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New Jersey is an excellent location for entrepreneurs seeking big-city access without enduring the high cost of living in cities like New York and Boston. According to CNBC, Garden State is a fine place to live and work and boasts one of the country's top ten most well-educated populations.
To aid you in your venture, we've produced the definitive guide to starting a business in New Jersey, with detailed explanations of how to draft a business plan, register with the state, acquire business licenses, and more. We've also provided a list of the most active investors in the form, along with other vital resources that'll help you boost your business.
New Jersey small business 411
861,373 small businesses operate in New Jersey, 99.6% of the state's total companies.
1.8 million New Jersey residents work for small businesses, accounting for 49.8% of the state's workforce.
Small business proprietors in New Jersey increased by 2.7% in 2016 compared to the previous year.
86.95% of entrepreneurs in the state started their businesses by choice rather than necessity.
78.855 of New Jersey startups survive beyond their first year of existence.
New Jersey startups create an average of 5.38 new jobs in their first year, the 14th highest rate in the U.S.
37.46% of New Jersey's population has a bachelor's degree or higher.
Sources: Kauffman, U.S. Census, U.S. Bureau of Economic Analysis
The Layout
Medina Media is here to crawl, walk and run with you on building your dream—the American Dream of owning your business. We will help and guide you with the following:
Develop an idea
Every successful business starts with a good idea. Ask yourself these questions:
Which product or service can your company provide that doesn't exist on the market?
How does your business idea refine an existing product or service?
Determine your strengths and interests: developing an idea that suits your personality and positive traits will motivate you to put in the long hours necessary to address the myriad challenges you'll face in getting your business off the ground.
Figure out how to market your expertise: if your business idea is something you only partially believe in and can sell effectively, it will be much harder to succeed.
Do the research
Once you have an idea, it's time to put it through the wringer and decide if it's viable in the market. Conduct market research to arrive at answers to these critical questions:
Is there a demand for your product/service in New Jersey?
Who is your target market?
Do existing businesses in New Jersey offer a similar product/service?
What makes your business unique compared to the competition?
Coming up with satisfactory answers may require refinement, or even a total overhaul, of your original idea. Be patient: you'll only want to proceed with the following steps after determining a niche in the New Jersey market for your business idea.
Draft a business plan.
Now it's time to write the blueprint of your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide financing.
Your business plan ought to include the following sections:
Executive summary – An overview of your business and why it will be successful
Description of business – Explain the advantages of your business and the problems it solves
Market research – Provide research on your industry, target market, and potential competitors.
Organization and staff – Detail the nuts and bolts of your business, how it's structured, and who will run it
Product or service description – State what you are selling or offering
Marketing plan – Explain your strategy for attracting customers.
Fundraising – The money you'll need in the next five years to grow your business and how you'll spend it
Financial forecast – Data and balance sheets providing an economic forecast for your business
Appendix – An optional section with supporting and/or requested documents like resumes, letters of reference, permits, etc.
Plan on running your business well
Legal business entity.
The form of business entity you choose will affect many factors from now on. There are 3 main options to decide from:
Sole proprietorship – The name for running a business by yourself. Legally, you and your business are the same, with no separate legal entity.
Partnership – It is legally identical to a sole proprietorship, except that it comprises two or more people.
Corporation – A complex legal structure that is a separate entity (providing legal protection to owners) from the owner and comprises directors, officers, and shareholders.
LLC – AKA "Limited Liability Company", is a hybrid entity between a sole proprietorship and a corporation that possesses both advantages. An LLC provides the liability protection of a corporation yet isn't subject to double taxation as the profits go through your tax return.
Nowadays, LLCs are the option for small business owners as they are easy to manage and provide the benefits of a corporation while lacking their complex structure. Taxwise, they operate more like a sole proprietorship.
Register your business
Once you settle on the form your business will take, it's time to register with the state of New Jersey. This process differs depending on whether you establish a sole proprietorship, LLC, or corporation. The first step in forming either of these business entities is appointing a registered agent to handle process notices and other government paperwork on behalf of your business. This is a mandatory requirement in all 50 states. You can be your registered agent if you have a physical address in New Jersey, but hiring a professional won't cost much ($50-$200 a year) and ensures that paperwork is filed correctly. Next, run a search to confirm that your business is available, and then you can proceed to file the necessary paperwork to register with the state.
Acquire federal and state tax I.D.s
Now you should obtain a Federal Employer Identification Number (EIN), a social security number for a business that allows you to open bank accounts, handle payroll, and file taxes.
An EIN is optional for sole proprietorships, although it is required for corporations and LLCs. You can apply online for your EIN through the IRS website or fill out and mail this form.
Each state has its laws and taxes regarding businesses. Visit the New Jersey Division of Revenue and Enterprise Services website to register your business online to pay applicable state taxes.
Open business banking and credit accounts
Opening a bank account for your business is crucial because it allows you to separate company assets from your assets, making filing taxes much more manageable. This is a recommended step, even if you are operating a sole proprietorship.
It's also a wise idea to obtain a credit card for your business because it will help you isolate business expenses and build up credit for your company, which may help secure investment in later stages.
Choose a location
Whether running an online business or opening a restaurant, location is everything. Be aware of the neighborhood or town demographics you are considering: Are the residents likely to visit your business? Will nearby competitors take a share of your potential profits?
New Jersey is home to many mid-sized communities with a small-town feel and big-city connections that are apt for launching a business. Three of the best are Secaucus, Jersey City, and Morristown. All three have populations under 40K, yet boast a high quality of life and are conveniently situated near large cities like Newark, Philadelphia, and New York City.
Get insured
No matter what type of business you form, buying insurance coverage to protect yourself from property damage or legal action is a good idea. The federal government requires businesses with employees to have two types of insurance. In contrast, others are strongly encouraged or required at the state level, depending on your business type. Consult a licensed insurance agent to determine which types of insurance you should get.
Required forms of insurance:
Workers' compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
Unemployment insurance: Provides benefits to workers after losing a job through no personal fault.
Develop an internet presence.
Establishing an identity online is an essential investment in a business's future development.
For more information, Contact our office.
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