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Limited Liability Companies in New Jersey

The limited liability company is authorized in New Jersey effective January 26, 1994. Since then, LLC's have become the predominate form of new business. As a result of the actions of the tax bar, since August, 1998, single member Limited Liability Companies are permitted in New Jersey.

A. Organization.

Limited liability companies are organized by filing a Certificate of Formation with the Secretary of State of New Jersey. A Certificate of Formation, N.J.S.A. 42:2B-11 requires the following:
  1. Name of the company
  2. Registered office and agent
  3. Certification of the founding members
  4. Date of dissolution of limited liability company
  5. "Other matters"
In the "other matters"section, it may be appropriate to the list the name of the "Tax matters member" for dealing with the Internal Revenue Service. The borrowing provisions of N.J.S.A. 42:2B-9 and the indemnification provision of N.J.S.A.42:2B-10 might also be appropriately included. The Secretary of State is contemplating adding a purpose clause to their form even though this is not required under the statute.

B. Operating Agreement

The Operating Agreement is an agreement between the members of a limited partnership, which govern the affairs of the business. However, unlike corporate By-laws, there is great flexibility in the Operating Agreement. N.J.S.A.42:2B-66 provides "This act is to be liberally construed to give the maximum effect to the principal of freedom of contract and to the enforceability of operating agreements."

C. Conclusion.

The Limited Liability Company is an extremely flexible tool which has the limited liability advantages of a corporation and the tax advantages of a partnership or sole proprietorship.


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