A limited liability company (LLC for short) is a way to legally structure a business. This business type combines the limited liability of a corporation with the flexibility and lack of formalities of a partnership or sole proprietorship. Forming an LLC is one of the best ways for any business owner to limit his or her personal liability for business debts and lawsuits.
Forming LLCs in Connecticut is easy. What you’ll need to start is to file a Certificate of Organization with the Connecticut Secretary of State, which will cost you $120. You can choose to apply for your Certificate to form an LLC online, by mail, or in person. This certificate is a legal document that officially creates your Connecticut LLC.
If you’re looking to form an LLC in Connecticut, then you’ve come to the right place. Below is a step-by-step guide on how to form a Connecticut LLC today and to get your business up and running.
Steps to Starting an LLC in Connecticut in 2022
Step 1: Name Your Connecticut LLC
Choosing a company name is an important first step to forming an LLC in Connecticut. When picking a name, be sure to choose one that complies with the Connecticut naming requirements and one that is easily searchable by potential clients.
Under Connecticut law, an LLC name must contain the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.” The word Limited may be abbreviated as “Ltd.” and the word “Company” as “Co.”.
Your LLC’s name must also be distinguishable from the names of other business entities already on file with the Secretary of the State. Names can be checked for availability by searching the business name database. You can also choose to reserve an available name for 120 days by filing an Application for Reservation of Name. The form must be filed by postal mail and the filing fee is $60.
Below are some of the few naming guidelines:
- Your business name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your Connecticut LLC with a government agency such as FBI, Treasury, State of Department, etc.).
- You may require additional paperwork and a licensed individual, such as a doctor or lawyer to be part of your LLC if you plan on using restricted words like Bank, Attorney, University in your company name,
- Your name must be distinguishable from any other Connecticut LLC, corporation, limited liability partnership, or limited partnership.
Next, you’ll also want to check that the name you want is available in Connecticut. You can make sure that the name isn’t already taken by doing a Business Registry Search on the Connecticut Secretary of State’s website.
Another important thing to consider is whether the URL is available. We recommend that you check online to see if your business name is available as a web domain. You will need a web domain in order to create a website for your business.
Even if you don’t plan on creating a business website today, you may want to still buy the URL in order to prevent others from acquiring it. Otherwise, this may cause some confusion when potential clients search for your company on the internet. After registering a domain name, you will also need to consider setting up a professional email account (@yourcompany.com).
FAQ [Naming a Connecticut LLC]
What is an LLC?
LLC is short for Limited Liability Company. LLC is a simple business structure that offers business owners more flexibility compared to a traditional corporation while still providing many of the same benefits.
Do I need to get a DBA or Trade Name for my business?
Most LLCs do not need a DBA since the name of the LLC can already serve as your company’s brand name and you can even accept checks and other payments under that name as well. However, you may also wish to register a DBA if you would like to conduct business under another name.
Step 2: Choose a Registered Agent in Connecticut
To start an LLC, you will need to nominate a registered agent for your LLC. A registered agent is an individual or business entity that’s responsible for receiving important tax forms, legal documents, a notice of lawsuits, and official government correspondence on behalf of your business. They essentially act as a point of contact for your business with the state.
To nominate a registered agent, you need to make sure that they’re a resident of Connecticut, or a corporation, such as a registered agent service, that’s authorized to transact business in Connecticut. You may even elect an individual within the company, including yourself as the LLC’s registered agent.
FAQ [Nominating a Connecticut Registered Agent]
Can I be my own Registered Agent in Connecticut?
Yes, You or anyone else in your company can serve as the registered agent for your Connecticut LLC. However, there are also other requirements that you will need to meet.
Is a registered agent service worth it?
Hiring a professional registered agent service is an affordable way for you to manage government filings for your Connecticut LLC. The advantages of using a professional registered agent service often significantly outweigh the annual costs for most businesses.
Step 3: File the Connecticut LLC Certificate of Organization
As mentioned earlier, to register your Connecticut LLC, you will need to file the Certificate of Organization with the Secretary of State either online, by mail, or in person. Now is also a good time for you to determine whether your LLC will be member-managed or manager-managed.
The articles must include:
- Name and address of LLC’s organizer
- The LLC’s name and address
- The name, address, and signature of the LLC’s registered agent
- The name and address of at least one manager or member
- The LLC’s email address, and
- Signature of organizer
FILE THE CERTIFICATE OF ORGANIZATION
Option 1: File Online with the Connecticut Secretary of State
Option 2: File by Mail or in Person
State Filing Cost: $120 (nonrefundable)
Business Service Division,
Connecticut Secretary of State,
P.O. Box 150470
Hartford, CT 06115
If you already have an existing LLC and are looking to expand to the state of Connecticut, you will need to fill in the Foreign LLC form instead.
FAQ [Filing Connecticut LLC Documents]
How long does it take to set up an LLC in Connecticut?
Filing the Certificate of Organization with the Connecticut Secretary of State will take about 3 to 5 business days, but this process can be expedited for an additional fee.
Step 4: Create a Connecticut LLC Operating Agreement
An operating agreement is not required for you to start an LLC in Connecticut, but it’s still a good practice to have one. An LLC operating agreement is a legal document that outlines the ownership and operating procedures of a Connecticut LLC. This is important as a comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.
This document establishes how your LLC will be run and sets out the rights and responsibilities of each member and manager, including how the LLC will be managed. This can help preserve your limited liability by showing that your LLC is truly a separate business entity.
FAQ [Creating a Connecticut LLC Operating Agreement]
Do I need to file my operating agreement with the state of Connecticut?
No, an operating agreement is not required to be filed with the Secretary of State in Connecticut. This is an internal document that you should keep on file for future reference. However, many states do legally require LLCs to have an operating agreement in place.
Step 5: Get a Connecticut LLC EIN
EIN stands for Employer Identification Number and they’re a nine-digit number assigned by the Internal Revenue Service (IRS) to help identify businesses for tax purposes. It is essentially like a Social Security number for your business.
An EIN is sometimes referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN). Your company will need an EIN to open a business bank account, file and manage Federal and State Taxes, as well as to hire employees.
Getting an EIN for your business is free and you can get it from the IRS online or by mail. If you already have an EIN for your sole proprietorship, the IRS will require your sole proprietorships to get a new EIN when converting to an LLC.
GET AN EIN
Option 1: Request an EIN from the IRS
Option 2: Apply for an EIN by Mail or Fax
Internal Revenue Service
Attn: EIN Operation
Cincinnati, oH 45999
Fax: (855) 641-6935
FAQ [Getting a Connecticut LLC EIN]
How do I get an EIN if I don’t have a Social Security number?
Luckily, a social security number is not required by the IRS to get an EIN for your Connecticut LLC. You can simply fill out the IRS Form SS-4 and leave Section 7b blank then give the IRS a call at (267) 941-1099 to complete your application.
What tax structure should I choose for my Connecticut LLC?
When you get an EIN, you will be informed of the different tax classification options available. However, most LLCs elect the default tax status. Some LLCs can even reduce their federal tax obligation by opting for the S corporation (S corp) status.
Do I need an EIN for my LLC?
All LLCs that hire employees or with more than one member must have an EIN and this is a requirement by the IRS.
Important Steps After Forming a Limited Liability Company (LLC) in CT
Separate Your Personal and Business Assets
Your personal assets like your home, car, and other valuables are at risk in the event your Connecticut LLC gets sued if your personal and business accounts are mixed. In business law, this is often referred to as piercing the corporate veil. Here are a few steps you can take to protect your Connecticut LLC.
1. Opening a business bank account
This is a critical step as it will separate your personal assets from your company’s assets, which is necessary for personal asset protection. It will also make your business accounting and tax filing easier.
2. Getting a business credit card
Though it’s not a must, this is also a good habit to practice to help you separate your personal and business expenses. This step can also be used to build your company’s credit history, which will prove useful when you want to raise capital or to get small business loans later on.
3. Hiring a business accountant
Though you certainly can handle your business books yourself. However, it is also a good idea to consider hiring a business accountant as they are experts in this field with the right experience to help prevent your business from overpaying on taxes and to avoid penalties, fines, and other costly tax errors that you might miss out on.
Getting an accountant also makes bookkeeping and payroll easier, leaving you with more time to focus on plans and strategies to grow your business. Business accountants can also help you manage your business funding more effectively such as discovering areas of unforeseen loss or extra profit.
Get Business Insurance for your LLC
Getting business insurance is just as important as getting personal insurance. Business insurance helps you manage company risk and focus on growing your LLC in Connecticut. The most common types of business insurance available include:
General Liability Insurance – This is a pretty broad insurance policy that protects your Connecticut LLC from lawsuits. Most small businesses will get general liability insurance.
Professional Liability Insurance – This is an insurance that’s catered for professional service providers such as consultants, accountants, etc. The insurance covers claims of malpractice and other business errors that they may be exposed to.
Workers’ Compensation Insurance – This is a type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths.
Create Your Website
In a world of digitalization, creating a website is a big step in legitimizing your LLC in Connecticut. Almost every business will need a website. Even if you think that your Connecticut LLC is too small or you’re focused on an offline industry, you could still be potentially missing out on a large percentage of customers and revenue simply because you don’t have a website or online presence.
Some business owners may fear that creating a business website is out of their reach since they do not have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that make the life of small business owners much simpler!
Here are a few main reasons why you should seriously consider building your own business website:
- All legitimate businesses have websites. The size or industry of your business does not matter when it comes to setting up your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not enough and simply do not act as a replacement for a complete business website that you own and control.
- There are many website builder tools online like GoDaddy Website Builder that have made it their mission to create a website extremely simple. With this, you don’t even need to worry about hiring a web developer or designer just to create a website you can be proud of.
Send Out a Press Release
Though it’s not a requirement in the Connecticut Secretary of State to form your LLC, press releases are among the easiest and best ways to promote your business. They’re also one of the most cost-effective strategies that provide great benefits:
- Excellent publicity
- Establish your brand presence on the web
- Improves your website’s SEO to drive more customers to your website
- A one-time cost in terms of effort and money
- Have long-lasting benefits
Keeping Your Company Compliant in CT
Connecticut Business Permits & Licenses
Do I need business licenses and permits?
To operate your LLC in Connecticut you must comply with federal, state, and local government regulations. For example, if you own a restaurant you will likely need health permits, building permits, signage permits, etc before opening up for business.
The details of business licenses and permits will vary from state to state. So you need to make sure to read them carefully. Don’t be surprised if there are short classes for you to attend as well. Fees for various business licenses and permits will vary depending on what sort of license you are seeking to obtain.
Below are a few methods or easy ways you can obtain necessary Connecticut business licenses and permits for your LLC. Alternatively, you can also hire a professional service to do them for you.
Federal: Use the U.S. Small Business Administration (SBA) guide to get federal business licenses and permits.
State: Apply for or learn more about licenses, permits, and registration with the State of Connecticut’s CalGold website.
Local: Contact your local county clerk and ask about local business licenses and permits.
It is recommended for first-time entrepreneurs to consider having professional service research your business’s licensing requirements.
Connecticut LLC Tax Filing Requirements
Depending on the nature of your business, you may be required to register for one or more forms of state tax. Here are the types of tax that you may encounter:
Connecticut Sales Tax
If you’re selling a physical product, you’ll typically need to register for a seller’s permit through the Connecticut Department of Revenue Services. This certificate will allow your business to collect sales tax on taxable sales.
Sales tax is also known as “Sales and Use Tax” is a tax levied by states, counties, and municipalities on business transactions that involve the exchange of certain taxable goods or services.
Connecticut Employer Taxes
If your business involves hiring employees, you will need to register for Connecticut Employer Taxes, which include Employee Withholding Tax with the Connecticut Department of Revenue Services and the Unemployment Insurance Tax through the Connecticut Department of Labor Tax and Benefits System.
FAQ [Additional Business Taxes]
What is the Connecticut Business Entity Tax?
The Connecticut Business Entity Tax for each Connecticut LLC will vary depending upon your LLC’s income.
Federal LLC Tax Filing Requirements
Most, if not all LLC in Connecticut will need to report their income to the IRS each year using the following forms:
- Form 1065 Partnership Return (most multi-member LLCs use this form)
- Form 1040 Schedule C (most single-member LLCs use this form)
Just to note, how you decide to pay yourself as the company owner will also play an important role in your federal taxes.
Connecticut Business Entity Tax
Going forward, the State of Connecticut no longer requires businesses to pay the biennial Business Entity Tax (BET). The final due date for returns was March 15, 2020.
File your Connecticut LLC Annual Report
However, having an LLC in Connecticut will require you to file an annual report with the Connecticut Secretary of State. You can file your annual report online.
Fee: $80 (nonrefundable)
Due Date: between January 1st and March 31st of each year.
Late Filings: Connecticut does not charge late fees if you miss your filing deadline but the state will revoke your “good standing” status. Connecticut may also dissolve your LLC after 1 year for failure to file an annual report.
Avoid Automatic DIssolution
Connecticut LLCs may face fines and even automatic dissolution if they miss one or more state filings. With this happening, Connecticut LLC owners will risk the loss of their limited liability protection. This is where a quality registered agent service can step in to prevent this outcome by notifying you of upcoming filing deadlines and even help submit the reports on your behalf.
Hiring Employees in Connecticut
If you have an LLC in Connecticut and plan on hiring employees, you need to stay compliant with the law by following these steps:
- Verify that new employees are able to work in the US with a valid working pass
- Report employees as “new hires” to the State
- Provide workers’ compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your workspace
FAQ [Hiring Employees]
What is the minimum wage in Connecticut?
The statewide minimum wage in Connecticut is $11.00 per hour.
How often do I need to pay employees in Connecticut?
In Connecticut, employee wages are required to be paid monthly unless approved by the labor commissioner according to the Connecticut Department of Labor Wage Payment Laws.
Avoid Automatic Dissolution
Connecticut LLC may face fines and even automatic dissolution if they miss one or more state filings. When this happens, the LLC owners risk the loss of limited liability protection. This is where a quality registered agent service can help LLC in Connecticut to prevent this outcome by notifying you of upcoming filing deadlines and even submitting the necessary reports on your behalf for an additional fee.
More Connecticut LLC Information
Connecticut Foreign LLCs
Forming a foreign LLC allows your company to operate as one single entity across multiple states. If you already have an existing LLC and want to conduct business in Connecticut, you will need to register as a foreign LLC. This step can be done by mail or in person.
REGISTER AS A FOREIGN LLC IN CONNECTICUT
Option 1: File Online with the Connecticut Secretary of State
Option 2: File by Mail
Fee: $120 (Nonrefundable)
Commercial Recording Division
Connecticut Secretary of the State
P.O. Box 150470
Hartford, CT 06115
Commercial Recording Division
Connecticut Secretary of State
30 Trinity Street
Hartford, CT 06106
How to Obtain a Certificate of Good Standing in Connecticut
A Certificate of Good Standing is known as the Certificate of Legal Existence in Connecticut. This certificate verifies that your Connecticut LLC was legally formed and has been properly maintained. There are several instances where you might need to get a Certificate of Good Standing, like when you’re:
- Seeking funding from banks or other lenders
- Forming your business as a foreign LLC in another state
- Obtaining or renewing specific business licenses or permits
- You can order a Connecticut LLC Certificate of Legal Existence online or by mail.
ORDER A CERTIFICATE OF LEGAL EXISTENCE
Option 1: Request a Certificate Online through the Connecticut Secretary of the State
Option 2: Request a Certificate by Mail
Fee: $50 (nonrefundable)
Commercial Recording Division
Connecticut Secretary of the State
P.O. Box 150470
Hartford, CT 06115-0470
Other Frequently Asked Questions (FAQs)
Should I Start an LLC?
If you’re just started your business or have been operating as a sole proprietor, you should consider starting an LLC. LLCs limit an owner’s personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to business ownership, management, and taxation.
How do I know if my LLC name is available?
LLCs in Connecticut needs to have a unique name that is distinguishable from the names of other existing businesses on file. You can conduct a name search for free on the Connecticut SOS website to make sure your proposed name is still available.
How much does LLC formation cost in Connecticut?
The Secretary of State charges a $120 filing fee for the certificate of organization. It will cost $10 to file a name reservation application by mail or in person. If you do submit the reservation form in person, you will also need to pay an additional $10 handling fee. The Connecticut SoS also requires that you file an annual report every year which will cost $80.
Filing these documents on your own is often the cheapest option, but completing all of the forms and filing them yourself can quickly get complicated. Hiring a lawyer is another option but that will cost you hundreds, if not thousands of dollars in the process. Another option is to hire a registered agent service to help you with all the paperwork and filings for you.
Do I need an operating agreement for Connecticut LLCs?
Connecticut state does not require LLCs to have an operating agreement, but it is highly advisable to have one as the operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law.
Can a foreign LLC do business in Connecticut?
All LLCs organized outside of Connecticut State must register with the Connecticut SoS to conduct business in Connecticut.
Can I form a single-member LLC in Connecticut?
For most formation purposes, a Connecticut single-member limited liability company is considered the same as a multi-member LLC with the same steps required to start an LLC as those listed above.
How do I dissolve an LLC when I’m done?
If you reach a point where it is time to close your business and cease all operations, then you will want to properly dissolve your limited liability company to limit your liability for lawsuits and government fees.
What is the difference between a domestic LLC and a foreign LLC?
An limited liability company that conducts business in the state where it was formed is referred to as a “domestic LLC”. Normally when we refer to an limited liability company, we are actually referring to a domestic limited liability company. A foreign LLC must be formed when an existing limited liability company wishes to expand its business to another state.
How much does it cost to start a Connecticut LLC?
The cost to start a Connecticut limited liability company is $120.
How to Dissolve a Connecticut LLC?
If at any point of time, you wish to shut your business with your Connecticut limited liability company, it is important for you to officially dissolve it properly. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. There are two broad steps to dissolve your Connecticut limited liability company:
- Close your business tax accounts
- File the Connecticut Articles of Dissolution
Starting a business correctly doesn’t have to be difficult. With over 15 years of experience consulting new businesses and start ups, Matthew is probably the best person to help you set a strong foundation for your business.