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Starting a Business in NJ: The Ultimate Guide

Caroline Goldstein

Contributing Writer at Fundera
Caroline is a former Fundera staff writer and current freelance writer, specializing in small business and finance. She has an MFA in fiction from New York University. She loves finding creative ways to help entrepreneurs grow.

Latest posts by Caroline Goldstein (see all)

Editorial Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone.

If you’re thinking about starting a business in NJ, you’ll be joining a vibrant entrepreneurial community that’s already thriving in the Garden State. In their 2018 New Jersey Small Business Profile, the SBA reported that small businesses employed 49.8% of the state’s private workforce in 2015. 

Of course, starting a business in NJ takes more work than just coming up with a great idea and calling it a day: You’ll need to register your business with various state agencies, get business insurance, and open a business bank account, among other key action steps required to start your business off on the right foot. 

In this comprehensive guide on how to start a business in NJ, we’ll walk you through those six important steps. Along the way, we’ll also provide you with an arsenal of additional resources to inform your plan of action as fully as possible. Let’s get to it.  

How to Start a Business in NJ: A Step-by-Step Guide

Once you’ve written a business plan outlining your business’s product or service, identifying your target market, taking stock of your current and projected financials, and setting your financial goals, you’re ready to officially start your business in New Jersey. Let’s dive into the six steps that you’ll need to complete the process and join the ranks of small business owners who have started a business in NJ:     

1. Choose a Business Name and Entity

One of the most important steps in starting a business is deciding what to call your new venture. Your name is your customers’ first impression of your business, and first impressions matter, so take this step seriously. But choosing a business name is also one of the more creative aspects of starting a business, so use it as an opportunity to have fun and flex your inventive side. 

If you’re thinking of starting a business in NJ, but are feeling uncertain about the naming process, take a look at our guide on how to come up with a business name for advice about what makes a strong business name, plus some brainstorming exercises to get your creativity going. One important thing to note: Remember to check your business name availability, which you can do for free online, to make sure that your dream name isn’t already in use by another business in New Jersey. Try to do this before reserving domain names, printing business cards, or any other fun branding task that might turn out to be a money-sinker.      

After choosing your unique business name, you’ll need to determine which type of business entity makes the most sense for your enterprise. The type of business entity you choose will affect how your business is taxed, your business’s management and ownership structure, how it’s regulated by the state, the degree of legal protection you’re provided as the business owner, and the ease with which you can raise capital from investors or secure a business loan.

The four most common types of business entities in New Jersey are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. There are pros and cons to each; and, as is always the case, there’s no one-size-fits-all solution for every business. We will say, however, that an LLC is perhaps the most common choice for brand-new small businesses for their ease of formation and the legal protections they provide. 

Consult our guide on types of business entities for more detailed explanations of each—or, better yet, seek advice from an attorney or accountant for a thorough understanding of which type of business entity is best for your budding business.      

2. Register Your Business

Once you’ve nailed down your business name and chosen your business entity, you can officially register your business with the proper state agencies—but how you go about registering your business depends on the type of business name and entity you’ve chosen in step 1. 

When starting a business in NJ, you don’t need to register your trade name if you plan on doing business under your own name. Otherwise, general partnerships and sole proprietorships doing business under a unique name will need to register their name with their county clerk’s office. 

The state also advises registering your business name in all of the state’s 21 counties in order to protect your name statewide. Corporations, LLCs doing business under a unique name, and limited liability partnerships will need to register their business with the Division of Commercial Recording of the New Jersey Department of Treasury. You can do that online. 

As all businesses in New Jersey need to pay taxes, when you’re starting a business in NJ, you’ll also need to register with the New Jersey Division of Revenue, which you can do either online or over the phone. Also, keep in mind that all business entities other than LLCs and sole proprietorships will need an EIN (LLCs and sole proprietorships can use the business owner’s social security number) to complete this step. An EIN, or employer identification number, is a business tax ID number the IRS assigns you that you’ll use to file taxes—and it has a couple other uses we’ll cover below. If you haven’t already, you can apply for an EIN on the IRS website.

starting a business in NJ

3. Obtain Permits, Licenses, Certifications, and Understand Local Regulations

Depending on the type of business you’re starting and the kinds of activities your business will conduct, the state of New Jersey may require you to have professional or occupational licenses, construction or safety permits, or environmental licenses. 

For example, if you’re starting a daycare business in New Jersey, then you’ll need to obtain a license from the Department of Children and Families by meeting all the necessary conditions as outlined in the agency’s Manual of Requirements for Child Care Centers, among other requirements. 

To find out whether New Jersey requires that you have a license or certification to operate your business, check out the NJ License and Certification Guide. This guide will also point you to the proper agency contact to get started. Depending on the municipality or county in which you’re operating your business, too, you may be responsible for additional regulations. Check with your county clerk to find out.

On top of that, if you have employees then you’ll need to understand your employer responsibilities as outlined by the state, like registering with the Division of Employer Accounts, New Jersey Department of Labor and Workforce Development. You can learn more about employer responsibilities by visiting the State of New Jersey Business Portal’s “Workforce” page

4. Get Business Insurance

For most businesses, taking out business insurance early on is crucial—or even required—in order to protect yourself against potential legal trouble.

The exact type (or types) of small business insurance you should consider depends on a number of factors, like the industry you’re in, whether you have employees, and whether you operate a physical location, among other considerations. 

That said, most businesses can benefit from purchasing general liability insurance, which can protect your operation from a number of legal claims. Check out our guide to the most common types of small business insurance to find out more about your recommended coverage.

There is one type of insurance that’s non-negotiable when starting a business in NJ: If you have at least one employee, then the State of New Jersey requires that you have unemployment insurance and workers’ compensation insurance (something you’ll remember from reading up on your employer responsibilities in step 3, of course).

starting a business in NJ

5. Open a Business Bank Account

We recommend that every small business owner separates their personal and business finances ASAP. Doing so will certainly help streamline your bookkeeping, but it can even save you from legal trouble, depending on the type of business entity you’ve chosen. Opening a business bank account is one crucial step in creating this separation. On top of that, having one can help you build business credit, which in turn can help you secure a business loan down the line—not to mention that having a business bank account is simply more professional. 

When you’re starting a business in NJ, it’s likely that you’ll only need a business checking account, rather than a business savings account, which will give you easy access to your working capital. We’d recommend opening your business checking account with the same bank that holds your personal account (assuming you’re happy with that bank, of course). Not only will this make it easier for you to manage both your personal and business finances, but banks generally encourage loyalty and may be more incentivized to approve your business loan application in the future. Note that the EIN you applied for earlier is usually necessary to open a business bank account, and to get loans later on.

Most banks require that you visit a local branch in person to open an account, so you’ll need to gather all the documents necessary for opening a business bank account ahead of time. That said, a few brick-and-mortar institutions do make it possible to open a business bank account online; and some business checking accounts, like Azlo, are entirely online (and in Azlo’s case, completely free). Take a look at our guide to this year’s best business bank accounts for a complete list of our recommendations.     

6. Secure Startup Funding

As you’re completing steps 1-5 from this guide on how to start a business in NJ, it’s likely that you’ve also been thinking about how to finance your startup—because, with just a few exceptions, most startups simply need money to make money. Often, however, startup financing looks a bit different than business financing for more established firms. 

When you’re just starting a business in NJ, you just don’t have the documentation and credit score that banks and other lenders need to feel confident that you can handle additional debt. That said, it can’t hurt to plan to apply for traditional forms of debt financing—like term loans, lines of credit, and coveted SBA loans—once your business picks up speed.

In the meantime, look into more accessible forms of startup financing. Entrepreneurs in the launch phase of their new ventures often find the money they need from their personal savings, by borrowing funds from trusted friends and family, or by using a personal loan for business purposes. Crowdfunding can also be a relatively low-lift way to make a chunk of change, and the barrier to entry is quite low, too. 

Depending on the nature of your business and your personal network, you might strike gold with an angel investor or another type of equity financing. But even if that’s not an option for you, starting a business in NJ can still be a fund-able endeavor. The State of New Jersey offers business financing, grants, financial assistance, and incentive programs, too, which are well worth looking into.

We also recommend that new business owners apply for a business credit card, which will quickly become your most-used form of business financing, both now and when your business gets its sea legs. 

Applying for a business credit card online takes a matter of minutes, and if you’re approved, then you’ll likely receive your card in a week or two. And the barrier to entry here is surprisingly low, too: If you can’t yet provide financial information for your business on your application, card companies will often accept your personal financial information. Plus, using a business credit card for your business, rather than your own credit card, is an important step in maintaining that crucial separation between your business and personal finances that we talked about. 

Starting a Business in NJ: The Bottom Line

Once you’ve completed all the steps in this list about how to start a business in NJ—or, more accurately, all the steps we mentioned that address your particular business’s needs—you’re all set to officially launch your New Jersey business. Now you can implement a stellar small business marketing plan (or create a business website and social media handles to start!) to get the word out about your business to your fellow Garden Staters. Starting a business in NJ can be well worth the investment and with some careful attention to detail, your business can go far. Good luck!

Forming an LLC in NJ: A Step-by-Step Guide

Caroline Goldstein

Contributing Writer at Fundera
Caroline is a former Fundera staff writer and current freelance writer, specializing in small business and finance. She has an MFA in fiction from New York University. She loves finding creative ways to help entrepreneurs grow.

Latest posts by Caroline Goldstein (see all)

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