When starting a company, there are many different business forms available. The Limited Liability Company (LLC) is a relatively new business structure and very popular. One of its benefits is that it protects owners’ personal assets from financial liability and generally protects owners’ from personal liability. An LLC is governed by state law, so the rules about them can vary from state to state. For example, many states do not allow certain types of businesses, such as banks, insurance companies, or non-profit organizations to be formed as LLCs. It is also important that since LLCs are state structures, no special federal tax forms exist for them. So an LLC must decide whether to be taxed as partnership, corporation, or individual.
In New Jersey, when forming an LLC, the first step is the company name. It must include either the words “Limited Liability Company” or the abbreviation “LLC.” The name must be sufficiently unique and distinct from the names of the other businesses that are already on file with the NJ Division of Revenue. The next step after the name is filing a Public Records Filing for New Business Entity with the NJ Department of Treasury, Division of Revenue. The filing must have the name and address of the LLC; the name and address of the LLC’s registered agent; its purpose; its dissolution date, if any; and the name and address of all of members or managers. There’s a filing fee of $125.
Every LLC in NJ must have a registered agent, someone who agrees to accept legal papers on behalf of the LLC if it is ever sued. He or she can be a New Jersey resident or even a foreign or domestic corporation that is authorized to do business in New Jersey. But there must be a physical street address in New Jersey.
In NJ, an LLC is not required to have an operating agreement, but it should. This document allows you to structure financial and working relationships between co-owners in a way that best suits the business.
It’s essential to be compliant with tax and other regulatory requirements. For example, if an LLC has more than one member, there should be an IRS Employer Identification Number, even if there are no employees. If the nature of a business requires licenses or certifications, that should be done. After an LLC is formed, annual reports must be filed on the anniversary month of the LLC’s formation or authorization to do business in New Jersey.
Creating an LLC can be a difficult process and there can be serious ramifications if it’s not done right. If there is no operating agreement or a poorly written one, the rules for the inner working of the company may be superseded by New Jersey’s “default rule” and can lead to serious u nintended consequences.