Does New Jersey Have Franchise Tax? An Expert's Guide

Franchise taxes are generally a fixed fee or an amount based on a company's net worth.

New Jersey

taxes corporate income through its corporate business tax (CBT), but the state has no franchise or privilege tax generally applicable to businesses. Some states charge a tax on certain companies for the right to exist as a legal entity and do business in the state, usually referred to as a privilege tax, transaction privilege tax, or franchise tax. However, New Jersey does not impose a franchise tax.

Instead, it has something similar to the Corporate Business Tax (NJ CBT) which applies to C and S corporations; LLCs are exempt from paying this tax. If your LLC is classified for tax purposes like any of those other entities, you will have to pay the New Jersey CBT. The rates vary depending on the type of corporation, net income, and the length of the tax period, among other factors. The New Jersey State Tax Division provides us with franchise tax data.

Once an order is placed with us, we conduct a preliminary investigation to obtain the information we provided to the State with our request, to help facilitate obtaining franchise tax data for our customer. The New Jersey Franchise Practices Act was designed to oversee the interactions and relationships between franchisees and franchisors. This rule requires a franchisor to provide a current and legal FDD to any potential franchisee within 14 days prior to signing an agreement or exchanging money. Other regulations and rules of the New Jersey Franchise Practices Act focus on monitoring the relationship between the franchisor and the franchisee, as well as protecting the franchisee from any unreasonable interference by the franchisor in connection with the operation of the franchise. If you are a New Jersey Franchise Tax Searches customer, you may have experienced shift time from one week to ten weeks.

Talk to your accountant or tax advisor to determine if you are required to pay NJ CBT and, if so, how much you should pay. Federal taxes can be complicated, so talk to your professional accountant or tax preparer to make sure your New Jersey LLC pays the right amount. Also check with the New Jersey Tax Division to confirm if your business is required to collect sales tax and to make sure you pay the correct amount. The corporate corporate tax rate is 9% on the adjusted total net income or on the portion assignable to New Jersey. For example, if you buy furniture for your New Jersey business from a company in a state that does not have a sales tax or has a lower sales tax than New Jersey, you will be responsible for paying New Jersey use tax.

Note that the final month of the accounting period for federal returns and New Jersey returns must be the same; however, the tax return year in the return title for federal and state returns may differ.