Limited liability companies (LLCs) in Connecticut are affordable and easy to form. As with other states, the State of Connecticut has some unique LLC requirements.
Interested parties must register with the Secretary of State by filing the necessary forms, paying the necessary fees, and meeting all naming and formation requirements.
The specifications required of a Connecticut LLC are:
Registration. LLCs are required to file articles of organization with the Secretary of State. The articles must include the following information:
- Filing party name and address
- LLC’s name and principal office address
- Description of the business
- Registered agent’s name and business and residence addresses
- Registered agent’s signature accepting such an appointment
- Member or manager names, titles, and business and residence addresses
- Type of management
- Execution date
- Organizer’s name and signature
Forms and fees. LLC registrants are required to complete and submit articles of organization to the Secretary of State. There is a filing fee, about $120, that must be paid upon submission of the documents. Filing fees can change, you should contact the Secretary of State for the most current fees.
Timeline. Processing time can take up to six weeks depending on the volume of submissions. However, there are 24-hour expedited services that are available for a minimal fee of about $50 per transaction.
Naming requirements. LLC naming requirements can be confusing. However, the easiest way to make sure that your LLC name will be approved is to make sure that it is distinguishable from other LLCs and includes specific words required of LLCs. You may opt to have a preferred name checked for availability before filing your LLC formation documents.
Formation requirements. To form an LLC, a registrant must first file their Articles of Organization with the Secretary of State. All submissions must be accompanied by the filing fee.
Next, an LLC with more than one member is strongly advised to have a limited liability operating agreement among its members. This operating agreement contains the terms entered into by the members of the LLC and governs such critical items as the roles of each member, voting rights, who manages the LLC, how members are admitted or removed, dissolution of the LLC, and procedures for amending the LLC operating agreement itself.
Starting an LLC in Connecticut
Before deciding to form an LLC in Connecticut, you must understand what an LLC is and if it is a viable business structure for your company. To begin, an LLC is a business structure that has flexible organization, is privy to tax efficiencies, and provides limited liability for its members. Members may include individuals, corporations, other LLCs and foreign entities. One benefit of an LLC is that there is no maximum number of members. An LLC is also known as a ”hybrid” business structure in the sense that it brings together elements of a corporation and limited liability partnerships.
Here are some tips to help you put together what you need to begin the registration process with the Secretary of State:
1. Decide on a name for your business.
You can choose any name as long as it ends with “Limited Liability Company” or any variation of its abbreviation—e.g., L.L.C., LLC or Ltd. Co.
Names may be reserved for up to 120 days. You may file a name reservation application, along with the filing fee, which is about $60, with the Secretary of State. The application must include the applicant’s name, address, title and signature, the name to be reserved, the execution date and the filing party’s name and address.
You may also have a preferred name checked for availability.
2. Assign an agent for service of process (also referred to as the resident agent).
Registered agents are individuals or corporations authorized to do business in the state and which have permanent addresses in Connecticut. Registered agents accept legal documents on behalf of the LLC and make sure its members are notified.
3. Get an Employer Identification Number (EIN) from the IRS.
If there are two or more members in your LLC, your company will need to obtain an EIN from the IRS, for tax purposes.
4. Create an operating agreement.
Although LLCs in Connecticut are not required to have a limited liability company operating agreement, it is wise to have one in place with other members should your LLC have more than one member. The State of Connecticut recognizes limited liability company operating agreements as governing documents.
5. Register with the Department of Revenue Services for the Connecticut Business Entity Tax (BET).
All LLCs are subject to taxes, starting from the taxable year in which the articles of organization were filed up until an articles of dissolution is filed formalizing the termination of the LLC. The annual tax is about $250 and must be paid every year on or before the 15th day of the fourth month following the end of the LLC’s taxable year. Late payments incur an additional fee. Registration and payments may be done by mail or online with the Department of Revenue Services.
6. Familiarize yourself with the LLC’s continuing legal obligations, specifically annual reports.
LLCs in Connecticut are required by state law to submit annual reports. This is filed every year and is done online. There is a filing fee that is about $20.
Filing an LLC and Fees
Following are the forms and fees that are required when starting an LLC in Connecticut:
1. Forms. Those looking to form an LLC in Connecticut will have to file their articles of organization, along with the required filing fee, with the Secretary of State.
2. Fees. The filing fee for Articles of Organization is about $120. Fees can change, check with the Secretary of State for the most current fees.
3. Limited liability company operating agreement. Although the LLC operating agreement is not filed with the Secretary of State, it is a good idea to have one in place for LLCs that have more than one member. This agreement should be kept on file by the registered agent.
4. Taxes. LLCs in Connecticut are treated as corporations, limited liability partnerships or single-member LLCs and are subject to federal income tax classifications. Depending on the type of taxation you opt to have for your LLC, the tax responsibilities are as follows:
a) An LLC treated as a limited liability partnership. These LLCs are required to file Form 1065, U.S. Return of Partnership Income, and to show equal distribution of profits, losses and credit on a Schedule K-1 with the IRS.
b) An LLC treated as a C corporation for federal tax purposes. These LLCs are required to file Form 8832, Entity Classification Election, and must opt to be taxed as a corporation. Next, they must file Form 1120, U.S. Corporation Income Tax Return, with the IRS.
c) An LLC treated as an S corporation. These LLCs are required to file Form 1120S, U.S. Corporation Income Tax Return, accompanied by a report from each owner expressing the equal distribution of profits, losses and credit with the IRS.
d) An LLC treated as a sole proprietorship. These LLCs must report all business income and expenses via the sole proprietor’s personal income tax returns, Schedule C (Form 1040), Profit or Loss from Business, with the IRS.
You should always acquaint yourself with the state laws regarding taxation. Your LLC may be subject to other taxes depending on the kind of services your LLC may offer.
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