from investment, venture capitalists also often take an active role in the evolution of firms, frequently taking positions on boards of directors or otherwise providing advice on strategic and management issues facing newer companies. Like Angel investors, venture capital firms generally seek to exit their investment within a relatively short period--typically five to ten years--through such options as the company's sale or a public stock offering. The New Jersey Innovation Evergreen Fund is a partnership of the state government with the private sector that raises and invests funds in New Jersey-based companies to address shortfalls in venture capital funding.
* New Jersey Venture Capital Firms, NewJerseyAlmanac.com
* New Jersey Venture Capital Firms, Gaebler.com
* New Jersey Venture Capital Investors, Crunchbase.com
* New Jersey Tech Council
* National Venture Capital Association
- Government financing
Government financing generally also is limited to firms with some history of operations, but in some cases may be available to finance startups and early-stage growth and expansion. The most frequent sources for potential assistance are the federal government's US Small Business Administration, which maintains a New Jersey District Office in Newark, and the New Jersey Economic Development Authority, a state government agency based in Trenton. In addition to their ongoing financing programs, both the federal and state governments enacted emergency programs responding to the COVID-19 economic disruption to assist businesses with lockdowns and loss of income from the pandemic.
* New Jersey District Office | The U.S. Small Business Administration | SBA.gov
* New Jersey Small Business Development Centers, US Small Business Administration
* Small Business Resource Guide, NJ Edition, US Small Business Administration
- Business Associations & Networking
The largest statewide business associations are the New Jersey Business & Industry Association founded in 1910 and the New Jersey Chamber of Commerce founded in 1911. Both associations were established in response to Governor Woodrow Wilson's policies viewed as threats to business such as mandatory workers compensation and other labor protections. The NJBIA, founded as the New Jersey Manufacturers Association, later formed New Jersey Manufacturers Insurance Co. to provide workers compensation insurance, which has evolved to become New Jersey's largest workers compensation carrier, as well as a major provider of auto and homeowners insurance. (In 2018, NJM removed restrictions limiting its policies only to NJBIA member firms and employees and began offering its insurance products to non-NJBIA applicants). The Chamber of Commerce also maintains affiliations with many local chambers within the state (New Jersey Chambers of Commerce) which focus on more local networking and business developments, including regional chambers which cover wider areas such as the Princeton Mercer Regional Chamber; North Jersey Chamber of Commerce; and Chamber of Commerce Southern New Jersey. The state Chamber's annual "Walk to Washington", a chartered train traveling to Washington DC with a dinner featuring the state's Congressional members, is one of the leading business-government networking events.. In addition to lobbying on legislative and regulatory issues, both organizations sponsor networking events, educational programs and money-saving discounts.
Apart from the NJBIA and the state Chamber, more specialized business and executive groups provide targeted information and networking. These include the Employers Association of New Jersey, (over 3,200 employers primarily interested in human resources and personnel management); Commerce and Industry Association of New Jersey (advances free enterprise, opposes excessive government regulation); New Jersey Retail Merchants Association (retailers concerned with issues such as minimum wage, sales tax; environmental regulation, workplace standards); New Jersey Restaurant & Hospitality Association (vendor partnerships in health care, insurance, training, issues include minimum wage, labor standards, provides scholarships for aspiring chefs and entrepreneurs), New Jersey Technology & Manufacturing Association (founded 1943 as New Jersey Tooling and Manufacturing Association, supports manufacturing and related companies); TechUnited:NJ (former New Jersey Technology Council, comprised of technology companies, promotes networking opportunities, advocacy); and NJCAMA (New Jersey Communications, Advertising and Marketing Association with members of creative and business professionals in communications, advertising, marketing programs, public relations and related fields).
Business groups organized on ethnic or national affiliations include the
African American Chamber of Commerce of New Jersey; Asian Indian Chamber of Commerce; New Jersey Chinese-American Chamber of Commerce; and the Statewide Hispanic Chamber of Commerce of New Jersey.;
- Resources for small business -
There are a range of government and nonprofit agencies and organizations which provide free or low-cost assistance in forming and managing businesses in the state. The New Jersey Business Action Center was established in 2010 as a resource for business owners in mentoring and counseling entrepreneurs throughout the state. The state government also supports regional Small Business Development Centers, most frequently associated with universities and colleges, to help entrepreneurs draft business plans, comply with legal and tax requirements and identify financing and hiring resources.
With its sponsors including the US Small Business Administration, SCORE is a national non-profit organization helping emerging and existing small businesses by providing free, confidential, professional business counseling to launch companies and solve management problems. The regional chapters typically provide volunteer mentors comprised of active, semi-retired or retired executives or business owners from small- to mid-size companies.
- Media -
The major print and digital media publishers covering New Jersey all provide articles and other resources on business news and developments. job listings and consumer advertising. These include the affiliated print and web sites of Advance Media (NJ.com/Star-Ledger; The Times-Trenton; Jersey Journal; South Jersey Times; Hunterdon County Democrat; Warren Reporter).and the Gannett Co. (Bergen Record; Asbury Park Press; Courier Post; Daily Record; Home News Tribune; Burlington County Times; New Jersey Herald; Vineland Daily Journal). For the Atlantic City-Cape May and South Jersey coast area, The Press of Atlantic City is the leading print and digital publisher, with special focus on casino and tourism industries.
Media with more focused business coverage include New Jersey Business Magazine (published by the New Jersey Business & Industry Association); and NJBiz; (publishes business news, also markets series of lists and directories of largest employers, private companies, lobbyists etc.). Industry and trade associations also publish digital and print updates on developments affecting topics such as real estate, construction, finance, retailing and many more. More targeted industry coverage includes the NJ Tech Weekly; Jersey Digs (real estate) and the New Jersey Health Journal.