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Connecticut has experienced consistent growth in the number of new businesses since 2010, with an annual average increase of 5%. Nevertheless, in 2021, there was a remarkable surge of 20% in new business registrations in the “Constitution State.”
This increased interest has led to a significant rise in the formation of limited liability companies (LLCs). If you’re interested in starting an LLC in Connecticut, this guide is here to assist you. You can discover the straightforward steps to establish an LLC in Connecticut as we provide a detailed walkthrough of the process and underscore essential factors to consider.
What is an LLC?
An LLC, short for a limited liability company, serves as a structured business entity that’s managed by its ownership collective. These owners, formally referred to as LLC members, assume the company’s profits and losses through a tax structure known as “pass-through.” LLCs can take the form of single-member or multi-member setups.
Within an LLC, an individual member can either be a managing member, actively involved in day-to-day operations, or a non-managing member, holding an ownership stake without direct involvement in operational processes.
One of the primary advantages of an LLC is that it shields business owners from financial responsibility for legal claims against the entity or most business debts. Consequently, the LLC’s creditors and litigants cannot seize an owner’s personal assets or bank accounts.
In Connecticut, the distinctions between a limited liability company (LLC) and a limited liability partnership (LLP) are relatively minimal. While LLPs offer somewhat fewer liability protections than LLCs and have a slightly different ownership structure, they remain a viable option. LLP partners typically work with a degree of independence.
As an LLP member, you’re personally protected from lawsuits or defaults arising from the actions of your business partners. However, in cases where you’re personally liable, litigants may have the ability to pursue your personal assets. LLPs are often favored by groups of professionals who operate semi-independently, such as doctors, lawyers, and architects.
Notably, in Connecticut, LLPs are required to file nearly all the same legal documents as LLCs, including Articles of Organization and name reservation materials.
Starting a Connecticut State LLC in 8 Easy Steps
1. Pick a Name For Your Connecticut LLC
If you’ve been contemplating the idea of establishing a company for some time, it’s likely that you’ve already chosen a name. If not, it’s time to exercise your creativity. Selecting a memorable and distinctive name is essential, as it can help potential customers and future business partners establish a connection with your company.
However, before you become too engrossed in the process of naming your LLC in Connecticut, you should be aware of the state’s naming requirements, which include the following:
- The name must incorporate some form of the phrase “Limited Liability Company” (such as “Limited Liability Co.,” “Ltd. Liability Company,” or “Ltd. Liability Co”) or one of its abbreviations (like “L.L.C.” or “LLC”).
- It should be distinguishable from the names of all other entities operating in Connecticut.
- The name must not include a phrase or abbreviation that could cause confusion with a government entity, such as “Department of Justice” or “FEMA.”
Once you have found the perfect name for your Connecticut LLC, conduct a search in the business entity database to check its availability. If your chosen name is unavailable, there are strategies you can employ to make it distinct from other entities while still reflecting your company’s essence.
For instance, you can rearrange keywords, introduce adjectives, or substitute a word with a synonym. If you initially wanted to name your car wash “Soapy Suds LLC,” but that name is already taken, you could consider alternatives like “Suds and Soap LLC” or “Bubbly Suds LLC.”
If the name is available, that’s excellent news – it means you can register your business under that name. However, if you’re not yet prepared to file but want to safeguard your chosen name while you wait, you have the option to apply for a name reservation for a fee of $60, which will reserve your name for 120 days.
Here’s a tip: Some LLCs opt to name the company after its members for filing purposes but subsequently choose to do business under an assumed name (Doing Business As or DBA). This is a common practice for companies with multiple services or products under their Connecticut LLC.
For example, if two friends, Leslie and Lexie, wish to establish a Connecticut LLC to sell their newly developed ice cream brand, “Creamy Ice,” but also plan to operate a line of food trucks specializing in lobster rolls, they might consider naming their LLC “Leslie and Lexie LLC” rather than “Creamy Ice LLC.” This allows them to keep their “Creamy Ice” brand distinct from their lobster roll service when conducting business.
2. Appoint a Registered Agent
Selecting a registered agent for your Connecticut LLC stands as one of the most critical decisions your new company will need to make. This designated agent holds the responsibility of receiving legal documents and official notifications on behalf of the LLC, serving as the primary point of contact for crucial state-related matters.
The Connecticut LLC Act mandates that the agent must be an individual who is a Connecticut resident with a local address or an entity authorized to conduct business within the state. Opting for one of your company’s members to serve as the agent might prove convenient.
Many LLCs often opt for a registered agent service or engage the services of the LLC’s attorney to fulfill this role. Having a third party act as the agent can help maintain the focus of LLC members on their business operations. If you decide to designate an attorney as your agent, it can also enhance the efficiency of legal advice and streamline communication processes.
Our Picks of the Best-Registered Agent Services
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Initiating a business venture involves a multitude of state-mandated paperwork, which can often baffle inexperienced business proprietors. Northwest provides a range of business services aimed at assisting entrepreneurs in locating the appropriate documentation, completing it accurately, and submitting it promptly to the relevant government agency.
Besides aiding in the establishment of an LLC, Northwest offers a variety of additional services, including registered agent services, which can be particularly beneficial to new business owners.
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3. File Your Certificate of Organization
The certificate of organization is submitted to the secretary of state’s office in order to officially establish your company as a recognized business entity. While some business structures, such as sole proprietorships or general partnerships, can operate without state registration, entities like LLCs and other corporations are required to register for liability protection.
This certificate can be obtained as a downloadable PDF form that you can complete either online through your account or by filling out the PDF version. To complete this form, you will need to provide the following information:
- The name of your Connecticut LLC
- The physical location of the LLC’s main office
- The mailing address of the LLC
- Contact information for the registered agent, which can be an individual or a business entity
- The name and address of at least one member or manager of the LLC
- The company’s email address, if applicable
- The NAICS code, which specifies the type of business your LLC will conduct
- The signature of the LLC’s organizer
You can submit your certificate of organization by either sending it through the mail or by creating an account and submitting it online via the portal. In both cases, the filing fee is $120.
For foreign LLCs that were formed outside of Connecticut but wish to operate within the state, they must register with the Connecticut Secretary of State. Here are the steps to make your LLC eligible to conduct business in Connecticut:
- Ensure that your LLC name adheres to Connecticut’s naming guidelines and verify its availability in the Connecticut Secretary of State’s business name database.
- Appoint a registered agent in Connecticut who will handle the process service.
- File a Foreign Registration Statement, Limited Liability Company, with the Connecticut Secretary of State.
4. Draft an Operating Agreement
While it’s not a legally required part of the process when establishing an LLC in Connecticut, it’s highly advisable for all newly formed limited liability companies to create a thorough LLC operating agreement.
This operating agreement should:
- Outline the business structure of the LLC.
- Define the individual roles and responsibilities of each LLC member.
- Specify the procedures for running the LLC.
- Having an operating agreement that clearly defines the roles and responsibilities of its members can help the LLC steer clear of significant legal and operational challenges.
5. Obtain an IRS Employer Identification Number (EIN)
Every newly established LLC in the United States is required to obtain an Employer Identification Number (EIN) from the Internal Revenue Service, with the exception of single-member LLCs.
The EIN, a nine-digit identifier, serves as the business equivalent of a social security number and is essential for fulfilling obligations such as paying income tax, filing tax returns, establishing business bank accounts, and carrying out numerous critical operations. You have the option to apply for an EIN online through the IRS website at no cost.
6. Fulfill Your Connecticut LLC’s Additional Legal Obligations
Upon LLC registration, members must ensure compliance with ongoing legal obligations throughout the company’s existence. These obligations encompass several key areas:
LLCs established in Connecticut are mandated to submit an annual report to the Connecticut Secretary of State. The sole method for report submission is through the online platform, incurring an $80 filing fee. These reports are due between January 1 and April 1, starting from the first calendar year following the LLC’s formation.
State Tax Requirements
For LLCs that have employees or engage in sales tax collection, registration with the Connecticut Department of Revenue Services is necessary to facilitate the filing of relevant tax forms. The registration process with Connecticut DRS can be completed online, via postal mail, or through in-person delivery of the required form.
Depending on the nature of the business, a Connecticut LLC may be obliged to secure one or more licenses, permits, or certifications issued at either the state or local level. Comprehensive information on state licenses and permits can be accessed through the Connecticut Economic Resource Center.
Furthermore, it’s advisable to consult with a city clerk in the locality where the LLC is headquartered for guidance on meeting local licensing prerequisites.
7. Examine Business Insurance Options in Connecticut
Entrepreneurs opt for the LLC business structure to safeguard their personal assets in case of a lawsuit against their company. However, LLC owners often find it necessary to obtain insurance policies for their everyday business activities.
Some types of insurance, such as workers’ compensation and commercial automobile insurance, are mandatory under Connecticut state law. Meanwhile, other insurance policies, though not mandated by the state, may be required by private parties like landlords, lenders, or event hosts.
The Connecticut Insurance Department oversees insurance offerings in the state and facilitates connections between businesses and insurance providers. Common insurance policies include:
- Workers’ compensation insurance: If you have employees, you must provide workers’ compensation insurance, which covers medical expenses for on-the-job injuries and provides compensation to employees who need time off due to work-related injuries. Independent contractors are not covered by workers’ compensation policies.
- Commercial automobile insurance: Regardless of how your business uses its vehicles, such as delivery or semi-trucks, they must be insured with commercial automobile insurance in Connecticut.
- Professional liability insurance: This type of insurance, also known as errors and omissions insurance, offers protection to your LLC against claims alleging that your advice or services resulted in financial harm to a customer.
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8. Market Your LLC
After completing the necessary legal paperwork for your Connecticut LLC, you can shift your focus to the enjoyable task of establishing your brand and promoting your business. Marketing efforts encompass various elements such as slogans, logos, a consistent written tone, color schemes, and fonts, which can be incorporated into:
- Traditional TV and radio ads: Although more expensive in Connecticut due to its higher population density, these ads provide broad exposure and potential long-term benefits.
- Pay-per-click web ads: These ads, commonly found on websites, social media platforms, and online videos, offer targeted advertising by considering demographics, interests, search history, and geographic location.
- Social media influencer campaigns: Collaborate with social media influencers with substantial followings to endorse your products, provide reviews, and offer discount codes.
Connecticut LLC Checklist
To establish a Connecticut LLC, the name you choose must adhere to the following criteria:
- The LLC name should be unique and not resemble existing business entities registered with the Connecticut Secretary of State.
- Your LLC name must incorporate the words “Limited Liability Company” or the abbreviations “L.L.C.” or “LLC.”
Required Formation Documents and Filing Fees
The process of forming an LLC in Connecticut involves the submission of the following documents and associated fees:
- Application for the Reservation of Name – This requires a filing fee of $60.
- Certificate of Organization – A filing fee of $120 is necessary for this document.
To establish an LLC in Connecticut, you must submit a Certificate of Organization to the Connecticut Secretary of State.
Regular Legal Obligations
Connecticut LLCs must fulfill the following regular legal obligations:
- Annual Reports – These reports must be filed annually between January 1 and April 1.
- Connecticut Department of Revenue Services Registration – Certain Connecticut LLCs are obligated to register, depending on the nature of their business.
- Business Licenses – Specific Connecticut LLCs are required to obtain licenses based on their business type.
- Biennial Business Entity Tax – Connecticut LLCs must pay this $250 tax annually.
How to Start an LLC in Connecticut – FAQs
How Long Does Connecticut Let You Reserve a Business Name?
You have the option to reserve a name for a maximum period of 120 days.
Are Connecticut LLCs Required to File Annual Reports?
On an annual basis, it’s mandatory to file an annual report and make an $80 payment for the filing fee.
What Form Do I Need to Dissolve an LLC in Connecticut?
You’re required to present a Certificate of Dissolution, and it does not involve any filing fee.
About the author
Dr. Alexander Sterling, Esq, a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. Sterling guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Alexander Sterling, Esq, is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.