Connecticut LLC - Everything you need to know
Whether you own an existing Connecticut business or you are looking to form one, operating as an LLC (Limited Liability Company) provides two main advantages: it enables the owner or owners to construct their business as a separate legal entity, which helps shield their, as well as their managers’, personal possessions from lawsuits and other risks, and it also enables the LLC to pass on costs and profits to the owner’s or owners’ personal tax returns as opposed to being taxed as an LLC or a corporation.
The owner or owners also have the option to operate the LLC as a business, or it can be utilized to hold various property, such as real estate.
How to start an LLC in Connecticut is straightforward and explained in the next 8 steps, which our team can also assist you with any time throughout the process.
Make Sure the Chosen Name for Your LLC is not Already In Use
First, select a name for your limited liability company, which must be accompanied by the abbreviation LLC or L.L.C.
Your chosen name must also be entirely original, meaning there is no other business with the same name in the state of Connecticut. Therefore, once you have selected a name for your LLC, you will next need to conduct a search, using the Connecticut Business Entity Database, to ensure your chosen name is not already in use. Otherwise, the state of Connecticut will return your filing, alerting you that the name is too similar to another business, in which case you will need to come up with a different name.
On the other hand, if the search returns no available matches, then you are free to register the name and proceed to the next step.
Select a Person or Company to Accept Legal Mail on Your Behalf
As part of your Connecticut LLC filing requirements, you will also need to select an individual or a company to accept Service of Process deliveries, such as subpoenas, complaints, and summons, on behalf of your LLC. This individual or company is known as a Registered Agent and must be selected prior to filing a Certificate of Organization.
In the state of Connecticut, the Registered Agent is also required to serve as an intermediary for accepting documents, such as tax notices, etc.
Your chosen agent needs to have a valid Connecticut address, which does not include a PO box, and they must also be reachable between the hours of 9:00 AM and 5:00 PM to receive legal documents. Or, you could hire a Commercial Registered Agent located in Connecticut to serve as your registered agent, in which case you could use their physical address.
Hiring a Registered Agent also enables you to keep your home address off public records, provided you receive their permission to use their address when filing your Certificate of Organization. However, there may be a fee.
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File a Certificate of Organization With the State of Connecticut
- Once you file a Certificate of Organization, it means you are thereby permitted to legally operate your business as an LLC within the state of Connecticut.
- The Certificate of Organization must be filed with the Connecticut Secretary of State, which can be done either online or via mail. There is also a fee for filing, which is $120. There is also a charge of $40 for a copy of your approved Certificate of Organization if you file by mail.
- Once you are approved, you will also receive a Business ID Number, which will be included in your Acceptance Letter. This Business ID Number is used by the Secretary of State to recognize you as an LLC.
Complete and Sign an LLC Connecticut Operating Agreement
As an LLC Connecticut, you are required to keep an Operating Agreement as part of your business records.
An Operating Agreement, simply put, states the names of all members of the LLC as well as the proportion of the business they each own. It also explains the manner in which the LLC’s finances, as well as its functions, will be managed as agreed upon by all parties. Lastly, it must also cover how tax obligations will be met and how members will share in profits and losses. The agreement must also be signed by all members.
You can draft your own Operating Agreement using a template; however, for more complex situations, such as if your LLC has many members, it may be best to consult a professional third party.
Apply for an Employee Identification Number (EIN)
An EIN, which is known by various names, including Employer Identification Number, Federal Employer ID Number, FEIN, Federal Tax Number, and more, is a Tax Identification Number that is issued by the IRS to help identify your limited liability company for tax purposes.
It also enables your business to open a separate bank account using your business name, manage employee payroll, apply for permits and licenses, and acquire lines of credit for your LLC.
You can file an EIN by mail or online, using Form SS-4, which is provided by the IRS. You will also need to file for a Connecticut State Tax Identification Number, which can be done by filing Form REG-1 with the Department of Revenue.
Once your LLC in Connecticut is approved for an EIN Number, you will then receive an EIN Confirmation Letter, which typically arrives anywhere between 1 day and 8 weeks, depending on your mode of registration.
File Your Connecticut LLC Annual Report
To ensure your contact information remains updated, the state of Connecticut requires your LLC to file an Annual Report each year, which is usually required by March 31st the year after the approval of your LLC. However, January 1st is the earliest you can file.
The Annual Report must be filed online, and it also includes a $20 fee for filing.
Failure to file an Annual Report annually will result in a negative mark on your records, which can negatively impact your LLC.
Obtain the Proper Licenses and Permits
- Conducting business in Connecticut often requires various licenses and permits, depending on the location of your business, as well as your business industry. In fact, the more regulated your industry, the more requirements your LLC will have.
- Some common licenses and permits required to do business in Connecticut include a business license, building permit, zoning and land use permit, health permit, and signage permit.
- Failure to obtain the proper permits and licenses for your LLC can result in fines, penalties, or even the loss of rights to operate your business in Connecticut.
Meet Your Connecticut Tax Obligations
The taxes your LLC is required to pay ultimately depends on various factors, including your industry, the location of your business, and how you are classified by the IRS; however, the most common taxes include:
Connecticut Withholding Tax
If your LLC has employees, then the IRS requires you to withhold Connecticut Income Tax. The Connecticut Department of Revenue is where you will need to register your LLC for withholding tax, which also needs to be before you can file your return.
You’ll also need to register for unemployment taxes as well as workers compensation with the Connecticut Department of Labor.
Connecticut Sales and Use Tax
If you are a Connecticut LLC business that sells goods or provides taxable services, then you are required to pay sales and use taxes, regardless of your income, and whether you collect them from your customers or not.
However, your LLC will need to acquire a Sales Tax Permit prior to conducting business. Failure to acquire a Sales Tax Permit prior to providing services or making sales will result in a state fine upwards of four hundred dollars. It could also land you in prison.
Connecticut Business Entity Tax
All Connecticut LLCs are required to file the Business Entity Tax (BET) biennially, or every two years, and by April 15th of the year in which it is due.
The Business Entity Tax can be filed online through the Taxpayer Service Center, or you can file by mail. There is also a $250 fee for filing.
Additional Taxes Due
Some other taxes your LLC may be responsible for include property taxes, surtax, motor vehicle fuels tax, franchise tax, estimated corporate business tax, and more.
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How a Filing Company Can Help
Forming a Connecticut LLC requires various steps, orchestrated in the right order, as well as detailed information, which can be time-consuming and overwhelming. Additionally, failure to complete the required Connecticut LLC forms properly can result in your LLC being denied.
However, a filing company is highly knowledgeable and experienced in the formation of LLCs and can help make the process much easier for you by completing many of the tasks on your behalf, including your Connecticut LLC search, so you can feel confident that your filing is taken care of and according to the guidelines.
The filing company can also complete much of the paperwork online, which, in many cases, will result in you receiving your acceptance letters and certifications in as little as one day as opposed to having to wait several weeks, so you can begin your exciting new endeavor as soon as possible.
For more questions or to begin forming your LLC in Connecticut, contact us at your convenience. You can also check out our next guide to filing an LLC in Delaware.