How to start an LLC in Connecticut?

LLC in Connecticut

If you are thinking of starting a business, then one of the most favored entity structures is that of a limited liability company. You can file an LLC in Connecticut, and this will enable you to participate in various business incentive programs, including tax credit programs. These programs focus on increasing growth while minimizing overall operational costs. You can opt for Connecticut LLC filing online or offline. However, there are several requirements that you will need to fulfill before and after you apply for new LLC registration. You can even move your existing LLC to this state through foreign qualification.

What is a Connecticut LLC?

The Internal Revenue Service (IRS) has defined a Limited Liability Company (LLC) as a type of business structure that is allowed by state statutes, although regulations may vary from one state to another. Connecticut LLC filing requirements will be governed by the 2024 Connecticut General Statutes, Title 34, Chapter 613a – Uniform Limited Liability Company Act. The owners of an LLC are known as members, and there are no restrictions on ownership in most US states. Members of a Connecticut LLC can be individuals, other LLCs, corporations, and even foreign entities.

When you file a Connecticut LLC application, you will be able to enjoy several advantages of this type of structure, like pass-through taxation. After registering your company, you can even elect an S Corporation tax status.

Benefits of forming an LLC in Connecticut

As a first-time business owner or entrepreneur, choosing the right entity structure can often be decisive when it comes to company operations and long-term sustainability. You can choose to register any entity structure, although a Connecticut LLC search will reveal that this type of entity structure has many advantages. Let’s look at some of the top benefits:

• Pass-through taxation – When you file an LLC in Connecticut, this will help you derive maximum leverage. Pass-through taxation is where a business entity does not pay taxes at the business level. Instead, the income will be passed on to the owners of such a business, and they will need to file personal income tax on their share of profit from the company.
• Flexible ownership and management – If you start a Connecticut LLC, one of the key benefits is the flexibility to manage your company. An LLC can be member-managed or manager-managed. There are no restrictions on the number of members in your company. A limited liability company allows an extremely diverse ownership structure and, hence, is favored by entrepreneurs.
• Limited liability protection – This is definitely one of the greatest features of an LLC. Once you register an LLC, it will offer liability protection to the owners of the company. This refers to the fact that your personal assets cannot be used by creditors to satisfy any financial obligations of the company, like debts.

Start an LLC in Connecticut

There are several Connecticut LLC filing requirements that you will need to fulfill in order to register your company in the state and operate it smoothly. This could vary from filing of formation documents to acquiring proper licenses or permits. Let’s take a look at some of the important aspects of starting your LLC in this state.

1. Choose a Connecticut LLC name

One of the most important Connecticut LLC filing requirements is the company name. Your LLC name has to be mentioned in the company registration documents as well as licenses. Hence, the fundamental step is to identify a proper business name and ensure it is compliant with the 2024 Connecticut General Statutes. Let’s take a look at the important steps in this process.

• The name of your company must include a word, phrase, or abbreviation like “limited liability company,” “limited”, “ltd.,” “LLC,” or “L.L.C.,” pursuant to CT Gen Stat § 34-243k. (2024).
• You need to ensure the name is distinguishable in the Secretary of State’s records.
• Your chosen name should not be similar to the name of an existing person or entity.
• The chosen name should not contain any language that implies or states that the domestic or foreign limited liability company has been organized for a purpose other than what has been permitted by subsection (b) of section 34-243h.
• The use of certain words or phrases is restricted in the state, especially those that imply the company is a government agency, a bank, or a licensed professional.
• You need to conduct a Connecticut LLC search, also known as a name availability search, with the Business Services Division.
• If the chosen LLC name is available, then you can file the “Application for Reservation of Name” or BUS-002 form.
• You will need to submit this form along with a fee of $60.
• Your LLC name will be reserved for an effective period of 120 days pursuant to CT Gen Stat § 34-243l. (2024)

2. Choose a Connecticut LLC registered agent

If you have conducted a proper Connecticut LLC search and reserved your business name, the next step is to choose a registered agent in the state. The law states that an LLC, or any new or existing business operating within this state, must hire and continuously maintain a Connecticut LLC registered agent pursuant to CT Gen Stat § 34-243n. (2024).

The roles and responsibilities of a registered agent remain largely consistent across states, although the services offered may vary depending on the agent you choose. The most important responsibility is that of delivering service of process. IncParadise can serve as your registered agent in Connecticut, as we are committed to complying with all state requirements and laws. We also offer several types of business services, like new LLC registration as well as fulfillment of annual maintenance requirements.

3. File Certificate of Organization with the Connecticut Secretary of State

Every new domestic or foreign entity in this state must register or qualify as a foreign entity. You will need to submit a Certificate of Organization to register a domestic LLC pursuant to CT Gen Stat § 34-247. (2024). You can choose Connecticut LLC filing online or submit the same with the Business Services Division, Connecticut Secretary of the State.

You will need to submit a Certificate of Organization along with a fee of $120. It is important to note that you need to provide information pertaining to the appointment of a Connecticut LLC registered agent, along with the certificate.

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4. Prepare Connecticut LLC operating agreement

An LLC operating agreement is considered a legal and binding document that primarily outlines the various rules and regulations for operating a limited liability company (LLC). This document provides a detailed view of the company’s operational and financial decision-making processes, as well as the rights and responsibilities of its members. If you want to start a Connecticut LLC, then you will need to ensure you have created this legal document. Although in some US states, this is a required document for establishing an LLC, you are not required to submit it to the state. The scope, function, and limitations of an LLC operating agreement are provided in 2024 Connecticut General Statutes, CT Gen Stat § 34-243d. (2024).

The operating agreement doesn’t fall under Connecticut LLC filing requirements, but a limited liability company and its members will be bound by and have to enforce this agreement. Some of the important areas that a basic operating agreement contains are as follows:

• Statement of intent
• Distribution of profits and losses
• Member duties and benefits
• Powers and duties of members and managers
• How board member meetings will take place
• Regulations and procedures related to new member admission
• Voting rights
• Time period of operation
• Buyout and sellout processes or ownership transitions
• Elimination or limitation of any and all liabilities
• Tax considerations

5. Obtain an EIN for a Connecticut LLC

Once you file a Connecticut LLC application and it is registered, then certain state laws and rules have to be followed. Every new and existing business operating in this state needs to file some form of taxes, and this is where possessing an Employer Identification Number or EIN is beneficial.

There are several benefits of having an EIN for your LLC, and the top one is simplifying business tax filing. You will need an EIN to handle any type of tax obligation, and it will also help you access certain tax benefits. This is a unique nine-digit number issued to a limited liability company by the Internal Revenue Service (IRS) for the purpose of identifying that entity. An EIN is also known as the federal tax ID number (FEIN).

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6. Check local licenses and permits

Once you file an LLC in Connecticut, your company needs to maintain legal compliance in the state. One of the foremost requirements is that of obtaining relevant business licenses and permits. The state of Connecticut does not have a statewide general business license like Delaware does. However, other types of licenses may be applicable. The business licenses for a Limited Liability Company in this state are categorized as follows:

• Sales Tax Permit – Every state in the USA that has sales and use tax requires businesses to apply for and obtain necessary permits. Connecticut will require your LLC to apply for one only if it meets certain conditions. The Connecticut Department of Revenue Services requires only those businesses to obtain a sales tax permit who are involved in the following activities:
  • Selling, renting, or leasing goods
  • Selling a taxable service
  • Operating a bed and breakfast establishment, motel, hotel, or lodging service
• This is also known as a sale-and-use tax permit in Connecticut. You will not require this permit if you make an isolated sale. To obtain this permit, you will need to register online through myconneCT. This permit will be issued by the Department of Revenue Services (DRS).
• Licenses and permits by activity – Licenses in the state of Connecticut are issued based on the business activity or industry. There are different and dedicated government departments that are responsible for the issuance of these licenses. You will need to conduct a Connecticut LLC search for licenses based on the industry your business is in.
  

  For Example, if your business is operating in industries like construction or retail, then the license will be issued by the Department of Consumer Protection (DCP). Similarly, if you provide healthcare facilities, then the license will be issued by the Department of Public Health (DPH).

• Licenses issued by City/County – The third category of license is known as local licenses. These are issued by proper authorities in the city or county where your business is operating. The issuance of these licenses will vary according to business activity. The requirements and fees will vary from one county or city to another.

Searching for the right license or permit and finally obtaining it will take you through a maze of requirements. A reputable Connecticut LLC registered agent like IncParadise can help you identify relevant licenses and permits for your business. All you have to do is choose the “Business License Research Report” service. This is basically a detailed report containing a list of filing instructions, supporting document requirements, and fees for all business licenses and permits in this state.

7. Open a Connecticut LLC bank account

When starting a new LLC, business owners typically use their personal bank accounts for all transactions, including those related to their business. Mixing your personal and business transactions can lead to complexities in the long run. Hence, opening a business bank account is highly recommended, and it also comes with numerous benefits. This type of account is also known as a checking account. You should always conduct a Connecticut LLC search to find banks that offer personalized business services, such as overdraft protection, Account Management Tools, and merchant services.

One of the important features that most businesses look at is digital banking. A top digital banking platform is Cheqly. They provide the flexibility to open a business bank account in the USA, from anywhere in the country or abroad. You can not only open an LLC bank account quickly, but you can also access several smart features, like using physical or virtual debit cards for making payments faster.

8. Comply with taxes and other regulations

Once you start a Connecticut LLC, you will need to comply with the state’s annual maintenance requirements. The two most important annual requirements are filing taxes and submitting an annual report. Since an LLC is considered a “pass-through tax entity” for tax purposes, the burden of filing federal income tax passes to the individual owners. As an owner of the company, you will need to file the Connecticut Composite Income Tax Return. Apart from this, you may be required to file Connecticut employer taxes and sales and use tax. The latter depends on the business activity.

Another important Connecticut LLC filing requirement is the annual report. You will be required to file this by March 31 each year. You will also be required to renew your business licenses and permits as and when specified by the state laws or local zoning laws.

Know more about starting an LLC in Connecticut!

A Connecticut LLC registered agent can provide meaningful assistance towards the registration of a limited liability company in this state. However, you may have several queries regarding LLC formation, the cost of formation, and related matters. Hence, we have created a special “Frequently Asked Questions” section to address some of these queries.

Is Connecticut a good state to form an LLC?

Connecticut is home to several Fortune 500 companies like EMCOR Group, Inc., The Hartford Insurance Group, Inc., Stanley Black & Decker, and Amphenol Corporation, among others. The state provides new and existing LLCs with several small-business incentives, and there are additional advantages as well. Some of the reasons why entrepreneurs prefer to file an LLC in Connecticut are:

• It is home to 354,013 small businesses
• The state supports innovation and is responsible for inventing the world’s first nuclear submarine
• It boasts of having the highest per capita income as well as median household income in the nation
• One of the strongest industries is the financial services industry
• The average median income of self-employed individuals operating businesses is $60,584
• It provides quick access to large metropolitan areas like Boston and New York
• There are several innovation hubs in Hartford, Stamford, and New Haven
• Highly affordable cost of living
• The state offers several small-business and tax incentive programs, including corporate tax credits and exemptions.

How do I know if my Connecticut LLC name is available?

It is imperative that you first identify or choose a business name in compliance with the LLC naming guidelines as mentioned in the 2024 Connecticut General Statutes. You will then need to conduct a Connecticut LLC search. This is also known as a name availability search. The search helps in checking through the state database for unique names. If the chosen name is available, you can proceed to reserve it.

How much does an LLC cost in Connecticut?

If you want to start a limited liability company in Connecticut, then you will be required to submit a Certificate of Organization for a domestic entity. The initial cost to file an LLC in Connecticut is $120. Apart from the LLC registration cost, there will be other costs associated with name reservation and business licenses, permits.

Do I need a business license for my Connecticut LLC?

Yes. A business license is required for making your LLC operational. You may be penalized if you conduct business without proper licenses or permits.

Can I set up a single-member LLC in Connecticut?

Yes. You can set up a single-member LLC (SMLLC) in Connecticut. The process and documentation will remain the same as those of a sole proprietorship.

What taxes does an LLC pay in Connecticut?

One of the important Connecticut LLC filing requirements is annual tax filing. Since it is a pass-through entity, you will need to file personal income tax. You may also be required to file other taxes applicable in the state, depending on the business activity, location, and employees.

Can I register a foreign LLC in Connecticut?

Yes. You will need to register through the process of foreign qualification to transact business in this state. You have to file the Foreign registration certificate or Foreign registration statement pursuant to CT Gen Stat § 34-275b. (2024).

How do I dissolve my Connecticut LLC?

After a Connecticut LLC is filed online, if you want to dissolve your company, then there is a process to do so. You will need to file a Certificate of Dissolution for a Limited Liability Company pursuant to CT Gen Stat § 34-267a. (2024). There is no filing fee for the same.

Ready to form a Connecticut LLC?

A Connecticut Limited Liability Company is one of the most favored structures in the state. There are several advantages to this type of structure, and you can also benefit from state incentives. You can file a Connecticut LLC application to start a single-member or a multi-member LLC. IncParadise, a reputable Connecticut LLC registered agent, can assist you with the entire process of new business registration in this state.

IncParadise has helped with the registration of hundreds and thousands of businesses. We also offer a wide variety of additional services like foreign qualification, EIN assistance, and certificate of good standing, among others.