Overcoming The Biggest Challenge To Starting A Business In New Jersey
With the highest urban population in the United States and the densest system of highways and railroads, New Jersey is pretty much the promised land for any startup that requires an urban focus. It’s got a strong healthcare and manufacturing sector, and its transportation and technology industries are both booming.
Of course, it’s not all sunshine and flowers in the garden state. In spite of this rapid growth – and in spite of the fact that New Jersey is a promising candidate for entrepreneurs – there’s on major problem. Namely, it’s notoriously difficult to receive funding as a New Jersey-based startup.
“We don’t have an especially founder-friendly ecosystem compared to other places in the country,” explains entrepreneur Jennifer Crews, speaking to Bell Labs. “I have witnessed this for a while and now, as a founder, I am experiencing it first hand…We can create a ton of activity and invest a lot of effort, but the key to building a robust startup ecosystem is to make New Jersey a place where founders want to do business.”
And currently, that’s where the problem lies. See, New Jersey has something known as a capital gains tax, which applies to all exchange of property, shares, and stock. What that means is that whenever a startup has an exit event, founders have to pay out a huge chunk of their gain in taxes.
Factor in that the region also has some of the highest sales, property, and income tax in the country, and it starts to look like a pretty expensive place to do business.
Currently, investors and entrepreneurs alike are lobbying the New Jersey government to change that fact. It’s not clear how long it’ll take before they succeed. In the meantime, however, if you’re dead-set on founding a business there, here’s a bit of advice:
- Seek out an established startup community that can give you both support and advice.
- Find staff who are willing to work for equity rather than cash.
- Don’t be afraid to look for investors who aren’t based in New Jersey.
If the above sounds like it’s a bit too much to handle while you’re trying to get your business on its feet, there’s another way – you can get in touch with My New Company. We’ll help you take care of all the basics, and allow you to focus on finding investors.
Give us a shout today – we’ve even compiled a one-stop resource for starting a business in New Jersey.