Starting LLC in Connecticut: Peculiarities & Detailed Manual
Want to start an LLC in Connecticut? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Connecticut, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Connecticut LLC: The Notion & Essence
Many Connecticut business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Connecticut puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Connecticut’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Connecticut obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Connecticut’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Connecticut and will help you to start an LLC. The agent can be an Connecticut resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner.
Send to the limited liability company or registered foreign limited company at the address indicated by the last agent of the limited liability company or registered foreign limited company, any process, notice or request relating to the limited liability company or registered foreign company with limited liability the responsibility that the agent serves or receives.
A registered agent guarantees an excellent reputation for your Connecticut LLC. Also, if your business gets worse, Connecticut can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Connecticut, you must file the Articles of Association with the Connecticut State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
You can fill out this form online or print the pdf file and send it by mail. Mind that if you decide to mail and want a certified copy for your documentation, you will have to pay $ 40 for each document.
LLC Formation Cost: In Connecticut, you should pay a $ 120 fee to set up an LLC.
Time of processing: Your Connecticut LLC incorporation documents will be processed during 5-10 working days and you’ll receive your final documents by mail. In more busy times, this process sometimes takes a little longer. But if you want your application completed in 24 hours, you can expedite your registration for an additional fee of $ 50. Mind that the calculation of working days begins after ALL the necessary documents are in order and correctly submitted.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Connecticut, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
All LLCs in this state pay income tax, depending on the structure of their business. Individual enterprises and limited partnerships are transit organizations. Such LLCs must pay their taxes through CT Form 1065. Corporate LLCs pay tax as such. You can see more information here.
All Connecticut LLCs are not only subject to income tax but also pay state corporate tax. This tax is levied every two years. The fee is $ 250 you have to pay it on April 15th every two years. You can see the form and learn more about corporate tax here.
In this state Sales and use, tax is levied on retail, taxable services, and housing businesses. Every LLC falling into these categories should apply for a sales tax permit with the State Revenue Department. You can read more about sales tax and usage here.
A Connecticut LLC with employees should pay withholding taxes. The income tax is paid at the Taxpayer Service Center or you may work with the Business Telephile system. Also, an LLC with employees may be required to pay Unemployment Insurance Tax (depends on their tax status).
Paying taxes on unemployment insurance protects your employees if they cannot work, but they are not to blame for this. To specify the rules behind unemployment insurance taxes, Connecticut compiled an Employers’ Guide to Unemployment Compensation. And here you can file and pay Unemployment Insurance Tax.
Local Tax Business Demands
You will have to pay some local taxes depending on where your business is in Connecticut. The main is the property tax, but other taxes may be relevant to your business, you should look into them.
Stage №6: Getting Business Licenses & Permits
This state does not demand a general business license which all LLCs must have. However, there may be other licenses that you will need to conduct business by state and federal laws. The licenses you may need depend a lot on what kind of business you are in.
If your business is an industry federally regulated, so you will have the license from that agency before doing business. These are industries such as transport, agriculture, and many other activities. Take a look here to determine if your business is subject to federal regulations.
There are some other industries, hairdressing, and the like, which are usually regulated by government agencies. Connecticut has a resource that helps companies figure out which licenses they might need: contact the Connecticut Business Hotline at the Connecticut Economic Resource Center before starting your own business.
The Department of Consumer Protection has a list of all permits and licenses which may be needed here.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Connecticut Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
It is what it looks like – a statement of the income you have received from your business. Mind that you must complete this form regardless of whether you made some money during the year or lost it. Connecticut has several forms depending on how your business is organized and you can access them here.
Referring to the services of a qualified accountant
All LLCs that operate in Connecticut must file an annual return during the first three months of the year as required by the state. You can put it online here. Such an annual report, first of all, helps to update the status of any information related to your business that has changed over the year.