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Articles of organization must be filed with New Jersey to form New Jersey LLC. While an operating agreement does not have to be filed, it is an important document that you should have, setting forth the members’ rights and responsibilities, their share of ownership, their voting rights, their shares of profits and losses and their distribution rights, all of which can be different and without regard to their capital contribution. One or more managers make management decisions and “run the business” for the inactive members.
As the name “LLC” implies, New Jersey LLC provides the same limited liability for its members as does a corporation. Members enjoy limited liability for the debts, obligations and liabilities incurred by the business as well as liability stemming from possible legal action. Normally, members cannot lose more than the amount they invested in the LLC. If the LLC goes bankrupt, the members will not be liable for its debts. Should someone sue the LLC and it is found liable, they can take the LLC’s property to satisfy the judgment but if that property does not satisfy the judgment, they will not be able to take a member’s personal assets, i.e. home, car, or bank account. Protection of members’ personal assets is a major advantage of New Jersey LLC. There are exceptions to members’ limited liability to keep in mind. For example an exception to a member's limited liability occurs when the LLC has recklessly harmed people or has been used to perpetuate a fraud.
New Jersey LLC Taxation
New Jersey LLC can choose to be taxed as a corporation or choose the pass through tax structure of proprietorships, partnerships and S Corporations. Also, the distribution of profits and losses can differ from members’ share of ownership. While New Jersey LLC and New Jersey S Corporation are essentially alike, an LLC is much more flexible and is easier and less complicated to operate than a corporation.
Why Form New Jersey LLC?
For those who want the same limited liability as a corporation but without the formal structure and more cumbersome ongoing requirements, New Jersey LLC’s flexibility and simplicity offer a distinct advantage over a corporation. New Jersey S Corporation does, however, offer the advantage of allowing owners to minimize self employment taxes.
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Some Points to Consider When Forming New Jersey LLC
Members & Employees
This information is not an attempt to present all you should know when forming an LLC in New Jersey but rather to present just some of the basic information about New Jersey LLCs. While we make every effort to ensure its accuracy, MaxFilings does not guarantee that all of the information is accurate, complete and/or current and it should therefore be independently verified. And, as always, you should seek the advice of qualified professionals who are familiar with your circumstances as well as applicable federal and New Jersey laws.
MaxFilings helps business owners just like you form LLC’s in New Jersey
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