Choosing to start a new company is both exhilarating and terrifying. It’s the first of many choices you’ll have to make along the path. Depending on where you reside, you may need to register your company at the state, municipal, and federal levels. This guide will assist you through the process of registering your Connecticut company.
Connecticut Business Registration
Table of Contents
1. Give Your Connecticut Business a Name
There is one crucial step you must do before registering your new business: you must choose a name. While naming your new company may seem simple on the surface, it is really one of the most important and time-consuming activities you will do throughout the business launch process.
Your company’s name should be unique and capture customers’ attention, but it also conveys much more. It should provide a clear message about the things you sell and/or the services you provide. The name of your firm exposes the public to your brand and may convey a message about your company and what it stands for.
Considering Your Name
While many entrepreneurs are inclined to speed through the name process, you should take your time and investigate all naming options. Take multiple brainstorming sessions and utilize the free internet business tools available today to assist you come up with a variety of choices, narrowing them down as you go.
Connecticut Name Lookup
The Connecticut Secretary of State features a business registration search engine that allows you to search for business organizations by name. You should also make sure that your name isn’t too similar to any existing firm in your state. This will assist to prevent future misunderstanding and legal problems.
It’s time to start legitimizing your firm once you’ve chosen a name that appropriately portrays your brand. These following procedures will differ based on your company structure and the legal requirements of your state. The next section will go through the various company structures.
2. Select a Business Structure for Your Connecticut Company
Now that you’ve picked a good name for your brand, it’s time to start the legalization process. Before you begin the registration procedure, you must decide which company structure is appropriate for you. Each has its own set of perks, drawbacks, and tax advantages.
The sole proprietorship
A single proprietorship is the simplest straightforward business form. This informal corporation was created for entrepreneurs who do not want to work with others. It provides no personal asset protection and does not need state filing.
Sole proprietorships usually operate under the owner’s surname. Connecticut will need you to apply for a DBA if you want to operate under a trade name. Because trade name certificates are submitted with the town clerk in the town where the business is located, the fee to register a DBA in Connecticut varies by city. Visit the Connecticut Town Clerks Association website for a comprehensive list of city contact information.
Partnership
A general partnership, like a sole proprietorship, is an informal structure established for entrepreneurs who form a partnership with at least one other person. You and your partners’ surnames may be used for the firm, or you can get a DBA name. Profits and losses would be reported on your (and your partners’) personal tax return, and no personal assets would be protected.
While general partnerships are not required to be registered in Connecticut, some partnerships (such as limited partnerships and limited liability partnerships) must submit formal papers with the state and pay a registration fee.
LLC
If you do not intend to go public in the foreseeable future, a limited liability corporation (LLC) may be the best option. It provides more freedom and protects your personal assets in the case of a lawsuit.
The state of Connecticut requires all LLCs to choose a registered agent who will receive legal papers on their behalf. Your registered agent must be a qualified Connecticut citizen or a company allowed to do business in Connecticut. Many new LLCs choose to use a registered agent service, which costs between $29 and $300 each year.
Connecticut also requires you to follow particular name guidelines and obtain a Certificate of Organization, which contains important information about your business.
Corporation
A corporation is a kind of business entity for those who have (or want to have) shareholders. So, if you want to go public in the future, this may be the greatest alternative for you.
Corporations, like LLCs, must designate a registered agent to receive paperwork, compliance papers, and government communication on the organization’s behalf. Your registered agent, like an LLC, might be a professional service, a corporate organization, or a person.
You will also need to submit a Certificate of Incorporation with the state in addition to obtaining a registered agent.
3. Determine whether your company has to be registered in Connecticut.
Once you’ve decided on your formal company structure and registered your new business name, you need check with your state to see what the criteria are for business registration. Each state has its own set of rules, which must be strictly followed.
Most informal business arrangements, such as sole proprietorships and general partnerships, do not need to be registered with the State of Connecticut. Check with your local government to discover whether your sole proprietorship or general partnership has to be registered at the county or municipal level.
Furthermore, certain firms (for example, sole proprietorships and single-member LLCs with no workers) are exempt from registering and filing for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a necessity for your company, you should consider registering regardless since there are various legal and tax advantages.
Even though you are not compelled to register your firm, it is important to recognize that creating an LLC has several legal and financial advantages. Your business debts are considered personal debts if you are a single proprietorship or a partnership. This implies that in the case of a lawsuit, your personal assets might be taken. Personal protection is provided through LLCs, which legally shield your personal assets and minimize your personal liabilities.
Aside from personal protection, LLCs have various additional advantages, including:
Profit distribution, decision-making, and company management flexibility
“Flow-through” taxes permits the LLC’s revenue and costs to pass through to the owners’ personal income tax returns, with no limits on the number and type of owners.
4. Register Your Connecticut Business for Taxes
EINs are used by the IRS to identify firms for tax purposes. Every company with workers is obligated to have one. Our EIN guide will assist you in determining the EIN requirements for your company structure and will coach you through each stage of the procedure.
After obtaining your EIN, you must register for state taxes with the Connecticut Department of Revenue Services. Businesses that sell tangible goods and/or taxable services must collect Transactions and Use Tax on all sales.
Business entity tax, withholding tax, and fuel excise taxes may also apply to your new venture. Visit the Department of Revenue Services website for a complete list of tax registration requirements.
5. Obtain Connecticut Business Permits and Licenses
The licensing and permission requirements in Connecticut vary depending on your region and business. Professional license criteria, applications, and paperwork are available through the Department of Consumer Protection. Many business professionals in Connecticut are required to complete a Criminal Conviction Application Worksheet, so be sure to put this on your checklist.
We have created a business licensing search to help you determine your federal, state, and county license and permit obligations. Simply choose your state from the dropdown bar to be brought to a list of everything you will need to consider when beginning a company in the state of Connecticut.
Still concerned about the procedure? We’ve also produced a list of our top five business licensing services to assist you in getting started and ensuring your company fulfills all compliance standards.