You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Connecticut.
Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Connecticut startup fees here.
✔ Start Your LLC For Free
As a business owner, you have so much to think about. Let an LLC service take care of the formation paperwork so you can sleep easy knowing everything is totally taken care of.
ZenBusiness has formed over 300,000 businesses, is reliable, fast and free when you use our special discount. Not to mention $79 less than LegalZoom!
Overall Connecticut LLC Formation Costs
LLC Name Reservation Fee
Let’s say you still have some paperwork to figure out before officially starting your LLC, but you have an amazing name in mind. In cases like this, a name reservation could be beneficial. Reserving a name is optional, but it can help provide peace of mind while you work out your LLC formation details. A Connecticut name reservation gives you a 120-day hold on your name, and it’ll set you back $60.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform a Connecticut business name search to make sure the name you want is available.
Certificate of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Connecticut LLC. Your LLC isn’t officially recognized by the state until you’ve successfully filed a Certificate of Organization. Whether filing online, by mail, or in person, the Certificate of Organization will cost you $120. What’s nice is that this is a one-time fee. You won’t have to pay it again during the life of your business unless your initial filing is rejected.
The information you’ll need to file your Certificate of Organization includes your name and address, your LLC’s official business name, your LLC’s principal office address (and mailing address, if different), your registered agent’s name, address, and signature, the name and address of at least one member or manager of your LLC, your LLC’s email address, your LLC’s six-digit NAICS code, the date, your name, and your signature.
Depending on the type of business you’re registering and where you’re located in Connecticut, you may need to acquire certain licenses before conducting business. For example, a restaurant would need to obtain a “Food Service Certification” from the Department of Health before serving customers.
The state has particular licensure requirements, but so do individual cities, so you’ll need to check with both. Visit the Connecticut Department of Consumer Protection to determine which licenses you may need.
What are some of the most commonly required business licenses for Connecticut LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
Connecticut LLC Formation Service
Starting an LLC in Connecticut can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for a Connecticut LLC service. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like ZenBusiness and IncFile) offer basic LLC formation services like Certificate of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.
Registered Agent Service
Appointing a Connecticut registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Connecticut business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer. If you’re considering hiring a lawyer, do some research to ensure that you hire an ideal match for your business. Take advantage of a site like Avvo, a database of attorneys from across the country, sortable by location, rates, specialties, review and more. It’s got everything you need to find the perfect Connecticut business attorney for you.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Connecticut. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Connecticut. Foreign businesses need only to file the “Foreign Registration Statement,” not the Certificate of Organization.
All foreign business entities are required to foreign qualify in Connecticut, or they could incur some pretty severe penalties. There are two ways to file: online or on paper. Both methods require a $120 fee. This filing is similar to the Certificate of Organization in that you’ll only need to file it and pay the fee once, provided it’s accepted by the Secretary of State.
LLC Annual Fees
Each year, your LLC must submit an annual report with the Secretary of State. This is to assist the state in maintaining current and accurate information for all of its businesses. Each annual report costs $20, so plan that into your yearly budget. Annual reports are due by the end of your LLC’s anniversary month (the month in which it was initially formed) and must be filed online.
The information required to file your annual report includes the official business name of your LLC, your LLC’s Connecticut business ID number, your LLC’s official business address (and mailing address, if different), your name, your title, and the names and addresses of your LLC’s members and/or managers.
For more info on annual reports for Connecticut LLCs, check out our full article on this topic!
The way that LLCs are typically structured, they do not have to pay taxes to the federal government. Only its individual members do.
However, there are certain circumstances that would make your LLC subject to other business-related taxes. If you hire employees, for example, your LLC may have to pay income and unemployment taxes, and if your LLC sells merchandise, it will likely owe a sales tax.
What if I Don’t Pay?
Want to form an LLC for free? ZenBusiness will file all LLC formation paperwork for $0 + state fee (normally $49 + state fee). No catch, just savings.
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Connecticut companies that fail to keep up with their required filings, fees, and taxes are classified as “delinquent.” The most common causes of delinquency are missed annual reports and failure to maintain a registered agent. Delinquent LLCs may lose their ability to maintain lawsuits, foreign qualify in other states, secure loans, and more.
A company that remains in delinquency risks being dissolved by the state. It’s possible to reinstate a dissolved LLC, but you’ll have to resolve all of your outstanding filings and fees and pay an additional reinstatement fee.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Connecticut.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like annual reports — so your business doesn’t fall out of good standing.
Key Steps for Starting a Connecticut LLC
- The first step to forming a Connecticut LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Connecticut, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Certificate of Organization. You’ll need to fill out the paperwork and pay a $120 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Connecticut LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Connecticut Department of Revenue Services, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Connecticut!
Key Steps for Maintaining a Connecticut LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Connecticut.
What are the state business tax rates in Connecticut?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 3% and 6.9%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Connecticut’s 7.5% corporate income tax on your business revenue.
How quickly does Connecticut process LLC formations?
The Secretary of State should be able to process your LLC’s formation within 3-5 business days. If you’re in a hurry, you can pay a $50 expediting fee to shorten your turnaround time to roughly 24 hours.
How many small businesses are there in Connecticut today?
The state of Connecticut is home to nearly 350,000 small businesses. Entrepreneurs of all backgrounds and business types find that Connecticut is a great place to own and operate a small business.
What are the top small business resources and websites in Connecticut?
The Connecticut chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Connecticut LLCs. The U.S. Small Business Administration’s Connecticut District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.
Should I form my LLC in Connecticut, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.