If you are thinking about starting a Limited Liability Company (LLC) in Connecticut, you’ve come to the right place.
In this article, we’ll cover:
- The basic process of forming an LLC in Connecticut
- Related tasks you should complete after you register your LLC
- The cost and how much time it takes to start an LLC in Connecticut
If you want to find out everything there is to know about forming an LLC in Connecticut, keep reading!
Start your LLC the easy way
Forming your LLC is a checkbox that needs to be ticked. Easy, fast and worry-free. We reviewed the 13 most popular LLC formation services to figure out who truly understands what new founders need. Our recommendation:
Best LLC Service 2022
- Formed 1,000,000+ LLCs
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After reading our guide, we suggest also checking out the Secretary of the State’s New Business Checklist tool. You’ll answer a few questions about your business, and the site will generate personalized details about the tasks you will need to complete to start your LLC.
Step 1: Name your Connecticut LLC
Before setting up your new Connecticut LLC, you will first need to choose its name. Unfortunately, you can’t just name your company anything you like. You need to follow some rules when it comes to naming an LLC in Connecticut. Certain words must be included, and other words can’t be used at all.
Words You Have to Use
Connecticut General Statutes Section 34-243k requires all LLC names to make it clear that the business is an LLC. This means that you must use one of the following terms in your LLC name:
- “limited liability company”
- “ltd. liability company”
- “limited liability co.”
- “ltd. liability co.”
Words You Can’t Use
Section 34-243K also sets rules on words that you can’t use in an LLC name.
For example, you can’t name your LLC something that makes it seem like it does something illegal. You also can’t pick a name that indicates your company is a government agency.
Additionally, keep in mind that if a job requires a license, your name can’t imply that your LLC does that job unless you are licensed to do so. For example, you can’t call your LLC a “medical practice” or a “law office” if you aren’t a doctor or lawyer.
The big rule is this: if you need a license to do your job, double-check with the Secretary of the State to make sure your company name complies with the law.
You will need to register your LLC under a unique or “distinguishable” name. This means that your name must not match any business entity names already registered in the state. Since people may be confused by two separate companies that have the same name, Connecticut law makes every business register with a different name.
Research the LLC Name You Want
Once you decide on an LLC name, you can check if someone else has claimed it through the Connecticut Secretary of the State’s Business Records Search.
If somebody has already registered the name you want to use for your LLC, there are still a few ways you can use it. First, if the other person consents in a record to let you use the name and changes their own name, you can use it. You can also use the name if you get a court order establishing your right to do so.
The person with the matching name can also agree to let you use an LLC name that is the same as theirs except for a term that indicates the type of business entity.
For example, the name “Carl’s Cameras, LLC” would not usually be considered “distinguishable” from the name “Carl’s Cameras, Inc.” But if you get the owner of “Carl’s Cameras, Inc.” to consent, you can use the name “Carl’s Cameras, LLC.”
If your desired name has not been taken, Connecticut General Statutes Section 34-243l lets you reserve it for 120 days. To do this, you must file an Application for Reservation of Name (Form BUS-002) with the Connecticut Secretary of the State and pay a $60 state filing fee.
You can file and pay online or print and mail the form and a check to the following address:
Business Services Division
Connecticut Secretary of the State
P.O. Box 150470
Hartford, CT 06115-0470
You can also hand-deliver or ship documents via FedEx, UPS, or DHL to this address:
Secretary of the State
Business Services Division
165 Capitol Avenue, Suite 1000
Hartford, CT 06106
When available, we always recommend you make use of online filing to speed up the process.
Get a Matching Domain
Once you settle on an LLC name, we recommend you get a matching domain, even if you don’t have immediate plans for a website.
Competitors can buy your perfect domain and its variations to block you from using them.
Domain squatters sift through public records of newly registered LLCs and will buy their matching URLs, only to relist them with huge markups.
A domain name from GoDaddy.com or a similar registrar will cost you between $20 and $50 per year, with regular specials and sales where you can get large discounts.
It pays to check now.
Once you have your domain name, you can also create a branded email address through GoDaddy.
Connecticut DBA: Using a Trade Name
Keep in mind that you don’t have to use your LLC’s official legal name out in the real world. In fact, many business owners choose to use a “DBA” (short for “doing business as”) instead of their LLC’s actual legal name.
If you register a DBA, your LLC can “go by” another name. You can use it for everything from your website to your business cards. You will only need to use your LLC’s real name on official legal documents.
If your LLC’s legal name is “Carl’s Cameras, LLC,” you could use a DBA of “Carl’s Cameras.”
But what if you want to start selling other types of home security devices on top of cameras? To make it clear what your LLC offers, you can register a new DBA and start going by “Carl’s Home Security.”
Connecticut law calls DBAs “trade names.” If you want to use a DBA, you must file a trade name certificate with the town clerk in the town where your LLC does business. You do not need to file with the Secretary of the State.
You can find contact information for your town clerk in the Connecticut town clerks directory.
Step 2: Appoint a Registered Agent for your LLC
Your “registered agent” is a person or business that accepts legal papers and other important documents for your LLC.
Connecticut General Statutes Section 34-243n requires every LLC in the state to select a registered agent to accept service of process.
Accepting service of process is a legal term for receiving the official legal papers that are sent out when someone sues someone else. This means that if your LLC is involved in a lawsuit, your Connecticut registered agent will get these documents.
Your registered agent needs to have an office or residence in Connecticut. In addition, they must be able to accept documents during normal business hours.
Connecticut law lets any person or business with an office in the state serve as a registered agent. For this reason, many new business owners think it makes sense to name themself as their LLC’s registered agent.
But the truth is, this may not be such a great idea.
Experienced LLC owners know that using a professional registered agent service is the best way to go. These services let you appoint them as your agent in exchange for a small yearly fee.
It’s easy to think that registered agent services are not worth their price. In fact, being your own LLC’s registered agent can seem like a good plan for various reasons:
- It’s cheap: You’re not paying someone else to do it for you.
- It’s easy: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important documents personally.
However, we strongly suggest not appointing yourself as your LLC’s registered agent.
Why is this our recommendation? Here are a few reasons:
- No privacy: Your name and address will be published on the Secretary of the State’s website. This means that anyone with an internet connection can find your personal information.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
- Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
- It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.
Hiring a professional registered agent service only costs about $100 per year, and it’s worth every penny. Plus, your agent will let you know right away if they receive any papers or mail for you.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
We also suggest using a nationwide service if you plan for your LLC to do business beyond the Connecticut borders.
To conduct business in another state, you need to register as a foreign LLC. You also must appoint a registered agent in that state. Because of this, it makes sense to simply hire one national service rather than a separate agent service in each state.
Step 3: File Your Connecticut LLC Certificate of Organization
A certificate of organization is a legal document that lists basic info about your LLC. To form an LLC in Connecticut, you must submit a certificate of organization to the Secretary of the State.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my Connecticut Certificate of Organization?
Connecticut General Statutes Section 34-247 requires your LLC’s certificate of organization to list:
- The LLC’s name.
- The address of the LLC’s principal office.
- The name and address of the registered agent.
- The name and business and home addresses of at least one member or manager.
If your LLC has an email address, you must also list that. But, you are not required to have an email address.
Connecticut LLC Filing Fee
According to the Connecticut Secretary of the State’s Domestic LLC Fees, the filing fee is $120 for both online and paper applications.
Connecticut LLC Processing Time
Routine filings can take 2-3 weeks, but the Secretary of the State suggests filing online for faster service. You can also request expedited processing of online filings for a $50 fee. Expedited requests will be finished by 4 p.m. on the next business day.
Step 4: Draft your Connecticut LLC Operating Agreement
An operating agreement is a legal document that governs how an LLC runs. It describes each member’s rights and responsibilities and lays out the ground rules for operating the company.
You are not legally required to create an operating agreement if you’re forming an LLC in Connecticut. However, they can be useful when starting a new business. Formal contracts ensure that each LLC member (LLC owner) understands their rights and duties. This can help avoid future disagreements among members about how to handle certain situations.
An example would be if someone wanted to sell their share of an LLC. The operating agreement will detail how they can be bought out. It may also designate who takes over their duties once they leave.
Some other reasons operating agreements can be helpful include:
- They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
- They say what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
- They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
- They say how new members can join the company. They also have rules about how exiting members can leave.
- They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
- They say whether members or managers are in charge. They also say how to hire and fire managers.
- They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
- They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.
LLC members have a great deal of discretion when drafting an operating agreement. Still, Connecticut General Statutes Section 34-243d lays out some things these contracts can’t legally include. Make sure to check that your operating agreement doesn’t violate these rules.
Operating agreements are important for your LLC because they set up guidelines for your company. Each member should participate in their creation so that everyone understands and agrees to the terms. After signing the agreement, be sure to keep an extra copy for your LLC’s records.
Step 5: Get an EIN (Employer Identification Number) for Your Connecticut LLC
An Employer Identification Number (EIN) is a nine-digit ID number issued by the IRS. An EIN is basically just like an SSN for your LLC. It can be used to file tax returns and take other actions involving the U.S. government.
Here are the most common times when you need an EIN:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If you answered yes to any of these questions, then you’ll need to apply for an EIN.
You don’t need an EIN to file taxes for a single-member LLC. You can just file using your SSN. However, having an EIN can still be helpful in certain situations. For example, an EIN can help you prevent fraud and keep your business and personal finances separate.
Plus, you’ll probably need an EIN to open a new business bank account.
It takes less than five minutes to apply for an EIN online, and it’s free and easy to do yourself. You should never pay someone to get you an EIN except as part of an LLC formation service package.
First Tasks After Registering your Connecticut LLC
After setting up an LLC, there are some additional steps you’ll want to complete. Handling these tasks will ensure you’re ready for business.
Open a Business Bank Account
Legally, you can open an LLC without having a business bank account. Still, keeping LLC funds separate from your personal accounts makes tracking expenses easier. Business accounts also help protect your personal assets from claims by your LLC’s creditors.
Here are some of the benefits of opening an LLC bank account:
- Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
- More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments.
- Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts.
The third advantage, asset protection, is crucial.
In general, LLC owners can’t be held personally liable for business debts. Only the LLC’s assets can be accessed if someone sues your business. This means your personal assets won’t be at risk.
This notion that you and your LLC are different legal entities is known as the “corporate veil.” If you “commingle” your LLC’s funds with your personal assets, this corporate veil can be “pierced” if the business is sued. This means you can be held personally responsible for your LLC’s debts.
A business account helps keep your personal finances separate from your company’s. This will keep your assets safe if your LLC is sued for any reason.
Get Business Insurance For Your Connecticut LLC
Getting the right insurance coverage is vital for every business owner. Without it, you might lose everything if something terrible happens. Certain types of insurance policies may also be required by law.
You should carefully consider your industry’s risks before selecting an insurance policy for your company. This will help you choose the coverage that meets your specific needs.
You should look into various types of business insurance, including:
- General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Workers’ compensation insurance: Connecticut requires all employers to have workers’ compensation insurance. You can get a policy from a private insurance company.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your Connecticut Company Compliant
As an LLC owner, you will need to be aware of and comply with certain rules that relate to your new business. For example, it might be necessary for you to get a business license or file tax returns.
You should stay on top of any changes in local law that may affect your business. This will keep you from breaking laws about how an LLC can operate.
Connecticut Business Permits and Licenses
Depending on the type of business you run, you may need to get a business permit or a business license in order to operate legally. If you answer the questions thoroughly, the Secretary of the State’s New Business Checklist tool will tell you whether you need a license for your LLC and how to apply for one if you do.
Connecticut Tax Requirements
If you plan to sell goods in Connecticut, you’ll need to collect and pay sales taxes. You can find out more and register as a new business through the Department of Revenue Services’ New Business Portal.
Federal LLC Tax Filing Requirements
For tax purposes, LLCs are considered pass-through entities. This means you’ll file your LLC’s profit and loss statements on Schedule C of your personal income taxes.
You’ll also need to pay federal social security and medicare taxes, even if you don’t plan on having employees. If you do end up hiring someone, you’ll need to withhold taxes for any employee who works for your LLC.
Annual Report and other Filing Requirements
Under Connecticut General Statutes Section 34-247k, you must file an annual report for your LLC with the Secretary of the State. You have to file it online between January 1 and March 31 of each year. There is an $80 filing fee.
Connecticut Business Formation Quick Links
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- New Business Checklist (SOTS)
- Business Records Search (SOTS)
- File Documents Online (SOTS)
- Business Services (SOTS)
- LLC Fees (SOTS)
- Town Clerks Directory
- New Business Portal (DOR)
- Naming Requirements: Connecticut General Statutes Section 34-243k
- Name Reservations: Connecticut General Statutes Section 34-243l
- Registered Agent: Connecticut General Statutes Section 34-243n
- Certificate of Organization: Connecticut General Statutes Section 34-247
- Operating Agreements: Connecticut General Statutes Section 34-243d
- Annual Report: Connecticut General Statutes Section 34-247k
Connecticut LLC FAQs
How much does it cost to start a Connecticut LLC?
The filing fee is $120 for both online and paper applications.
What is the processing time to form my Connecticut LLC?
Routine filings can take 2-3 weeks, but the Secretary of the State suggests filing online for faster service.
You can also request expedited processing (for online filings only) for a $50 state fee. Expedited requests will be finished by 4 p.m. on the next business day.
What are the benefits of a Connecticut LLC?
An LLC protects your personal assets from being seized to pay business debts. Plus, with an LLC, your business doesn’t have to pay income taxes.
Where do I check if my Connecticut LLC name is available?
Use the Connecticut Secretary of the State’s Business Records Search to check if your desired business name is available.