Starting a business can be a delight and a struggle at the same time. An essential part of every business is its structure, and a Limited Liability Corporation is favorable among entrepreneurs, small business owners, and foreign nationals.
Connecticut is the Constitution State and is a great place for all sizes of business. The presence of NYC and Boston as financial centers, along with the presence of a well educated population and the infrastructure of the state makes it a good place to form your LLC.
In case you missed it, this is a comprehensive guide on how to form an LLC in Connecticut, including useful reminders, compliance alerts, and professional opinions.
Why Form an LLC in Connecticut?
Limited Liability Protection
One of the biggest benefits of an LLC is protecting your personal assets. If your business is sued or incurs debt, your personal property (home, savings, vehicles) remains protected.
Tax Flexibility
By default, LLCs are “pass-through entities.” This means profit is filed on the owner’s personal return, effectively avoiding the double taxation issue that corporations deal with. In addition, an LLC has the option of being taxed as an S-Corp or C-Corp if it is advantageous to do so.
Operational Flexibility
With the exception of corporations, an LLC does not need to have a board of directors, hold mandatory meetings, or maintain elaborate books. This means that the LLC does not need to have as much structure or operate under as much red tape.
Credibility with Clients and Partners
Having “LLC” in your business name enhances the reputation of your company and helps in interacting with vendors, prospective investors, and banking institutions.
Strategic Location
Connecticut is sandwiched between New York and Boston, giving companies a foothold to two of the most important business regions in the United States, while still benefiting from local business incentives.
Step 1: Choose a Name for Your Connecticut LLC
Connecticut law has specific requirements for naming an LLC.
- It must include “Limited Liability Company,” or LLC, or L.L.C. Your LLC’s name is your first impression and how you name it will matter.
- It must be distinguishable from other businesses listed with the Connecticut Secretary of State, which means identical spellings and slight punctuation variations are not enough.
- The name also shouldn’t include “bank,” “insurance,” or “corporation,” without special permission.
How to Verify Your Business Name
To confirm whether your desired business name is available, you can check it on the Connecticut Business Registry Search located on the Secretary of the State’s website.
Keeping Your Business Name Reserved
To secure your business name, you may file an Application for Reservation of Name even if you are not able to file for registration right away.
- Filing Fee: $60
- Valid for 120 days
💡 Tip: Selecting an impactful business name during the formation process that is consistent with your brand can strengthen marketing efforts and build customer confidence over time.
Step 2: Designate a Registered Agent in Connecticut
Every LLC registered in Connecticut is required to have a Registered Agent. This is the person or business who will receive legal documents on behalf of the LLC. A registered agent can also be an independent agent to the LLC.
Duties of a Registered Agent:
- Accepts legal documents and government correspondence on behalf of your LLC.
- Notifies you of critical compliance updates or court documents.
- Maintains a physical presence in Connecticut.
Requirements:
- Must be a resident of Connecticut or a business entity authorized to do business in the state.
- Must have a physical street address (P.O. boxes not accepted).
You can choose:
- Yourself – If you are a Connecticut resident and do not mind using your address as a home address.
- An employee or a business partner can be categorized as a trusted person.
- A professional registered agent makes sure that all communication with government agencies is done with privacy and legal requirements in mind.
💡 Many business professionals utilize registered agent services to make sure that privacy is not lost and that no important document is ignored.
Step 3: Filing the Certificate of Organization
The Certificate of Organization is the official document that legally establishes your LLC with the Connecticut Secretary of the State.
Filing Details:
- Filing Fee: 120 dollars, which is not refundable.
- Processing Time: Online submissions are processed quicker than mailed applications.
Information Required:
- LLC name and address
- Registered Agent name and address
- Management structure which can be member-managed or manager-managed.
- An email address for correspondence.
- Business purpose in some cases.
Filing is available through Connecticut Business Services portal.
Upon approval, the LLC is legally recognized.
Step 4: Create an Operating Agreement
Connecticut does not require an Operating Agreement. However, it is prudent that one be drafted.
Why You Need An Operating Agreement:
- Sets out standard policies for the business
- Specifies the percentage of shares held by each stakeholder
- Avoids conflicts between members
- Enhances liability protections by demonstrating the business is separate from personal matters
Key Provisions in an Operating Agreement:
- Member contributions and ownership stakes
- Allocation of profits and losses
- Voting and decision-making rights
- Processes for member entry and exit
- Termination of the company
💡 An Operating Agreement adds credibility and facilitates banking and legal compliance even for single-member LLCs.
Step 5: Apply for EIN (Employer Identification Number)
The IRS issues the EIN, and in your business’s case, it is akin to a Social Security Number.
Why You Need An EIN:
- For filing federal taxes
- For employing personnel
- For setting up a business bank account
- For some licenses and permits
The IRS issues EIN for free if you apply through their site.
For non-US residents without an SSN, the process is sending SS-4 form via fax or mail to the IRS.
Step 6: Register for state taxes for Connecticut
For some business activities, there is a need to register to the Connecticut Department of Revenue Services (DRS).
Common Tax Registrations:
- Sales and Use Tax Permit – Necessary for merchants dealing in taxable goods and services.
- Withholding Tax – Necessary if there are employees to be paid.
- Taxes for a specific type of business, e.g., fuel, tobacco and alcohol taxes.
Registration can be completed through CT DRS Taxpayer Service Center.
💡 It’s important to understand your obligations as failing to register can attract penalties.
Step 7: Get Business Licenses and Permits
No general business license is issued for Connecticut but your business may still require other local or industry specific permits.
Possible Requirements:
- Local business licenses for the city or county
- Permits from the health department (for food or medical businesses)
- Professional licenses ( for contractors, accountants, legal services and other professionals)
- Business zoning clearances for your business location
Check with the Connecticut Department of Consumer Protection and your local city hall for requirements.
Step 8: Set up a Business Bank Account
Separating personal and business finances is important for financial management and to protect from liability.
Advantages of Having a Business Bank Account:
- Safeguards the limited liability shield of your business.
- Building business credit is easier.
- Simplified bookkeeping and tax reporting.
- Boosts company image during client and vendor interactions.
Most banks will request:
- Certificate of Organization.
- EIN.
- Operating Agreement, particularly for multi-member LLCs.
Step 9: Adhere to Ongoing Requirements
Once the LLC is formed, there are ongoing responsibilities to ensure it remains active and compliant. In Connecticut, these responsibilities include:
Annual Reports
Active and compliant LLCs are required to submit:
- Deadlines: By March 31 each year.
- Annual fee of: $80.
- Submission method: Digital through the Secretary of the State’s portal.
State Taxes
- Adhere to deadlines relative to filing and pay as per your business needs.
Licenses and Permits
- Renew any local or industry-specific licenses as required.
Noncompliance can lead to penalties or even the voluntary or involuntary administrative dissolution of your LLC.
How Bizstartz Can Assist You in Forming a Connecticut LLC
As a non-U.S. resident, I know that getting an EIN, ITIN, or a U.S. bank account can make forming an LLC in Connecticut seem complicated. This is where Bizstartz can assist you.
We offer comprehensive services:
- Forming Connecticut LLCs and all other states, forming LLCs in all 50 states, Connecticut included
- Acting as a registered agent
- Helping non-US citizens obtain EINs and ITINs
- Beneficial Ownership Information (BOI) filing compliance
- Account opening for businesses in the US
- Tax and bookkeeping services
- Filing for trademarks to prevent brand infringement
With us, Bizstartz, you won’t have to bother with dealing with forms, deadlines, or compliance matters, you can leave it all to us while you grow and focus on your business.
Final Thoughts
LLCs in the US provide a great deal of flexibility in regards to taxation, offer significant market reach, as well as protecting business owners from liability. This makes them a great option for many entrepreneurs.
Remember that choosing a name, appointing a registered agent, filing certificate of organization, drafting operating agreements, applying for EINs, and maintaining compliance all contribute to a great business foundation.
👉 Let us know if you’re interested in forming your Connecticut LLC and we can assist you with the entire process, till compliance is ensured.
