All businesses are obligated to file federal, state, and local tax returns each year. In addition, every business in New Jersey must file an Annual Report, which costs $75 and confirms that your registered agent and address information is current and correct. Submitting your tax documents or Annual Report late, or failing to do so entirely, can result in fines and penalties and may even lead to the dissolution of your business. Therefore, it is essential for responsible parties to understand their obligations.
There have recently been significant revisions to corporate tax legislation in New Jersey, particularly regarding the New Jersey Pass-Through Business Alternative Income Tax (PTE/BAIT), which came into effect for tax years beginning in 2022.
There are several important tax documents and forms with which business owners and financial controllers need to familiarize themselves. In this article, we will explain the purposes and functions of some of the key tax forms relevant to businesses operating in New Jersey.
There are various types of taxes that businesses in New Jersey will need to file, though your exact requirements and deadlines will depend on a number of factors, including the structure of your business and whether you have employees.
Income Taxes are payable on your net income, Sales and Use Taxes are payable on the taxable goods and services you have sold, Payroll Taxes and Wage Withholdings are payable if you employ people, and Specialty Taxes are those that relate to specific industries only. Your accountant or CPA firm will be best placed to advise you on the categories of taxation for which you will be liable, and the forms you will need to complete in order to file and pay them.
You can simplify the tax process by understanding exactly which documents you will need and what you will need to provide to your accountant for them to compile and submit your returns. In the next section, we will look closely at some of the most important tax forms you will need to understand.
A Limited Liability Company (LLC) may be treated as a corporation, partnership, or part of a disregarded entity for tax purposes. If your LLC has multiple members, it will be treated as a partnership for tax purposes, and if it has a presence in New Jersey, you must file both a NJ-1065 form and a Federal Form 1065, unless you elect to file under a different entity status. In certain circumstances, partnerships with no income or expenditures may not have to file the NJ-1065.
The NJ-1065, also known as a Partnership Tax Return, is an annual tax form that reports the income, gains, losses, deductions and credits of a partnership business as well as information about each of the business’s partners and their respective share of the partnership’s income. Partnerships and LLCs are defined as pass-through entities, which means that profits and losses are passed directly to the partners or members. These owners/members will obtain a K-1 from the partnership, which they must use to report their share of the profit/loss on their personal tax returns.
Your NJ-1065 form is due no later than the 15th day of the fourth month following the end of the tax year. Your Federal Form 1065, however, must be filed no later than the 15th day of the third month. For example, if your tax year ended on December 31, 2022, you must file your federal 1065 by March 15, 2023, and your NJ-1065 by April 15, 2023.
Under US federal law, an S-Corporation is a business structure that may pass its taxable income, credits, deductions, and losses directly on to its shareholders. S-Corporation classification is available only to businesses with fewer than 100 shareholders who must be a US citizen of legal resident.. S-Corporations do not pay corporate taxes, as income is taxed at each shareholder’s personal income tax rate instead.
If your business is classified as an S-Corporation and has a presence in New Jersey, you must complete both an NJ CBT-100S and a Federal Form 1120-S. An NJ CBT-100S is used by a corporation to file its income tax return in New Jersey, while a Federal Form 1120-S reports the business’s income, losses, dividends, and other distributions throughout the year for federal tax purposes. These forms also inform the IRS what percentage of the business is owned by each shareholder, which can impact payments owed by or refunds due to those individuals.
S-Corporations must file both an NJ CBT-100S and a Federal Form 1120-S once per year. Like Form 1065 for LLCs, Form 1120-S is due no later than the 15th day of the third month following the end of the fiscal year, while Form NJ CBT-100S is due no later than the 15th day of the fourth month.
The New Jersey Form K-1, or NJ K-1, must be submitted on behalf of all partners of pass-through entities in New Jersey. This includes any individual who was a partner at any time during the year. This form reports each partner’s share of the business’s income, which will then be reported and paid as part of their individual tax return.
Partners who are resident in New Jersey will be taxed on their share of the business’s income, while nonresident partners will be taxed only on the portion of their share that is allocated to New Jersey.
When the business files its partnership return (NJ-1065), it must attach a copy of the NJ K-1 for each resident partner. It must also attach any nonresident partners’ forms ift the business has reported income or losses allocated to New Jersey. The business must retain copies of all NJ K-1 forms as part of its recordkeeping.
Each partner must be issued a copy of their NJ K-1 no later than the date on which the Form 1065 is submitted.
The New Jersey Business Alternative Income Tax, or NJ-BAIT, was introduced in 2020 to mitigate the negative impact on businesses of the $10,000 federal limit on the deductibility of state and local taxes, which was introduced as part of the Tax Cuts and Jobs Act (TCJA) in 2017. For fiscal years beginning on or after January 1, 2020, LLCs or S-Corporations may optionally pay a Pass-Through Business Alternative Income Tax due on each partner’s share of income. Those individuals can then claim a refundable tax credit for the amount of tax paid by the pass-through entity.
Any eligible business opting to take advantage of the new NJ-BAIT regulations must submit a Form PTE-100. This election can be made annually but cannot be applied retroactively. The business must then pay quarterly estimated taxes.
With the PTE-100, the business must also include a PTE-K-1 for each member or partner.. The PTE-100 must be submitted electronically and no later than the 15th day of the third month following the close of the fiscal year.
The NJ Form 927 is a quarterly report on the gross income tax withheld from employees’ wages and is due each quarter regardless of the amount of tax payable.
All New Jersey businesses with employees must submit Form 927 reporting their total NJ state income tax withheld from wages as well as any NJ wages that are subject to Unemployment, Disability, Workplace Development, or Family Leave payroll tax.
The Form 927 process can be complicated if a refund is due as a result of an amended NJ Form 927. Unlike most amended tax returns resulting in a refund, the state of New Jersey will not automatically return the overpaid amount to the organization. In this instance, a Form UC-9 must be completed and submitted to claim back the overpaid sum.
Any business selling taxable goods or services within the state of New Jersey must register with the New Jersey Division of Revenue and Enterprise Services and collect sales tax. This applies even to businesses that sell taxable goods or services only on an occasional or seasonal basis.
Businesses that collect sales tax must submit returns and make payments quarterly in most instances. However, if your business collected over $30,000 in sales tax during the previous calendar year and collected over $500 in the first or second month of the current calendar quarter, you must instead make monthly payments.
The Form ST-50 is the quarterly sales tax return form, while the ST-51 is for those businesses required to file and pay monthly. You must file a quarterly ST-50 return even if no sales were made, and therefore no tax is due, during the quarter. An ST-51, however, can be used only if there is a payment to remit.
These returns must be filed. on the 20th day of the month following the end of the filing period. For example, Q1 ends on March 31, meaning that you must file your return and pay the amount due no later than on April 20.
Knowing which forms you need for your business’s tax returns, and where to find them, is critical to navigating tax season with ease. Missing a crucial form can have significant repercussions, from additional work to unforeseen financial penalties.
The state of New Jersey provides a NJ Forms Reference Library in which you can find all the tax forms you will need. In addition, the Corporation Business Tax Forms library is a comprehensive and searchable resource of corporate tax forms required in New Jersey.
Most forms can be submitted either electronically or in a physical format. Some, however, can only be submitted electronically. Always check before you begin completing your forms.
A Certified Public Accountant (CPA) firm licensed in the state of New Jersey can assist and support you with all aspects of navigating filing the relevant tax forms and paying your taxes. CPA firms offer an additional level of specialism above and beyond that offered by generalized tax and accounting firms, and your CPA can become an indispensable advisor and partner in your business’s success.
The team at Levine, Jacobs & Co. has been proudly supporting New Jersey’s business owners with their financial affairs for more than 70 years. Our tax advisory services include not only the preparation and submission of all relevant tax forms and payments, but also a comprehensive tax planning focus that equips you to navigate the complex world of taxes and make your money work harder for you, both now and into the future.
If you would like to learn more about how we can support you, please contact us to speak to a member of our experienced and professional New Jersey CPA team.