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New Jersey LLC |
Advantages and Disadvantages New Jersey LLC
An advantage of a New Jersey LLC is that you can gain the protection of law in terms of separating out your personal assets from the future liabilities of your New Jersey LLC as it conducts business, and where its creditors could look into litigation in order to satisfy the LLC's financial obligations. A tax benefit of an LLC is that your New Jersey LLC qualifies as a "pass through" vehicle, accordingly is not taxed at either the state of federal level, so long as your New Jersey LLC remains in good corporate standing. Indeed, failure to maintain good standing in terms of corporate formalitiees and related filings could mean that your New Jersey LLC could be re-classified as a corporation by the Federal Government, thus establishing an immediate corporate tax liability and possible fines and penalties.
Simplicity and flexibility are characteristics of an New Jersey LLC. Unlike the C Corporation or the Subchapter S Corporation which require annual meetings and written minutes along with other corporate procedures, your New Jersey LLC does not requires such meetings and records. Like the C corporation, your llc can bring in unlimited numbers of investor or members through private placement contracting, which allows you to capitalize your New Jersey LLC at whatever level meets your needs, inclusive of debt financing as arranged with lenders. However, unlike the C corporation which must distribute earnings on a dollar-per-share basis, your New Jersey LLC can develop much more flexible distributions policies, as will be noted in your llc operating agreement.
By New Jersey and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial New Jersey LLC members, the name and address of your New Jersey registered agent, the details of which will be introduced into the body of your LLC operating agreement and related New Jersey LLC formation documents assembled for application to the state of New Jersey.
New Jersey’s
Business Tax Climate Ranks 34th
New Jersey ranks 34th in the Tax Foundation's State Business Tax Climate Index, which measures the impact on business of five major elements of the tax system: the percentage of income taken by all taxes, the individual income tax rates, the corporate income taxes, the sales tax rate, and the complexity of the tax system. Neighboring states ranked as follows: New York (49th), Pennsylvania (22nd) and Delaware (18th).
New Jersey’s State/Local Tax Burden Just Above National Average
In the early nineties, New Jersey had one of the nation’s highest tax burdens. Since peaking at 11.3% in 1994, however, the state has seen this figure fall. Still, estimated in 2004 at 10.1% of income, New Jersey’s state/local tax burden percentage is 15th highest nationally and just above the national average.
New Jersey’s Individual Income Tax System
New Jersey’s personal income tax system consists of six brackets and a top rate of 6.37% kicking in at an income level of $75,000. New Jersey’s top rate of 6.37% ranks it 22nd highest among states levying personal income taxes. New Jersey's 2002 individual income tax collections were $797 per person (ranked 14th highest nationally).
New Jersey’s Corporate Income Tax Rate and Collections among the Nation’s Highest
New Jersey’s corporate tax structure consists of a flat 9% on all corporate income. Corporations with entire net income of less than $100,000 pay 7.5%. This upper tax rate ranks the New Jersey 8th highest among states levying corporate income taxes. In 2001, corporate tax collections reached $153 per capita, ranking the state 9th nationally.
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