New Jersey LLC Taxes
With its bustling job market and proximity to many major US cities, New Jersey is a popular place to start a business. Yet, as more business owners choose to launch their new ventures in the state, many may find it challenging to understand the business taxes involved.
Regardless of the size of your business, if you operate a limited liability company (LLC) in New Jersey, you’ll need to stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you must pay for your New Jersey LLC.
Recommended: Schedule a free consultation with an accountant to stay on top of your taxes.
New Jersey LLC Taxes Owed
LLCs benefit from pass-through taxation, which means the business’s profits pass through to its members’ individual tax returns. As a result, your LLC itself doesn’t pay taxes to the federal government or the state of New Jersey. Instead, LLC owners must pay taxes on their portion of the income generated by the LLC.
In New Jersey, LLC owners can expect to pay the following taxes:
Federal Taxes
Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.
Federal Self-Employment Taxes
It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%.
Federal Income Taxes
Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.
New Jersey State Taxes
Each state has its own laws that dictate how it taxes individuals and businesses. Below are some important state-level taxes likely to affect your New Jersey LLC.
New Jersey Income Taxes
New Jersey’s state income tax rate is 10.75%. That certainly places it on the high end when compared to other states.
New Jersey Sales and Use Tax
The state sales tax rate in New Jersey is 6.625%. Like its income tax rate, this also is quite high when compared to other states. You’ll need to keep this in mind when doing business in New Jersey.
Register for a Sales Tax Certificate of Authority
If your business sells taxable goods or services, you must register for a Sales Tax Certificate of Authority — New Jersey’s equivalent of a sales tax certificate. Visit the New Jersey Division of Taxation website for more information.
Additional State Taxes
The New Jersey Division of Taxation oversees the collection of various state-specific taxes businesses may have to pay, depending on their location, industry, and number of employees. A few examples of these additional taxes include:
- Alcoholic Beverage Tax
- Cigarette Tax
- Hotel/Motel Occupancy Fee/Municipal Occupancy Tax
- Motor Fuels Tax
To learn more, visit the New Jersey Division of Taxation website.
New Jersey Local Taxes
The local laws and ordinances likely will differ across New Jersey’s cities and counties. Regardless of where you live in the state, we recommend you check with your local jurisdiction to ensure your business obtains the proper local permits and follows any local regulations that may impact its operations.
New Jersey LLC Compliance
You must obey New Jersey’s state and local laws in order to maintain your business in good standing. While LLCs technically don’t file taxes with the state, businesses must still file an annual report each year.
New Jersey LLC Annual Report
Every LLC in New Jersey must file an annual report each year with the New Jersey Division of Revenue and Enterprise Services. You can only do this online, and the filing fee is $75.
Annual reports are due by the end of your LLC’s anniversary month, which is the month in which the state approved your LLC’s formation. The only exception is your first year of operation. Your annual report won’t come due until your anniversary month in the next year.
For more information, check out our New Jersey LLC Annual Report guide.
LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure you handle your business taxes correctly.