New Jersey LLC: S corp or C corp?

New Jersey at a glance

What is different about New Jersey?

New Jersey used to make you file a separate state S election, and a missed form meant the state taxed you as a C corporation. A 2022 law ended that for federal approval letters dated on or after December 22, 2022. If the IRS accepts your S election, New Jersey follows it, as long as the business is registered as a corporation and every shareholder signs the Shareholder Jurisdictional Consent. What did not change is the cost of keeping the status. Your S corporation owes a minimum tax set by New Jersey gross receipts, from $375 under $100,000 up to $1,500 at $1,000,000 or more, even in a year with no profit. A default LLC has its own quirk: one taxed as a partnership with more than two owners pays $150 per owner.

Does New Jersey recognize a federal S corp election?

New Jersey recognizes your federal S election without a separate state election form. Register the business as a corporation, then file the Shareholder Jurisdictional Consent at registration, with your first CBT-100S, or through the state's S Corporation Election system. Each shareholder is listed with an ownership percentage. The S corporation itself pays the gross-receipts minimum tax: $375 below $100,000 of New Jersey receipts, $562.50, $750, $1,125, and $1,500 at $1,000,000 or more. If you belong to an affiliated group with $5,000,000 or more of payroll, the minimum is $2,000. Owners pay New Jersey Gross Income Tax on their share of profit.

Does my LLC need a separate New Jersey election or form?

New Jersey has no separate S election form for new S corporations; instead every shareholder signs a Shareholder Jurisdictional Consent, filed at registration, with the first CBT-100S, or through the state's S Corporation Election system.²

What does New Jersey tax an S corp or LLC at the entity level?

• A New Jersey S corporation pays a minimum tax set by New Jersey gross receipts, from $375 under $100,000 up to $1,500 at $1,000,000 or more (or $2,000 for members of an affiliated group with $5,000,000 or more of payroll).³
• A New Jersey LLC taxed as a partnership with more than two owners pays a $150 filing fee per owner, up to $250,000; a single-member or two-member LLC does not owe it.⁵
• A New Jersey C corporation pays a minimum tax of $500 to $2,000 based on New Jersey gross receipts, even with no profit.⁷

Is a New Jersey LLC taxed as a C corp ever better?

A New Jersey C corporation pays the Corporation Business Tax on allocated net income: 6.5% if net income is $50,000 or less, 7.5% if it is $100,000 or less, and 9% above that. On top of that comes a minimum tax by gross receipts, from $500 under $100,000 to $2,000 at $1,000,000 or more. The business pays the tax first, and you pay personal tax again on whatever you take out as dividends. New Jersey does not allow consolidated returns, so each corporation files on its own.

Run your New Jersey numbers

In New Jersey, S status starts to pay when profit is high enough that the self-employment tax saved on distributions beats your added payroll and filing costs. Count the yearly minimum tax of $375 or more against that saving, because it is owed even when the business loses money. A small LLC with thin profit often keeps more as a default LLC.

How much would a New Jersey LLC owner save as an S corp?

Assumes a 60% salary⁹ and a single filer. Income tax is left out. C corp dividends are taxed again. A one-owner New Jersey LLC owes no partnership filing fee. S and C minimums shown are for New Jersey receipts under $100,000; they rise above that.

When is the Form 2553 deadline for a New Jersey LLC, and what if I miss it?

Late relief: federal steps, deadline guide.

What to do next

More on New Jersey: How to start a New Jersey LLC · How to start a New Jersey corporation · New Jersey LLC cost · New Jersey annual report · Annual report late fees by state

Common questions