Do You Want to Start a Business in New Jersey?
A new business in New Jersey is not out of reach. So have you been wondering: how do I start a business in New Jersey? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in New Jersey during a recession?
New Business in New Jersey: Pros and Cons
Per Business Insider, New Jersey is right in the middle set of ten states to start a new business in, per a 2016 article. This is for the entire nation. On the plus side, the state scores well for productivity and it has a $56,721 per capita GDP.
Business opportunity seems to favor business owners here more than in other states. But its living costs are among the most expensive in the nation.
The bigger problem, though, is business taxes. It ranks the worst in that category. Property taxes in New Jersey are some of the highest in the nation. The state’s 9% corporate income tax is high as well.Being near New York and Pennsylvania means business owners can hire people from those other states. But beware. CBS News put Trenton and Newark on its list of the ten most expensive cities to start a business in, again for the whole country. They were #9 and #10.
Max Filings said New Jersey had the worst business tax climate when it comes to starting a corporation or how to start an LLC in NJ.
So there are issues for any NJ small business.
New Jersey Time of Application Clause
But maybe the most immediately beneficial New Jersey business resource is the state’s time of application clause for new business applications. These new rules now let businesses follow only the regulations applying at the time of their initial application.
This allows for increased regulatory certainty. It also helps to avoid costly setbacks which could occur when local governments adopt new regulations.
In 2018, Forbes puts New Jersey at number 38. Also in 2018, Fit Small Business clocks in New Jersey at a pretty similar number 34. Keep in mind, the three websites all have different criteria when it comes to starting a small business in New Jersey.
Forbes praises New Jersey for its number 6 quality of life. Labor supply and growth prospects are both near the middle of the pack. But the economic climate is worse than the average. And the regulatory environment and business costs (a lousy number 49!) are in the worst ten states.
Fit Small Business says New Jersey has the second-best quality of life in the country. Labor market, costs of starting a business, and access to capital are all rather good. Labor market is a measure of both the desirability of an area and the number of people with bachelor’s degrees. Startup activity is also better than average. But the cost of living is in the worst ten states. And when it comes to taxes, New Jersey is dead last.
Only you can decide if starting a business in New Jersey is worth your while. The tax environment has not gotten any better, and your business costs will be high. One thing to consider is that these rankings are likely splitting the difference among the leafy north, the industrial center, and Atlantic City and coastal towns in the south.
New Business in New Jersey: Initiatives
The Edison Innovation Fund provides programs and funding. It’s meant to “develop, sustain, and grow technology and life sciences businesses that lead to well-paying job opportunities.” Since 2006, the Fund has given hundreds of millions of dollars in support to startup technology firms across the Garden State.
In addition, there are designated Innovation Zones near research universities for more public to private collaboration. Technology companies in these zones have access to tax credits and grants. They can also get support in the form of laboratory and production space. This can be a lot of help with how to open a company in NJ.
Technology Business Tax Certificate Transfer Program
The state’s Technology Business Tax Certificate Transfer Program lets unprofitable technology and biotechnology companies sell unused research and development tax credits to unaffiliated businesses for at least 80% of value.
In this way, companies can raise more funds for procuring equipment and facilities.
Here is how to start a new business in New Jersey.
Start a New Business in New Jersey – New Jersey New Business Secretary of State Requirements
Register a Business Name
Go to the State of New Jersey Business Portal for information about permits and licenses.
Local Permits and Licenses
There is a list of phone numbers and links for county clerks available online.
Start a New Business in New Jersey – Business Registration
Start a New Business in New Jersey – Virtual Offices
Alliance Virtual Offices offers New Jersey virtual business office space in the following cities:
Northern New Jersey
Alliance’s northern New Jersey offices are in East Orange and Morristown. They are also in Pine Brook, and Rutherford.
Central New Jersey
Alliance’s central New Jersey offices are in Bridgewater, Mt. Laurel, and Piscataway .
Southern New Jersey
However, Alliance’s only southern New Jersey office space is in Marlton.
So go to Regus for more New Jersey virtual office space.
Also, go to DaVinci for New Jersey virtual business offices in these cities.
Northern New Jersey
DaVinci has space in Bayonne and Englewood Cliffs. It also has offices in Hackensack, Hoboken, and Jersey City. There is more space in Montclair, Mountain Lakes, and Parsippany. It also has space Scotch Plains, Sparta, Summit, and Union City.
Central and Southern New Jersey
DaVinci offers space in Eatontown, Middletown, and Princeton. There is also space in Red Bank and Somerville. However, there does not seem to be any DaVinci space in southern New Jersey.
For Atlantic City and in other parts of the state, try local business owners. Or ask computer user groups for help in this area.
Start a New Business in New Jersey – Establish Business Credit
Business credit is credit in a business’s name. It doesn’t attach to an entrepreneur’s personal credit, not even when the owner is a sole proprietor and the solitary employee of the small business.
As a result, a business owner’s business and individual credit scores can be very different.
Since business credit is distinct from consumer, it helps to safeguard a business owner’s personal assets, in case of a lawsuit or business insolvency.
Also, with two distinct credit scores, a small business owner can get two separate cards from the same merchant. This effectively doubles buying power.
Another benefit is that even startup companies can do this. Heading to a bank for a business loan can be a formula for disappointment. But building small business credit, when done correctly, is a plan for success.
Personal credit scores are dependent on payments but also various other considerations like credit usage percentages.
But for business credit, the scores actually only hinge on whether a business pays its debts on time.
Start a New Business in New Jersey – Small Business Fundability™
Building company credit is a process. A small business has to be Fundable to lending institutions and vendors.
Therefore, a business will need a professional-looking website and e-mail address. And it needs to have website hosting from a company such as GoDaddy.
Additionally, company phone numbers need to have a listing on ListYourself.net.
Likewise, the business telephone number should be toll-free (800 exchange or comparable).
A company will also need a bank account devoted only to it, and it has to have all of the licenses essential for operation.
Working with the IRS
Visit the Internal Revenue Service web site and obtain an EIN for the business. They’re free. Pick a business entity such as corporation, LLC, etc.
A small business can start off as a sole proprietor. But they should change to a form of corporation or an LLC.
This is in order to minimize risk. And it will maximize tax benefits.
A business entity will matter when it involves tax obligations and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible.
And never look at a DBA filing as being anything beyond a steppingstone to incorporating.
Starting the Business Credit Reporting Process
Start at the D&B website and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a company in their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s sites for the company. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.
By doing this, Experian and Equifax will have something to report on.
First you need to establish trade lines that report. This is also referred to as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can begin to get more credit.
These types of accounts have the tendency to be for the things bought all the time, like marketing materials, outdoor work wear, ink and toner, and office furniture.
But first of all, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are generally Net 30, rather than revolving.
Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, like within 30 days on a Net 30 account.
Vendor Credit – It Makes Sense
Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with a minimum of effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
You want 3 of these to move onto the next step.
Start a New Business in New Jersey – Monitor Your Business Credit
Know what is happening with your credit. Make certain it is being reported and deal with any errors ASAP. Get in the practice of checking credit reports and digging into the details, and not just the scores.
Update Your Information
Update the information if there are errors or the information is incomplete.
A Word about Business Credit Building
Always use credit responsibly! Never borrow more than what you can pay off. Track balances and deadlines for repayments. Paying off promptly and fully will do more to increase business credit scores than just about anything else.
Establishing business credit pays off. Good business credit scores help a small business get loans. Your loan provider knows the small business can pay its debts. They understand the company is authentic.
The small business’s EIN connects to high scores and credit issuers won’t feel the need to ask for a personal guarantee.
Business credit is an asset which can help your small business in years to come.
Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.
New Jersey’s Response to COVID-19
The New Jersey Economic Development Authority , or NJEDA, has a portfolio of loan, financing, and technical assistance programs available to support small and medium-sized businesses.
Currently, several state agencies are engaging with local business leaders, local financial institutions, and business advocacy groups as well. Basically, this is to better understand what supports would have the most impact to ensure business and employment continuity.
On April 2, Rep. Chris Smith (R-NJ) announced over $4.5 million in emergency funding was awarded today to local governments in the Fourth Congressional District to help areas stabilize and recover from the economic impacts of the coronavirus pandemic.
On April 13, it was announced that New Jersey will receive millions in aid for its colleges and universities.