Learn about the annual report and tax filing obligations for Connecticut limited liability companies.
To establish and operate a Connecticut limited liability corporation (LLC), you must prepare and submit a number of paperwork with the state. This article discusses the most significant continuing reporting and state tax filing obligations for Connecticut limited liability companies.
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Report Annual
Your LLC must submit an annual report with the state of Connecticut. Annual report forms or notices are automatically sent to the postal address of your LLC. Your annual report may be filed online at the SOTS website. The yearly report is required by the end of the month in which your LLC was formed. The filing cost is now $20.
State Corporate Taxes
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay federal income taxes by default; only its members do.
Connecticut, on the other hand, levies a separate biennial Business Entity Tax (BET). The current tax is $250 and must be paid to the Department of Revenue Services. Every odd-numbered year, the tax is payable on April 15th (2015, 2017, and so on). The tax may be paid electronically at the DRS website or on paper using Form OP-424, Business Entity Tax Return.
In certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Connecticut, like almost every other state, taxes corporate revenue. This is referred to as a corporate business tax in Connecticut. In Connecticut, the business tax is calculated in a variety of ways, including a flat 7.5% of net income. There is also a minimum tax of $250. The DRS receives the tax. To pay the tax, use the state’s corporate business tax return (Form CT-1120) or file online.
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) However, Connecticut employers must additionally pay state taxes.
To begin, you must withhold and pay employee income taxes to the DRS. Begin by registering your company with the DRS, either online or in print form (Form REG-1, Business Taxes Registration Application). After you’ve enrolled, you must submit withholding taxes on a regular basis. In addition, you must complete an annual reconciliation of your LLC’s tax withholding. Unless you get a waiver from the DRS, you must complete this online.
You’ll also need to register to pay state unemployment insurance (UI) taxes. The Connecticut Department of Labor is in charge of these levies (DOL). These taxes may be registered for online or by downloading and mailing Form UCT1A, Employer Status Report for Unemployment Compensation. Then, each quarter, utilize online interactive Forms UC-2 and UC5-A to record your salary and pay your unemployment insurance taxes.
Taxes on Sales and Use
If your LLC sells items to Connecticut clients, you must collect and remit sales tax. This implies you’ll have to register with the Department of Revenue Services for this reason and then make periodic sales tax payments for products sold. You may register online or by submitting Form REG-1 by mail. You will be issued a sales tax permit after you have registered. Then, on a regular basis, such as monthly or quarterly, you must file sales tax reports with the DRR. This may be done on paper (Form OS-114) or online.
Other States Registration
If you want to do business in states other than Connecticut, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.