I want to create a small business in New Jersey with myself as an
employee.  I will not likely have more than two employees in the next
few years.  I have accessed NJ's government info on what needs to be
done, and don't have time to analyze it.  My questions are:  Will I
have to pay any taxes if I have not earned money in the business, and
are there any other expenses in having a small business that make it a
bad idea compared to my simply getting paid directly by customers
without any business entity?

I assume that you want to start a sole properietorship ( self -
employed ). This is the simplest type of business.
The answer for your first question is NO YOU DONT HAVE TO PAY ANY
TAXES IF YOU DONT EARN A PROFIT. The Government requires you to pay
federal and state taxes only if you earn any profit on any tangible
good. You will have to fill Form 1040 in order to report profit or
loss.
For your second question, I am assuming that you are getting profits
without forming a busines entity. The basic cost of forming any
busines entity lies in paying a very small fee for registering a
business, naming it etc ( anywhere from $0 to $75 ) for an average
small business in the United States. Beside that you need to look at
required licencing for your business ( most busineses dont require
licencing, rare ).
Once started, as for the main expenditures you will have to pay
federal and state taxes ( You charge state tax on everything you sell
to your customers in NJ )so nothing goes from your pocket. You also
have to pay a tiny amount of self employed tax ( for your social
security ).
Now if you will be employing anyone in coming years than there are
other factors that you will need to look at.
As I worked for New Jersey small business association and am myself
self-employed, i think it is not a bad idea to start your business (
the major cost of most small business is always the federal tax that
we all have to pay ). Otherwise for a self employed person, usually
the costs are low. And it isnt that bad to hire others to work for you
in the future ( the regulations are not as daunting as it may seem ).

If you dont have time, Please browse the following page for basic
information:
http://www.irs.ustreas.gov/businesses/small/article/0,,id=99336,00.html

Regards,
leader-ga

I agree with the above answer for the most part. The fact is that if
you are accepting money for services and/or goods, you ARE IN
BUSINESS. However not formally if you don't get a business license,
etc. As long as you declare this income you're legal for the most
part.
As a small-business owner for 22 years I disagree with the idea that
an employee is easy to add in. It's the paperwork that kills a
small-business owner. I try to keep mine to a minimum and lasted 20
years before hiring an employee and getting into payroll taxes.
Even with yourself as the only worker (you'd be sole proprietor not
really employee) you may have to file and pay quarterly (every 4
months) federal and state taxes, unemployment forms, gross sales tax
forms, etc, etc.
BUT, as a legal business you also get to deduct expenses.
It's been a hard, rewarding life but I recommend it to anyone who
likes to work hard. You'll never get fired!