When assessing business opportunities, there are several factors to consider. Market research is essential in understanding your target audience and their needs. It’s also important to understand the competition and how they are positioning themselves in the market. Additionally, you should consider market demand and whether there is an opportunity for growth or if the market is saturated.

In addition to researching these factors, our business library can help you further explore your business idea. Our library provides access to industry reports, competitor analysis, and financial performance data that can help you make informed decisions about your venture.

No matter what business you start, a business plan is necessary to help ensure your business begins on a solid foundation. A business plan not only helps to get funding, but it will also help you define the goals of your business and create a roadmap to keep on course.

A good business plan should include an executive summary, company description, market analysis, organization and management structure, product or service line, marketing plan, operational plan, financial projections, and other relevant information. This information will help you make informed decisions about your business and provide potential lenders or investors with the necessary information to evaluate your venture.

Related: How to write a business plan

The next step to starting a business in New Jersey is selecting a business entity. A business entity (also called a business structure) is how a business is legally formed to conduct business. New business owners need to choose the right entity type, as this will determine how the business is taxed and its owner’s or shareholders’ personal liability. In New Jersey, there are four common types of business entities: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

Sole Proprietorship: A sole proprietorship is the simplest business structure, where the owner and the business are considered the same legal entity. This means the owner is personally responsible for all debts and liabilities of the business.

Pros:
– Easy and inexpensive to set up.
– Owner has full control of the business.
– No separate business tax filings are required.

Cons:
Owner has unlimited personal liability for business debts and obligations.

General Partnership: A general partnership is a business structure where two or more individuals jointly own and operate the business. Each partner is personally liable for the business’s debts and obligations.

Pros:
– Simple and inexpensive to establish.
– Shared management and financial responsibility.
– No separate business tax filings are required.

Cons:
– Each partner has unlimited personal liability for the business’s debts and obligations.
– Potential for conflicts among partners if not properly managed.

Corporation: A corporation is a separate legal entity owned by shareholders. It provides limited liability protection for its owners and is subject to specific regulations and tax requirements.

Pros:
– Limited liability protection for shareholders.
– In addition to debt, a corporation can raise capital through the sale of stock.

Cons:
– More complex and expensive to set up and maintain.
– Can be subject to double taxation, where profits are taxed at the corporate level and again when distributed as dividends to shareholders.
– Increased regulatory requirements and paperwork.
– Must appoint a New Jersey registered agent.

Related: How to form a New Jersey Corporation

Limited Liability Company (LLC): An LLC is a hybrid structure that combines a corporation’s limited liability protection with a sole proprietor or partnership’s management flexibility.

Pros:
– Limited liability protection for owners (members).
– Pass-through taxation, where profits and losses are reported on the owner’s personal tax return, avoiding double taxation.
– Flexibility in management structure.

Cons:
– More complex and expensive to establish compared to sole proprietorships and general partnerships, but easier than a corporation.
– Must appoint a New Jersey registered agent.

Related: How to form an LLC in New Jersey

Starting a business in New Jersey requires obtaining various licenses and permits. Depending on the type of business you are starting, and where it’s located in the state, there may be one or more agencies to register with.

Business Licenses: The first step is registering your business with the State of New Jersey. This can be done online through the Business Registration Portal or by filing form NJ-REG. You will need to provide information such as your business name, address, contact information, and other relevant details. Once registered, you will receive a Business Registration Certificate from the State of New Jersey.

Employer Identification Number: The Employer Identification Number or EIN (sometimes referred to as the Federal Employer Identification Number or FEIN) is a nine-digit tax identification number issued by the Internal Revenue Service (IRS). Needed by partnerships, corporations, multi-member LLCs, or any business entity with employees, the EIN is used by employers to report taxes and other financial information related to their businesses.

Business Name Registration: Sole proprietorships and partnerships operating under a business name will need to register for a Certificate of Trade Name (sometimes referred to as a DBA or Doing Business As) with the County Clerk’s office where the business will be located.

Sales Tax Certificate – Businesses selling products and certain services will need to register for a Sales Tax Certificate with the New Jersey Department of the Treasury.

Professional Licensing – Besides registering your business and obtaining an EIN, you may also need specific licenses or permits depending on your business type. Some occupations, such as contractors, landscapers, child care centers, and barbers, require occupational licenses before offering their services in New Jersey. While this isn’t a license on the business, licensing is required to operate. More information about professional licensing is available from the NJ License & Certification Guide (published by the New Jersey Business Action Center.

Related: What business licenses and permits are needed in New Jersey

Maintaining a clear distinction between these personal and business finances provides numerous benefits and helps you to manage your business more efficiently and responsibly.

First and foremost, separating your personal and business finances helps to establish a clear legal distinction between your business and your personal assets. This is particularly important for businesses structured as LLCs or corporations, where limited liability protection is crucial. By keeping your business and personal funds separate, you can prevent the commingling of funds, which could jeopardize your limited liability protection.

Second, separating your finances simplifies accounting and bookkeeping processes. Having separate business bank accounts and credit cards lets you track business-related income and expenses more easily without sifting through personal transactions. This not only saves time and effort but also helps you to generate accurate financial statements and gain a better understanding of your business’s financial health. Additionally, a clear record of your business transactions makes tax preparation easier and reduces the risk of errors when filing tax returns.

Third, separating personal and business funds allows for a more professional appearance. Using dedicated business accounts for transactions with clients, vendors, and other stakeholders signals that you take your business seriously and helps to establish credibility.

Last, having separate business and personal finances can be beneficial when applying for loans or seeking outside investment. Lenders and investors typically require detailed financial information to assess your business’s stability and growth potential. By maintaining separate accounts, you can easily provide the necessary documentation and demonstrate your business’s financial discipline, increasing your chances of securing funding.

Without funding, it may be impossible to start your business, so it’s important to understand the various funding options available.

One option is to apply for a conventional bank loan. Banks typically require collateral, a personal investment between 15% – 25% of the total startup costs, and a personal guarantee from anyone owing 20% or more of the business.

The Small Business Administration (SBA) also offers loan guarantee programs that can make it easier for small businesses to obtain financing from participating lenders. The SBA guarantees a portion of the loan, reducing the risk for lenders. The most popular SBA loan program is the 7(a) Loan Program, which can be used for various purposes, including working capital, equipment purchases, and real estate.

Microloans are small, short-term loans designed to help small businesses and startups with limited financing needs. In New Jersey, several organizations offer microloan programs, such as the Main Street Micro Business Loan from the New Jersey Economic Development Authority (NJEDA) and the UCEDC microloan program. These programs typically provide loans up to $50,000, with lower interest rates and more flexible terms than conventional bank loans. Microloans can be an excellent option for businesses that require a smaller amount of capital or do not qualify for traditional bank loans.

Researching how to find small business grants is very popular, however, it’s not common for there to be grants for startups.

Finally, investors such as the Jumpstart NJ Angel Network can provide a source of funding for new businesses in New Jersey. Investors may provide equity financing or debt financing depending on their preferences and risk tolerance levels.

Related: Understanding the different types of business funding

There is a lot to prepare for as a small business owner in New Jersey hiring their first employee. This process involves multiple steps, including planning, recruitment, selection, and onboarding.

Before hiring your first employee, it’s critical to comply with all relevant employment laws and regulations. There are multiple agencies to register with, such as the New Jersey Department of Labor and Workforce Development, the IRS, the Department of Treasury, and others.

Employers are also responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Related: Steps to hiring your first employee in New Jersey

having the right small business insurance in place can give you peace of mind knowing that you are protected from potential financial losses due to unexpected events. It’s worth taking some time to research different policies and find one that best suits your needs so that you can rest assured knowing that your business is properly covered should something go wrong.

Most types of business insurance are optional, except for workers’ compensation insurance which is required for all New Jersey employers.

Even if insurance isn’t required, and there is a fire, theft, or personal injury lawsuit, the business owner may have to pay out-of-pocket damages and legal fees. General liability insurance is commonly purchased, which provides financial protection for businesses from claims related to bodily injury, property damage, and other liabilities.

Related: Types of insurance your business may need

Bookkeeping is a critical aspect of running a successful small business. By maintaining accurate and organized financial records, you can ensure compliance with tax requirements, manage your cash flow effectively, and make informed decisions that support your business’s growth and long-term success.

Effective bookkeeping is vital for small businesses and involves maintaining various financial records, such as sales receipts, accounts payable and receivable, payroll data, bank statements, and invoices.

Recording this information can be simplified through accounting software like QuickBooks or Xero, which automates tasks like invoicing and bank reconciliations. Alternatively, a well-structured paper filing system can ensure easy access to physical documents. For those lacking time or resources, outsourcing to a professional bookkeeper can provide expert guidance on maintaining financial records.

Related: Setting up accounting for a business