New Jersey is the 4th smallest state, yet the 11th most populous, with a population of around 8.8 million people. The state has recently attracted a lot of investments, especially from corporate entities migrating from New York that are attracted to New Jersey’s favorable tax rates, open spaces, and better transportation.
Small businesses (SMBs) are very crucial to the New Jersey economy. The state has brought in proactive and pro-business programs that help these businesses flourish to a point that it now ranks 11th out of 50 states in the number of SMBs.
Here are a few statistics on small businesses in the state of New Jersey:
- There are a total of 908,209 small businesses. That’s 99.6% of all businesses in the state.
- Micro-enterprises employ 1.8 million individuals, or 49.9% of all state-wide employees.
- There are 18,953 small business exporters that account for 41.4% of New Jersey’s total exports worth $31.8 billion.
- Self-employed individuals at their own incorporated businesses have an average median income of $58,000. Those who run unincorporated businesses have a median income of $33,000.
- SMBs in the health care and social assistance sectors account for 48.6% of the private workforce, with 291,118 employees currently working in it.
- The professional, scientific, and technical services industries have the largest share of small businesses in the state, and a total of 144,041. 117,492 of these are nonemployer businesses.
- There are only 117 SMBs in the utilities sector, the smallest industry in New Jersey.
- New Jersey State law requires that every New Jersey LLC designate a New Jersey registered agent that will be available during regular business hours at a physical address within the state.
- The state has no franchise or privilege tax generally applicable to businesses. However, if income from your business passes through to you, that income will be subject to taxation on your personal state tax return.
- Corporations and limited liability companies (LLCs) must register and file their Articles of Organization at the New Jersey Department of Treasury. The filing fee for business registration forms is $125.
- For business owners who are subject to the individual income tax, like LLCs, the tax rate is based on a tier system ranging from 1.4% in the lowest tier (annual incomes of $20,000 or less) to 8.97% in the highest tier (annual incomes of $500,000 or higher).
- New Jersey has the highest sales tax in the tri-state area, which is capped at 6.625% compared with New York’s 4% and Pennsylvania’s 6%.
- The state also has a 2.49% property tax rate, which is the highest in the country, followed by Illinois (2.27%) and New Hampshire (2.18%).
- Millennials do not typically search for opportunities in New Jersey’s small firms, despite them having an 80% hiring rate. Young people prefer larger corporations, due to higher salaries and incentives.
- Corporations must pay a minimum tax fee of $500 to the New Jersey Department of Revenue.
- The New Jersey Department of Treasury requires all corporations to file an annual report at a fee of $50.
Sources:
- The New Jersey Tax Guide
- Investopedia
- US SBA – 2020 Small Business State Profiles
- US News
- Business News Daily
- Nolo
