An LLC is a business entity and can have multiple owners. Members often participate in the management until they elect another management structure.
One of the most important features of an LLC is the limited liability and this means all owners are protected from any personal liability for debts and claims on the business.
The LLC is not considered separate from owners for any tax purposes and means income passes through the business to members.
LLCs are business structures that are a lot easier to manage and offer much more flexibility than a more traditional approach. However, it often provides the same benefits.
But how do you go about setting up an LLC? And how do you do so in Connecticut? It’s a lot easier than you might think. You will need to start by filing a Certificate of Organization with the Secretary of State. In Connecticut, this costs $120.
You can apply for this certificate either online, through the mail, or even in person. This certificate is the legal document and created your Connecticut LLC for you.
If you want to know more about setting up an LLC in Connecticut, keep reading as we tell you all about the process in the State, from getting started, to the benefits of an LLC, and what exactly they do. Let’s jump in.
Setting Up An LLC In Connecticut
To set up an LLC in Connecticut, you will need to follow 6 steps which we will go through in this article.
You will need to name your LLC, before choosing a registered agent, then file a Certificate of Organization which we have mentioned at the beginning, create an Operating Agreement, get an EIN, and then decide if you need a BIN before forming your LLC.
Let’s look at these steps in closer detail:
Name Your Connecticut LLC
Choosing the company name is the first step to setting up your LLC. You will need to make sure that the name complies with any state naming requirements, in this case, Connecticut and it should be easily finable and easy to search for any clients.
Most LLCs in the state do not also need a DBA and the LLC name can be the company brand name. This means you can accept checks and payments under the name but if you want to conduct business under a different name, a DBA might be worth looking into.
Naming Guidelines Explained
- The name of your LLC needs to include, “limited liability company” or at least an abbreviation such as LLC.
- The names should not and are not allowed to include anything that might confuse your LLC with any type of government agency such as the FBI, State Department Treasury, or any agency similar to this type of work.
- You should research whether any additional restricted words such as Attorney, University of Bank need extra paperwork, and a licensed individual such as a lawyer or a doctor may need to be part of your LLC if you include these words.
- The name of the LLC needs to be distinguishable from other Connecticut LLCs or any other corporation in the state including any limited liability partnerships or limited partnerships.
When naming, you also need to ensure the name is available to use in the state. You need to provide the name that has not already been taken in Connecticut but another LLC. You can do this by doing a Business Registry Search on the Connecticut Secretary of State’s website.
Finally, you need to make sure that the URL is also available. You should check online to see if the business name you have gone for is still available as a web domain.
Having a workable and good web domain lets people know in just one glance why you are online and every successful business starts with a good domain name.
Even if you do not make your LLC website right away, you need to buy the URL as soon as possible, so others do not end up acquiring it first.
After you have successfully come up with an available business name, and secured your URL, you will need to select a professional service to help out.
These services will complete the whole process of forming your LLC. Businesses that are recognized and have good reviews in the state include ZenBusiness, Inc | Start, Run, and Grow Your Business Today and Company Formations, Conveyancing and Make a Will | LegalZoom UK.
Choose A Registered Agent
You will now need to go about choosing a registered agent in Connecticut. A registered agent, for those unfamiliar, is an individual or a business entity.
They are solely responsible for dealing with legal documents, tax forms important to the business, a notice of any lawsuits that may crop up, and government correspondence on behalf of the business.
A registered agent is the business’s point of contact with the state, which in this case, is Connecticut.
A registered agent can be anyone who is a permanent resident of the state or a corporation and is authorized to conduct business concerns in Connecticut. You can select an individual in the company and this includes electing yourself.
As long as they are an owner or employee of a business, over 18, and have a street address in Connecticut, you are good to go.
A registered agent in Connecticut is responsible for all communication with the State of Connecticut such as the Connecticut Annual Report and the certificate of good standing. They receive all services of the process for the business.
ZenBusiness, which we have mentioned above, provides your LLC with the first year of registered agent services free when you pay for an LLC formation with them.
You can choose to elect someone in the LLC such as a friend but they need to meet the state requirements.
A lot of businesses like to use a professional registered agent service instead of this as it is an affordable way of managing government filings for your LLC and using a professional service in most cases, outweighs the annual costs you pay out yourself.
File The Articles Of Incorporation
In Connecticut, you need to file an LLC Certificate of Organization with the Connecticut Secretary of State and this is what forms the LLC as a legal entity separate from others. You will need to pay a fee of $120 and this is the Connecticut LLC Filing Fee.
Luckily, you can do this quite easily online via this website, Commercial Recording Division (ct.gov) and this means you will be filing it directly with the Connecticut Secretary of State.
However, if you would prefer to do this yourself, you can download the certificate here: Certificate of Organization (LLC – Domestic) (ct.gov) and simply either apply in person or send it off in the post.
Filing the certificate takes about 3-5 business days, but it can be expedited for an extra fee.
Many LLC formers will use a formation service for them such as ZenBusiness and they will do this task for them. It is a lot more simple and with such confidence in the accuracy, you should have nothing to worry about by leaving it in their hands.
If you decide to expand your LLC to the state of Connecticut that you already owned elsewhere, you need to form a Foreign LLC which allows you to operate as one entity in lots of different states.
You can find the form here: Foreign Registration Statement (LLC – Foreign) (ct.gov) or apply online at CT.GOV-Connecticut’s Official State Website. If you apply in person or by post, the mailing address is the same.
Create An Operating Agreement
Now that we have our certificate, it is time to form an operating agreement. Although this is not required in Connecticut, it is still good LLC practice to form one.
For those unfamiliar, an operating agreement is a legal document and outlines the ownership and procedures you use to operate the LLC.
They are important, though not mandatory in Connecticut. They’re important as the agreement means all owners of the business are on the same page and this will reduce any risk of unnecessary conflict in the LLC.
You should keep the operating agreement as a separate file for reference and it is an internal document you should keep in the LLC. However, a lot of states require you to have an operating agreement in place and this means it might not be optional depending on where you live.
Get An EIN Number
An EIN is a next step in securing your Connecticut LLC. EIN simply means an Employer Identification Number. It is composed of nine digits and is assigned directly by the Internal Revenue Service.
The number helps with identification when it comes to tax purposes and you can look at it almost like a social security number for a business.
An EIN is often referred to as a Federal Tax Identification Number (FTIN) or a Federal Employer Identification Number (FEIN).
You will need to get an EIN for essential things such as opening a business bank account, filing and managing Federal and State Taxes, and hiring any employees. All LLCs will need an EIN, if you have more than one member or if you have employees.
If you already have an EIN for a sole proprietorship, the IRS will require you to get a new EIN when you are switching this to an LLC.
When you get an EIN, you will need to choose a tax classification and most LLCs choose the default.
You can get an EIN directly from the Internal Revenue Service and it is completely free. It is an easy process that anyone can do and you can either do it by mail via this form, Form SS-4 (Rev. December 2019) (irs.gov) or online.
If you need an International EIN, you do not need an SSN to get an EIN.
If you are in the US and don’t have an SSN, you can also still apply for an EIN with the About Form SS-4, Application for Employer Identification Number (EIN) | Internal Revenue Service (irs.gov) form but you need to keep section 7b black and call the IRS to finish the application.
Frequently Asked Questions
Do I Need A Business License?
In Connecticut, to form an LLC, you need to comply with the federal, local, and state government regulations and this means you will need to get your permits and licenses sorted.
If you are working in a restaurant, for example, you will need health permits, building permits for other work, and signage permits.
The details of what business licenses and permits will be different in each state and you might need to take a short class too.
You can obtain a Connecticut business license either online or you can get it in person. If you choose to do it in person, you need to apply with the licensing or regulatory agency for your specific business.
The main permit you need in the state of Connecticut is a sales and use tax permit and this is also called a seller’s permit. You will need to get one of these if you sell, rent, or decide to lease goods.
You will also need one if you sell a taxable service or operate any kind of motel, hotel, or lodging house in Connecticut. This, however , is not limited and other professions might require additional state licensing which you can check here: Businesses Licenses Registrations Permits (ct.gov).
You might also need local Connecticut Businesses Licencins depending on your business, and location of activities. For example, in New Haven, if you are a pawnbroker, you need a local-level broker license to do business and you need to contact the town clerk for all the information on applying.
Depending on your business, you might need to register multiple forms of tax.
Connecticut Sales Tax
If you are selling a product, you will need to register a seller’s permit. You can do this through the Connecticut Department of Revenue Services and this will allow you to collect sales tax on any taxable sales.
Sales tax is also called ‘Sales and Use Tax’ and this is a tax levied by states, municipalities, and counties on transactions in the business which involve the exchange of taxable goods or services.
Connecticut Employer Taxes
When it comes to employer taxes, you need to register your LLC for unemployment Insurance Tax with the Connecticut Department of Labor Tax and Benefits System.
You will also need to register Employee Withholding Tax with the Connecticut Department of Revenue Service. You will need to do this if your LLC has employees.
There is also a business Entity Tax on any LLC in Connecticut and this will vary depending on your LLC’s income.
Federal LLC Tax Requirements
A lot of LLCs will need to report their income to the Internal Revenue Service using two forms.
These forms are Form 1065, U.S. Return of Partnership Income | Internal Revenue Service (irs.gov) if you are a multi-member LLC or Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) | Internal Revenue Service (irs.gov) if you have a single-member LLC.