Starting a Business in New Jersey
New Jersey is among the top states in the nation for the sheer amount of manufacturing business that is conducted, especially for chemical manufacturing. It is home to the eighth largest economy in America and boasts one of the lowest unemployment rates. The state does have a high tax burden and a somewhat inefficient system when it comes to business licensing. Otherwise, it is an especially good place for a startup company or other small business to grow. New Jersey businesses can benefit from a variety of different incentive programs that can help foster growth and expansion. The most common are incentives that are given through tax credits, Sales and Use Tax exemptions, grant/loan programs, and benefits to companies who reside inside a New Jersey Growth Zone.
STEPS TO STARTING A BUSINESS IN NEW JERSEYThe NJ Division of Taxation oversees filing procedures related to tax collection and the New Jersey Secretary of State administers business formations. After you have setup a company with the New Jersey Department of State, you can move onto dealing with state level compliance issues. These include applying for a Federal Employer Identification Number, registering online for a New Jersey Sales Tax Permit (Certificate of Authority), and getting the correct Business Licenses. Once you have finished conducting a proper NJ Business License search and finalizing a New Jersey business registration you could move on to other actions. These include filing a NJ-REG packet, looking up a New Jersey sales tax rate, and paying sales tax. If you make sales to out of state customers, you may also be required to register for SST streamlined sales tax if you meet certain requirements. Here are some of the incentive programs extended:
- The Film Production Tax Credit offers film producers the opportunity to secure a tax credit equal to 20% of all qualified production costs. To qualify, filming must commence within 150 days from when the application for the credit was submitted. This credit applies to all qualified digital media content including television series and commercials, feature films, and music videos.
- The Grow New Jersey Job Expansion Program gives tax credits to businesses that can either create new jobs or retain existing jobs. Job credits range from $500-$5000 per job created in a calendar year. Additional bonus credits are available if certain conditions are met.
- New Jersey has two Opportunity Zone Programs that provide benefits to businesses that either make improvements to building structures or relocate to one of the five state designated growth areas. The first one is known as the Business Improvement Incentive. Any business willing to make improvements to a building will receive a grant of up to 50% ($20,000 maximum). To qualify a business must be located on the first floor and make a minimum project investment of $5000. The second program is called the Business Lease Incentive. Any business willing to lease a 500 square foot office space will receive a subsidy of up to 15% of the total annual lease payments. The objective is to stimulate investment and bring growth to these distressed areas. The idea behind the programs is to lower taxes for businesses.
- New Jersey offers a tax credit to certain businesses that have qualified R & D activities within the state. The R & D tax credit which is equivalent to 10% of qualified R & D base expenses and an additional 10% of qualified R & D expenses that exceed that amount. Qualifying expenses include R & D dealing with scientific experiments as well as R & D related to engineering activities.
- The Urban Enterprise Zone Act gives a New Jersey Sales Tax Exemption to any qualified company located in a UEZ district. This exemption is given at a rate of 50% of the sales tax owed to a business in an adjacent district that is not inside a qualified zone. To receive an exemption, you must first obtain a sales tax license.