New Jersey LLC advantages disadvantages

New Jersey LLC Advantages Disadvantages

New Jersey LLC and Taxes

New Jersey LLC Advantages Disadvantages

An New Jersey LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership or a Subchapter S Corporation,are generally prime candidates for a business juststarting. The state of New Jersey gives public support to an New Jersey LLC.

Should I form a New Jersey LLC?

A New Jersey LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in New Jersey to your LLC. Your New Jersey LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your New Jersey LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.

New Jersey LLC Advantages Disadvantages

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 Corporationwhich 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 2012 Business Tax Climate Ranks Last

New Jersey ranks last in the Tax State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.

New Jersey's State and Local Tax Burden Highest in Nation

New Jersey's and local tax burden percentage has consistently ranked among the nation's highest, this year being no exception, taking the top stop, currently estimated at 12.2% of income (1st nationally), above the current national average of 9.8%. Compared to the 1977 data, New Jersey had a rate of 12.4% (3rd nationally), decreasing 0.2% overall. Currently residents pay $6,751 per capita in state and local taxes.

New Jersey's Individual Income Tax System

New Jersey's personal income tax system consists of six brackets and a top rate of 8.97% kicking in at an income level of $500,000. Among states levying personal income taxes, New Jersey's top rate ranks 6th highest nationally. New Jersey's 2008 state-level individual income tax collections were $1,457 per person, which ranked 6th highest nationally.

New Jersey's Corporate Income Tax System

New Jersey's corporate tax structure consists of a flat 9% on corporate income. However, corporations with total net income of $100,000 or less pay 7.5% and corporations with total net income of $50,000 or under pay 6.5%. Among states levying corporate income taxes, New Jersey's top tax rate ranks 5th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $326 per capita, ranking the state 5th highest nationally.

New Jersey Sales and Excise Taxes

New Jersey levies a 7% general sales or use tax on consumers, which is above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,424 per person, ranking 22nd highest nationally. New Jersey's gasoline tax stands at 14.5 cents per gallon and ranks 47th highest nationally. New Jersey's cigarette tax stands at $2.70 per pack of twenty, which is the 5th highest cigarette tax in the nation. The sales tax was adopted in 1966, the gasoline tax in 1927 and the cigarette tax in 1948.

New Jersey Property Taxes: Highest Per Capita in the Nation

New Jersey is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. New Jersey's localities collected $2,372.03 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, New Jersey collected $0.40 in property taxes during FY 2006, making its combined state/local property taxes $2,372.43 per capita, New Jersey's combined per capita collections were the highest in the nation.


Tax Foundation

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