- Step 1. Naming Your Connecticut LLC
- Step 2. Filing the Certificate of Organization
- Step 3. File Your Articles of Organization
- Step 4. Choosing a Registered Agent
- Step 5. Creating an Operating Agreement
- Step 6. Getting an EIN/Tax ID Number
- Step 7. Keeping Your LLC Running
- Paying Federal, State, and Local Taxes
- Filing an Annual Report
- Permits and Licenses
- LLC Bank Accounts
- Beware of LLC Scams
- Connecticut LLC Resources
- Final Thoughts
- Connecticut LLC FAQs
Starting an LLC in Connecticut brings many benefits to business owners. For one, it will make your business look more official in the eyes of your potential customers. Additionally, it will limit your liability to the LLC, so your personal assets will be protected. It's definitely worth doing, especially since it can take as fast as a few days and can cost as little as $120.
Step 1. Naming Your Connecticut LLC
A name can really make or break your business, so it’s important to choose a unique name that is catchy, and also represents your brand or business well. But before that, make sure you comply with the naming requirements.
Legally Required Designation
The state of Connecticut requires LLC names to contain the words “Limited Liability Company” or its abbreviated forms such as:
- Liability Co.
Uniqueness of the LLC Name
Your LLC name shouldn’t be identical to any LLC or business registered with the Secretary of State. Make sure to check if your desired business name is available by searching the Secretary of State’s business name database here.
Apart from looking into the name’s availability, you should also make sure that the domain name is available. This is ideal if you’re thinking of starting a website for your business. You can search available domain names on this website.
You have to be aware of the restricted words when naming your LLC. For example, the use of terms like Attorney, Bank, University, and Doctor is prohibited, unless you have a member that is licensed to use these titles.
Furthermore, you also need to avoid names that could get confused with government agencies. This includes terms like FBI, State Department, State University, and more.
Reserve a Name
If you already have a name in mind but aren’t ready to start the process of starting an LLC just yet, you have the option to reserve the name by filling out the Application for Reservation of Name. This will buy you an extra 120 days without worrying about another business taking your name.
Send the form in the mail to:
Commercial Recording Division
Connecticut Secretary of State
P.O. Box 150470, Hartford, CT 06115
Don’t forget to write a $60 check for the fee, made payable to the “Secretary of State.”
You might also want to go ahead and buy the domain name now. It’s never too early if you’re 100% sure you’re going to create a business website. If you wait too long, someone else might buy the domain name, and you might end up having to buy it from them at a much higher price.
Step 2. Filing the Certificate of Organization
Now that you’ve decided on a name, it’s time to actually start your application. The entire process is quite straightforward, even though there seem to be a lot of requirements.
LLC applicants in Connecticut are required to file the Certificate of Organization. To do that, you need to prepare the following information:
- Name and address of applicant
- LLC name and address of its main office
- Description of business activities
- Name, business, and home address of your registered agent
- A signature of the registered agent acknowledging their responsibilities
- Member and manager information (names, business, and home addresses)
- Management type
- Date of execution
- Name and signature of organizing party
Note that once your LLC is approved, all the information you have provided can be viewed by anyone online. It won’t be uncommon to get unsolicited communication from strangers and other businesses.
How to File
Filing online is the better option, since the process just takes around three days, which is much faster compared to mailing in your application.
You can fill out the application form here. Once approved, the Secretary of State will mail you a copy of your Certification at no extra charge. The filing fee to file online is $120.
If for any reason you decide to file by mail, know that the process can take anywhere from seven days to five weeks. It usually depends on whether the agency is backed up with requests.
You also need to keep in mind that if you file by mail, you will be charged an additional $40 to get a copy of your Certificate, bringing the total filing fees to $160.
To file by mail, you need to download and complete this form. You then mail it to:
Business Services Division
Connecticut Secretary of the State
P.O. Box 150470
Hartford, CT, 06115
Step 3. File Your Articles of Organization
In order to legally establish your LLC, you will need to file your Articles of Organization with the Secretary of State. Below, you can see some of the information that will be required on this form.
- Your LLC’s name
- Your LLC’s principal office address
- Your LLC’s registered agent’s name and address
- Your LLC’s organizers’ names and addresses
- Your LLC’s duration, if not perpetual
- If your LLC is member-managed or manager-managed
- If your LLC is manager-managed, the managers’ names and addresses
- If members will be liable for your LLC’s debts
- Your LLC’s organizer’s signature
You can file your Articles of Organization either online or through the mail. There is a $150 filing fee for online filing, and an additional $15 paper fee if you send the form through the mail. You can also pay an extra $50 filing fee to expedite the processing of the form.
To file your Articles of Organization online, you can use the portal on the Secretary of State’s website. Create an account and then follow the prompts to enter the necessary information. You will pay the $150 filing fee upon submittal, in addition to any card processing fees.
If you want to file your Articles of Organization by mail, you will need to print out the official form and fill it in. Mail the completed form and a check for $165 made out to the Secretary of State to the address below.
Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501
Step 4. Choosing a Registered Agent
Your registered agent will be responsible for receiving all legal documents on your LLC’s behalf. Your agent can be an individual, business entity, or member of your LLC—including yourself. The only requirement is that the chosen registered agent is 18 years old or older and has a street address in Connecticut.
You can also opt to hire a registered agent service provider that is legally allowed to operate in Connecticut. Hiring a provider can actually be one of the best decisions you can make for your business. Since they’ll be receiving correspondence on your behalf, you won’t need to worry about your personal information being available to the public.
They’ll also be the ones responsible for tracking annual report due dates and other deadlines. There are other benefits as well, so you should look into getting a provider if you want to take advantage of these benefits.
Step 5. Creating an Operating Agreement
Like some other states, Connecticut does not require LLCs to have an operating agreement. However, it is still a good idea to create one. It will serve as a guideline for running your business and will also outline the roles of each member.
This will significantly reduce the risk of conflict within the LLC. Moreover, it will protect the assets and finances of the members in the event that the LLC is sued.
Here are some of the things that an operating agreement should include:
- How ownership is divided among the members
- How the LLC will be managed (by its members VS an appointed manager)
- How much each member has invested in the LLC
- How profits and losses will be divided
If you’re unsure how to create an Operating Agreement, you can use this template to guide you.
Step 6. Getting an EIN/Tax ID Number
You will need to get an Employer Identification Number (EIN) if your LLC will have two or more members. It is a number assigned by the Internal Revenue Service (IRS) to LLCs for tax purposes and is completely free to get. It’s similar to a Social Security number, except it’s your LLC’s and not your own.
It is worth noting, however, that if your LLC is a sole proprietorship and you don’t plan on hiring any employees, you may use your Social Security Number in place of an EIN.
Filing online will save you a lot of time since it just takes a few minutes. You can request an EIN through the IRS online portal here.
On the other hand, if you’re not tech-savvy, you can also send it by mail. The IRS does not charge for the request, but the process will take longer.
You can download a copy of the form from the IRS website here. Once it’s ready, you can mail it to the IRS:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Getting a State Tax ID Number
All business entities who wish to operate in Connecticut are required to apply for a state Tax ID Number. You can file an online request here.
Step 7. Keeping Your LLC Running
At this point, your LLC is now official. It’s time to learn how to keep it running seamlessly. From taxes to annual filings, here’s everything you need to know about your duties relating to the LLC.
Paying Federal, State, and Local Taxes
Filing LLC taxes is more complicated than filing your own, so we recommend that you hire an accountant to help you in this department, especially if you’re not good with numbers.
LLCs do not pay income taxes by default. This responsibility goes to their members, since LLCs are considered to be pass-through (or flow-through) entities. The members will need to report any profits they receive from the LLC on their respective personal federal and state tax returns.
As for the amount you’ll owe, it’ll depend on a variety of things, such as the LLC’s profits and tax structure, your LLC’s expenses and other deductions, the members’ income tax brackets, and how they choose to file.
Paying federal taxes when you have a single-member LLC is less complicated, since the IRS will simply treat you as a “Disregarded Entity” and tax you as an individual. You just need to report your LLC’s profits on your tax return and pay taxes on those. You won’t need to pay taxes again when you take out money from your LLC’s bank account and deposit it in your personal bank account, but you will owe self-employment tax, which will be discussed later.
Note that you will be eligible for certain deductions and allowances, so make sure you keep track of all your business expenses—or better yet, hire a bookkeeper if your LLC can afford it.
As for multi-member LLCs, the members will need to pay federal taxes on their portion of the profits, as well as self-employment taxes.
Self-employment tax is also known as Social Security, Medicare, or Federal Insurance Contributions Act (FICA) tax. If this is the first time you’re hearing about this, it’s because this is normally withheld from the pay of employees prior to your net pay.
The rate, which is currently 15.3%, is split between employers and employees. When you have an LLC, however, you are basically your own employer, which is why you need to pay the full amount.
If you’re wondering if there’s a way to lessen this burden, there is, and it’s by having your LLC taxed as an S Corp.
You won’t be able to completely avoid paying self-employment tax by electing to become an S Corp, but if you do it right, you will be paying less. Basically, if your LLC becomes an S Corp, you—the owner—will also become an employee. When you pay yourself a salary (it must be a reasonable amount for your line of work), you’ll still pay income and self-employment taxes on that amount.
However, you’ll only need to pay income taxes on the distributions (or the leftover profits) that you’ll receive, so you’ll end up saving on self-employment taxes. Just remember to pay yourself at least $10,000 in distributions, or you won’t actually enjoy any savings, since being an S Corp means incurring additional expenses, such as accounting fees, bookkeeping fees, and payroll processing and tax returns.
Small businesses typically don’t have a C Corp status since C Corp LLCs are taxed twice. Apart from having to pay a separate corporate tax on all income, members also have to pay income and self-employment taxes on their salary.
But just like S Corps, members don’t have to pay self-employment taxes on distributions, which makes this structure very investor-friendly. Investors can invest as much money as they want into the business, and only need to pay income tax on the dividends they get from the LLC. Furthermore, C Corps are eligible for more tax deductions, which can translate to huge savings for the corporation.
All owning members of the LLC will need to pay state taxes on any income they get from the LLC. The rates range from 3% and 6.99%, and will depend on your income as well as how you’re deciding to file—whether as single, married filing jointly, or married filing separately.
LLCs that sell physical products will need to collect sales tax and pay it to the Department of Revenue Services (DRS). The rate depends on the city, county, or region your LLC is located, so be sure to contact local authorities to get the right number if you’re required to pay sales tax.
You can get your seller’s permit by registering online through the Department of Revenue’s website. The permit costs $100 and will expire after five years.
There are no local income and sales taxes in Connecticut. Local governments collect most of their revenue through property taxes, which can exceed $6000 annually on average.
Filing an Annual Report
Reports must be filed annually by LLCs in Connecticut. They must be filed between the beginning of January until the end of March. However, your first filing is due immediately a year after your LLC is formed.
While there are no official reprimands like late fees to settle when you file late, your LLC’s “Good Standing” status will be revoked, which may stop some entities from dealing with you. Additionally, failing to file an annual report after 15 months will result in the automatic dissolution of your LLC.
Permits and Licenses
All business entities in Connecticut are required to secure the appropriate federal, state, and local permits and licenses to operate. This is completely dependent on the industry you’re in, so you might want to hire a professional to help you with this.
Here are a few examples of the permits and licenses you may need to acquire in Connecticut:
- Business Operation or Privilege License
- Building Permit
- Health Permit
- Signage Permit
- Home Occupation Permit
- Zoning and Loud Use Permit
You can also do a quick search here.
LLC Bank Accounts
When you start an LLC, it’s important that you open a separate bank account for your business. This will separate your personal assets from your LLC, essentially protecting them in the case the LLC is sued. It will also make bookkeeping and filing taxes a lot easier, since you’ll be able to find all the business transactions easily.
Opening a business bank account is pretty easy. For the most part, you’ll only need your EIN, the LLC’s Certificate of Organization, and your driver’s license. However, if you have a multi-member LLC, you’ll need to present an authorization agreement signed by your co-members saying you’re authorized to open the account.
And finally, if you want to be sure you’re doing your absolute best to protect your assets and your LLC’s finances, hire an accountant. It will make everything easier for you.
Beware of LLC Scams
If you’ve chosen to appoint yourself as the LLC’s registered agent, you may receive mail and calls from people who might turn out to be scammers. Be especially wary of official-looking correspondence telling you to pay a fee to get important documents filed. Make sure you look up the names of the sender—no matter how official-sounding they are—as well as the name of the supposed document.
Connecticut LLC Resources
- Naming your LLC: Connecticut Business Registry Search
- Domain name search: com
- LLC Name Reservation: Application for Reservation of Name form
- Forming your LLC: online or by mail
- Operating Agreement template
- Getting your federal tax ID number: IRS EIN Assistant
- Getting your State Tax ID Number: online portal
- Unemployment Insurance Tax
- Employee Withholding Tax
- Seller’s Permit
- Obtaining federal licenses and permits: SBA list of federal licensing and permitting agencies
- State licenses guide
Starting an LLC in Connecticut is a huge undertaking. The process may be quick and simple, but once your LLC is official, you need to stay on top of your duties to the LLC, especially when it comes to filing annual reports and paying taxes. Once your LLC is running smoothly, however, you’ll have peace of mind knowing that your business is official and your assets are protected.
Connecticut LLC FAQs
Starting and running an LLC in any state can be overwhelming and confusing. Here are a few answers to common questions about the process.
A Certificate of Organization costs $120 to file. If you’re filing online, you don’t need to expect any additional fees. When you file by mail, you’re looking at an extra $40 fee to get a physical copy of your Certificate of Organization.
Filing everything online will save you from added fees and postage costs. Plus, it’s also a much quicker process.
LLCs themselves are not taxed so the owning members will be paying taxes on its behalf. In the past, LLCs were required to pay the $250 Business Entity Tax (BET) biennially. Now, LLCs just have to pay federal and state income taxes, self-employment taxes, and sales and employer taxes if applicable.
You’ll have to file annual reports between the beginning of January until the end of March each year. Failure to comply will revoke your LLC’s “Good Standing” status.