How to Start an LLC in Connecticut
If you're interested in starting an LLC in Connecticut, the Business and Commercial Services division of the Connecticut Secretary of State's office will be your main point of contact.
The initial step involves securing a name for your limited liability company and then appointing a registered agent before filing your Certificate of Organization. In addition, we will discuss the significance of having an operating agreement and how to apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
To simplify the LLC formation process in the Constitution State, we have created a step-by-step guide that outlines each stage of the process. We also address the most frequently asked questions regarding starting an LLC in Connecticut.
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1. Name Your Connecticut LLC
When establishing an LLC in Connecticut, the initial step is to choose a name for your company. It's crucial to ensure that your limited liability company name is exclusive in the state of Connecticut.
You can verify this by utilizing Connecticut Business Records Search, which displays whether your desired business name is available.
Available Business Name Reservation
In case the name you have selected for your LLC is available but you are not yet ready to submit your Connecticut LLC paperwork, you can opt to reserve it with the Secretary of State. For a fee, the Connecticut Secretary of State allows you to reserve a business name for 120 days.
Required Words & Abbreviations
Connecticut state law mandates that an LLC name should terminate with the words "Limited Liability Company" or the abbreviations "LLC" or "L.L.C." Furthermore, "Limited" may be shortened as "Ltd." and "company" as "Co."
It's important to note that the LLC name must not indicate or imply that the business purpose differs from what is outlined in the LLC's Certificate of Organization, as per Connecticut law.
2. Appoint a Registered Agent in Connecticut
All Connecticut LLCs are required to have a registered agent for service of process in the state. This is an individual or business entity that accepts legal documents on behalf of the LLC in the event of a lawsuit. Before appointment, the agent should agree to accept service of process on behalf of the LLC.
The registered agent may be one of the following:
- an individual who is a full-time resident of Connecticut, including a member or manager of the LLC;
- a Connecticut-based business entity; or
- a foreign business entity that has obtained a certificate of authority to conduct business in Connecticut.
The Benefits of Using a Registered Agent Service
New LLC owners, who are referred to as "members" in an LLC, may believe that they should act as their company's registered agent and use their primary business location as the registered office address. However, this approach may have unintended consequences.
One of the advantages of using an outside registered agent service is that the service of process won't be delivered to you in front of customers in Connecticut.
Additionally, if you serve as the registered agent for your LLC, you're required to be available during standard business hours, which can be challenging if you work outside the office or take business trips.
Lastly, if you provide your personal or business address as your registered agent address, you'll need to update your Connecticut registered agent paperwork with the state each time you move.
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3. File the Connecticut LLC Certificate of Organization
To form an LLC in Connecticut, both domestic and foreign entities must complete the appropriate paperwork.
Domestic LLCs need to complete a Certificate of Organization, while foreign LLCs must file a Foreign Registration Statement form.
The filing fee for both is $120.
Although you can download and complete the documents offline, Connecticut offers the option to complete the entire registration process online.
Alternatively, you can send the documents by mail to the Business Services Division, Connecticut Secretary of the State, P.O. Box 150470, Hartford, CT 06115-0470, or submit them in person.
The processing time varies from a few days to several weeks, depending on the submission method.
4. Create an Operating Agreement for Your LLC
Additionally, having an operating agreement for your LLC can help protect your limited liability status. Without an operating agreement, it can be argued that the LLC is not truly a separate legal entity from its owners, potentially exposing the members to personal liability in legal disputes.
In Connecticut, an operating agreement can be oral or written and does not need to be filed with the state. However, it is highly recommended to have a written agreement in place to avoid misunderstandings and ensure all members are on the same page.
If you choose to create a written operating agreement, it should include important details such as the LLC's purpose, the rights and responsibilities of each member, the allocation of profits and losses, and procedures for adding or removing members.
5. Apply for an EIN
The Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN) are alternate terms used for an EIN.
Generally, an EIN is mandatory for most businesses, except for single-member LLCs without employees who can opt to use their Social Security numbers (SSNs) instead. However, it is recommended to obtain an EIN to safeguard one’s SSN against identity theft and maintain confidentiality.
The IRS website provides a fast and easy way to obtain an EIN for your LLC.
6. Pay Your State Tax Obligations
If your Connecticut LLC will engage in certain activities, such as selling goods and collecting sales tax or hiring employees, you may need to register with the Connecticut Department of Revenue Services (DRS).
The registration can be done online or by submitting Form REG-1, Business Taxes Registration Application.
Additionally, the state imposes a biennial Business Entity Tax (BET) of $250 for LLCs. More information on BET can be found on the Business Entity Tax webpage.
7. File Annual Reports
Connecticut requires all LLCs to file an annual report with the Secretary of State between January 1 and April 1 of the year following the LLC's formation. One month before the report is due, the Secretary of State will send email reminders to LLCs.
The report can be filed online on the Secretary of State's website, with a filing fee of $20.
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