How to Start an LLC in Connecticut
- Why Start an LLC in Connecticut?
- Costs of Starting an LLC in Connecticut
- How to Start an LLC in Connecticut
- Step 1 – Pick a Name for your LLC
- Step 2 – Reserve your Name
- Step 3 – Find a Registered Agent in Connecticut
- Step 4 – Certificate of Organization
- Step 5 – Other Documents
- Step 6 – Operating Agreement
- Step 7 – Get an EIN
- LLC Taxes in Connecticut
- Final Word: How to Start an LLC in Connecticut
Business in Connecticut is thriving. Compared to the rest of the US, it has one of the highest GDP per capita, with a thriving business community, large populations nearby, and a reasonable tax system nearby. However, if you want to protect your personal assets and have a business, then you might want to learn how to start an LLC in Connecticut.
Why Start an LLC in Connecticut?
There are numerous reasons why you will want to start an LLC in Connecticut. For one, there is a relatively straightforward filing system for the LLC process. In addition, the tax rates, while higher than those in other states, aren’t the highest.
In addition, the minimum fee for LLC filing is very generous, especially when compared to states like California.
You will also find that the state is close to main population centers like New York and Massachusetts meaning that there is plenty of opportunity to grow and expand to nearby states with costs being relatively smaller than having to ship across the USA.
There are also lots of benefits to starting an LLC. LLCs protect the personal assets of the business owners from debts that might be accrued by the business. If you’re a sole trader, then personal assets are at risk.
At the same time, your business name is protected by law, so no one else can have the name or something that is very similar.
LLCs can also open business bank accounts, and take advantage of the additional services that are there. In addition, LLCs can often get access to more funding and improved credit terms with suppliers.
Costs of Starting an LLC in Connecticut
There are numerous costs when you’re registering an LLC in any state. But the costs with the State of Secretary in Connecticut are reasonable and straightforward. For instance, filing an LLC form in the state costs $120 to complete the online document and the necessary steps.
You will also likely want to reserve a name. Therefore, you must pay $60 to submit a name reservation application. There is also a registered agent fee that you may want to pay. A registered agent is an individual who represents your business in the state, it can be a business like ZenBusiness or IncFile or an individual. It can even be you or someone working for the business full-time.
There are requirements for the registered agent that will be discussed later. The cost for a registered agent will depend.
Therefore, costs can be as much as $250 for starting your LLC in Connecticut.
However, you can see the cost comparison of the neighboring state below in the table.
|State||LLC Filing Fee||LLC Annual/Biennial Fee||Corporate Tax Rate||Nominal GDP per capita|
|Connecticut||$120||$80 (every year)||7.50%||$82,233|
|New York||$200||$9 (every 2 years)||6.50-7.25%||$93,463|
|Massachusetts||$500||$500 (every year)||8.00%||$91,129|
|Rhode Island||$150||$50 (every year)||7.00%||$60,185|
|US Average||$130.38||$89.34 (every year)||5.60%||$64,773.08|
How to Start an LLC in Connecticut
Here are the instructions that you need if you want to know how to start an LLC in Connecticut. These steps are relatively easy to follow and you can complete the process within four days if you’ve got good organizational skills.
Step 1 – Pick a Name for your LLC
The first step is to choose a name for your LLC. Several rules are important for picking a name for your LLC. You need to ensure that there is no other business in the state using the name, that requires you to complete a business name search in the state. At the same time, you need to check social media, online sales platforms, and domain names.
You should also be sure that you have included the words ‘Limited Liability Company’ or any of the shortened versions of the name. This can include shortened forms like Ltd and Co.
Step 2 – Reserve your Name
Once you’ve chosen your name, you need to reserve your name. Reserving your name prevents others from stealing the name and using this as an LLC or other business format. When you reserve a name, you have 120 days to form your LLC. The cost for submitting a name for the reservation, the fee is $60.
If you don’t complete the process after 120 days, you can pay the fee again to extend the period by another 120 days. Though this is more than enough time to form an LLC.
Once the name has been reserved, you might also want to register your domain, social media, and on any other platforms that you intend to use. When registering a domain, try to add all the domain extensions to ensure that others don’t steal them and try to mimic your business.
Step 3 – Find a Registered Agent in Connecticut
A registered agent is a person who will for the best interests of the business in the state. They will be there to accept legal documents and forward legal customers to the Secretary of State. Numerous regulations say who can be a registered agent and not. These include:
- Have a full-time address in the state.
- Be available in the state during normal business hours.
A registered agent can be a person who is employed by the company, or you. Or you can hire a professional company that can work for you. A professional company can be a great idea because they know the regulations better and as a result, can prevent you from making common mistakes like missing deadlines.
Step 4 – Certificate of Organization
For you to complete the registration of the LLC, you will need to file a certificate of organization with the Secretary of State. You can use the online portal or you can post the documents by mail. The cost of the documents to be filed is $120. The articles of organization should include the following information.
- The LLC organizer’s full name, address, and signature
- Name, email, and physical address of the LLC
- Address and name of the members and managers
- The registered agent’s address, name, and signature
- A brief description of the nature of the business
- An indication of whether the company will be run by its members or managers
Step 5 – Other Documents
As part of the process, you might be required to apply for other additional licenses, permits, registrations, etc. To check on this, you can contact the secretary of state.
Step 6 – Operating Agreement
The operating agreement is an internal document that outlines how the LLC operates. It is highly recommended that you complete the document, but there are no requirements for you to submit the document to the government or the secretary of state.
Step 7 – Get an EIN
While you might not have any staff, all LLC companies with more than one member must acquire an EIN number from the IRS. This number allows the federal government to monitor the performance of companies and allows you to open a business bank account and pay employees.
There is no fee for obtaining the EIN number.
LLC Taxes in Connecticut
One of the best advantages of forming an LLC in Connecticut is that it has some good taxes that make it very lucrative for business owners. Federal taxes are the first tax that any business owner would think of, these are paid directly to the IRS and are based on the annual earnings of the individual or business. LLCs do not pay federal tax by default, which is one of the benefits of starting an LLC in Connecticut.
However, some options allow you to make your LLC act as a corporation. Under these terms, the LLC would pay federal taxes, and there are some benefits to this. If you would like to know if this is the right option for your business, then you should consult an accountant.
LLCs regardless are subject to state taxes. There is a minimum of $250 tax in the state and you would need to contact the Revenue Services to find out how much tax you owe in a given accounting period.
You will also need to register for tax with the Connecticut Department of Revenue Services if you are selling products, receiving sales tax, or have employees.
The registration is very simple. It can be done online or by completing the paper version of the form. You can then mail the form, but this takes longer.
Finally, there is a $250 Business Entity Tax, which is payable every other year.
Despite this sounding like a lot, Connecticut is one of the best locations for taxes. Some states require a minimum payment of $800 every year, regardless of income. Therefore, you can earn more expendable income in the state.
Final Word: How to Start an LLC in Connecticut
Above are the reasons why and the instructions on how to start an LLC in Connecticut. The state is one of the best for those looking to start a business in and around the state of New York and not be in the state, or those looking to make a business work in the area. The protection for the business/personal assets and the tax rules make the state very business-friendly.