New Jersey LLC Taxes

As the owner of a Limited Liability Company (LLC) in New Jersey, having a solid understanding of your business’s tax responsibilities is crucial.

This guide offers comprehensive insights into the various New Jersey LLC Taxes you might encounter, as well as a detailed, step-by-step guide on how to file your state taxes in order to ensure your business remains compliant.

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

How Is an LLC Taxed in New Jersey?

Taxation in New Jersey isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporate income tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay self-employment tax or FICA tax on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in New Jersey to help you ensure your LLC navigates them effectively.

New Jersey Local Taxes

Municipalities in New Jersey have different local tax regulations. 

We have detailed the most common local taxes that may impact your LLC below.

Local Sales Taxes

Many cities and counties in New Jersey impose their own local taxes on the sale of specific goods and services:

• Atlantic City Luxury Tax: Certain retail sales within Atlantic City (e.g., cover or entertainment charges, hotel room rentals, and rentals of beach chairs) are subject to a tax rate of 9.00%, except for alcoholic beverages consumed on premises, which are taxed at a rate of 9.625%.
• Cape May County Tourism Sales Tax: Municipalities in this county are able to impose an additional 2.00% retail sales on all tourism-related sales, such as hotel room rentals, food and drinks from restaurants, and admissions to various amusements.
• Meadowlands Regional Hotel Use Assessment: A tax of 3.00% is added to the sale of room rentals in hotels located within the Meadowlands District. This applies in addition to the statewide sales tax and any local Municipal Occupancy Tax.

In addition to all this, there are 32 Urban Enterprise Zones designated by the state for sales tax relief. Businesses in these zones can benefit from various tax reliefs, such as exemption from paying Sales Tax on most items and services and the ability to charge a reduced Sales Tax rate of 3.3125% to customers where applicable.

Note: For more information about the local sales taxes in effect in your municipality, you’ll need to get in contact with the relevant government body in your local area using the State of New Jersey’s County and Municipal Web Sites directory.

Municipal Occupancy Tax

In certain municipalities in New Jersey, hotels and motels must collect a municipal occupancy tax of up to 3.00% in addition to the state sales tax rate from their guests. Liable businesses are also required to file a monthly return using Form HM-100 as well as maintain detailed and accurate records of all transactions.

However, there are some exceptions to the municipal occupancy tax. For example, if the occupant is a government entity, the space is rented for assembly purposes, or the occupancy lasts for at least 90 consecutive days, then the tax is not payable. 

Note: This tax isn’t present in all municipalities, be sure to refer to the Municipal Occupancy Tax List to get a better idea of the situation in your local area.

Property Tax

If you are an LLC that owns real property in New Jersey, you will need to pay property tax based on the assessed value of your property. 

The County Board of Taxation sets the rate for each taxing district within the county, which can vary depending on the type and use of the property (e.g., whether it’s residential, commercial, industrial, or agricultural).

Currently, the average property tax rate in New Jersey is 2.23% of the assessed value of a property, which is the highest rate in the country. To ensure compliance, you must file an annual return with your local County Board of Taxation and pay any taxes due by April 30 of each year. 

Note: See the list of county Board of Taxation contacts and Tax Assessor’s hours by country on the New Jersey Division of Taxation’s County/Assessor Contact page. 

Recommended Service: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant. 

New Jersey State Taxes

Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below is a list of the most relevant state-level taxes for LLCs in New Jersey. 

Income Taxes

As in many other states, your LLC will need to pay taxes on the net earnings it makes from sources within New Jersey in addition to any federal income taxes. The main types of state income tax to be aware of in New Jersey are:

• Personal Income Tax: The members of LLCs filing with default tax status will pay a gradual tax on the money passed through to them at rates ranging between 1.40% and 10.75%. Each member will also need to report their individual taxable income on their personal tax return using Form NJ-1040. 
• Corporation Business Tax: This gradual tax is levied at a standard rate of 9.00% of LLCs organized as C Corps. However, this tax is applied at a rate of 7.50% if your business earns less than $100,000 in net income, or 6.50% if it earns $50,000 or less. If liable to pay this tax, your LLC will need to file a corporation business tax return using Form CBT-100.
• Pass-Through Business Alternative Income Tax (BAIT): After registering with the New Jersey Division of Revenue and Enterprise Services, LLCs can elect to pay BAIT. Under this election, the sum of the members’ shares of the business income is taxed at the entity level (rather than individually), and members can then claim a refundable tax credit. In some situations, this can help members by reducing overall tax liability.

Any LLCs with more than two members will need to pay a partnership fee of $150 for each member (up to a maximum of $250,000) and file a partnership tax return using Form NJ-1065. Similarly, LLCs structured as S Corps will need to file a New Jersey state income tax return using Form CBT-100S.

State Sales and Use Taxes

If your LLC sells tangible personal property, specified digital products, or certain services in New Jersey, it will need to collect and remit sales and use tax to the NJ Division of Taxation. This is levied at a consistent rate of 6.625% across the state since local municipalities are not permitted to impose their own additional local sales tax rates.

Depending on the amount of sales and use tax your LLC collected in the previous calendar year, you will typically be collecting sales tax and filing a tax return on a monthly or quarterly basis through the Division of Taxation website.

Note: Before it can begin making sales, your business must register with the Division of Revenue and Enterprise Services and obtain a Certificate of Authority for Sales Tax. This certificate will then need to be kept on display at all of your business’s locations.

State Occupancy Tax

If you have a business that rents out hotel and motel rooms in New Jersey, you are subject to the state occupancy tax of 5% of the room charge, in addition to the sales tax and any applicable municipal occupancy tax.

Keep in mind that the tax rate is lower in some cities that already have a local tax on hotel and motel occupancies, such as Atlantic City, Elizabeth, Newark, and Jersey City (1%), and Wildwood, North Wildwood, and Wildwood Crest (3.15%). You will collect this tax and remit it to the state on a monthly basis.

Note: Transient accommodations (e.g., vacation and room rentals) are also subject to a similar tax treatment. This tax also extends a similar tax treatment to transient accommodations (vacation rentals, rooms, etc.). 

State Excise Taxes

New Jersey imposes various types of excise taxes on the sale of a specific goods or services made within the state. We’ve broken down some of the most common one encountered by our readers below: 

• Alcohol Beverage Tax: This tax varies depending on the type of drink, with beer being taxed at a rate of $0.12 per gallon, wine at a rate of $0.875 per gallon, liquor at a rate of $5.50 per gallon, and apple cider at a rate of $0.15 per gallon.
• Cigarette Tax: Packs of cigarettes are taxed at a rate of $2.70 per pack of 20.
• Tobacco and Vapor Products Tax: This tax applies to the sale of tobacco and nicotine products, other than cigarettes, by a distributor or a wholesaler. For tobacco products the tax is set at 30% of the wholesale price, liquid nicotine at a rate of $0.10 per milliliter of liquid nicotine, and moist snuff at a rate of $0.75 per ounce.

Note: You can find a full list of the different excise taxes currently in effect on the New Jersey Division of Taxation’s website. 

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below are some of the main types your LLC may be required to pay for federal tax purposes:

Income Tax

By default, the Internal Revenue Service (IRS) will not treat single and multi-member LLCs as separate entities from you for tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income tax on them at the personal rate of your tax bracket.

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.

Self-Employment Tax

In addition to income tax, members of single- and multi-member LLCs will need to pay federal self-employment taxes on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employer Taxes

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employer taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in New Jersey

Below, we’ve outlined the general process an LLC in New Jersey will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in. 

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Federal Tax Identification Number or Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return. 

Step 2: Find The Right Tax Forms

Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The deadline for filing taxes using 1120-S is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State and Local Tax Returns: While specific filing requirements will vary depending on the tax, most local and state taxes can be filed easily online through the New Jersey Division of Taxation website. 
• Local Tax Returns: You can use the eFile services to file your local tax returns. However, for property taxes, you can download and print the forms and contact your county board of taxation for further instructions. 

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form. 

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.

Keep Your New Jersey LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

New Jersey LLC Annual Report

New Jersey LLCs are required to file an annual report, which contains pertinent information about the LLC's business activities, including its name, address, registered agent, members, managers, and authorized signatories. 

The filing fee for domestic LLCs is $75, while foreign LLCs are required to pay $125. Remember that the annual report must be filed by the end of the month of the LLC's anniversary date of formation or authorization using the State of New Jersey Online Annual Report portal. 

New Jersey also imposes a penalty for failing to file the LLC annual report, which could cost you up to $100 per day for late filing. If a business fails to file annual reports for two consecutive years, the state may revoke or void it. 

In case an LLC gets dissolved, the reinstatement fee is $75, and you may also need to pay for delinquent annual reports and any necessary amendments. You can find out the total payment due using the online reinstatement service. Depending on how long your business has been inactive, you may also need to obtain a tax clearance certificate from the Division of Taxation.

Licensure and Tax Requirements

In New Jersey, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:

• Sales Tax Certificates: If your LLC sells taxable goods or services in New Jersey, you must obtain a Certificate of Authority for Sales Tax from the Division of Taxation. For tax purposes, you will also need to get a Business Registration Certificate (BRC) from the Division of Revenue and Enterprise Services to be able to collect sales tax and remit it to the state.
• Professional Licenses: LLCs looking to offer professional services, such as accounting, engineering, cosmetology, or real estate will need to obtain the relevant professional license from the appropriate board. 
• Environmental Permits: If your LLC engages in activities that may have an impact on the environment (e.g., its air or water quality), you'll likely need to obtain an environmental license from the New Jersey Department of Environmental Protection (NJDEP). 

New Jersey LLC Taxes FAQs