What Taxes Does an LLC Pay in New Jersey?
Q: What taxes does an LLC pay in New Jersey?
A: New Jersey LLCs are pass-through entities. Members report LLC income on personal tax returns and pay graduated state income tax up to 10.75% under N.J.S.A. 54A:1-1 et seq. The LLC itself does not pay corporate income tax. However, LLCs must collect and remit 6.625% sales tax on taxable sales, and owners owe self-employment tax on business income.
Pass-Through Income Taxation
New Jersey does not tax the LLC entity itself. Instead, income passes through to members, who report it on their personal returns under the Gross Income Tax system (N.J.S.A. 54A:1-1 et seq.). The top rate is currently 10.75%.
Single-member LLCs default to disregarded-entity treatment and report income on Schedule C. Multi-member LLCs default to partnership taxation using Form 1065. Members must make quarterly estimated tax payments on April 15, June 15, September 15, and January 15 if they expect to owe more than a threshold amount.
Sales Tax Obligations
If your LLC sells taxable goods or services, you must register for a sales tax permit and collect 6.625% sales tax from customers. Register online at https://www.nj.gov/treasury/revenue/gettingregistered.shtml. Failure to register and remit sales tax creates personal liability.
Self-Employment Tax
LLC owners owe federal self-employment tax on net business income. This applies regardless of whether the LLC is single-member or multi-member. The tax is calculated on the owner's distributive share of LLC profits.
Tax Elections
You may elect to be taxed as an S-corporation or C-corporation (N.J.S.A. 42:2C), which can reduce self-employment tax liability but requires additional filings and compliance.
Annual Reporting
File an Annual Report by the last day of your formation anniversary month each year (N.J.S.A. 42:2C-26). The $75 filing fee is mandatory. Missing reports for two consecutive years results in inactive status or revocation of authority. Reinstatement requires all delinquent reports and a $75 reinstatement fee.
Contact the New Jersey Division of Taxation at https://www.nj.gov/treasury/taxation/ for specific tax guidance.
This is general information, not legal advice.