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Welcome to Connecticut’s business scene, where setting up a Limited Liability Company (LLC) forms the foundation for your business activities. This process involves understanding the associated costs, which include filing fees and ongoing expenses.
This article explains the “cost of forming an LLC in Connecticut.” For those seeking expert help, LLC services like Tailor Brands provide detailed guidance through the paperwork, filings, and compliance, simplifying the process and ensuring your LLC is set up correctly.
With proper knowledge and support, you can handle the costs and complexities of forming your LLC in Connecticut.
What Is the Cost of Forming an LLC in Connecticut?
The main expense to start an LLC in Connecticut is a $120 fee needed to electronically file the LLC’s Certificate of Organization with the Connecticut Secretary of the State.
Connecticut Foreign LLC Formation Costs
If your LLC is already registered in another state and you want to expand your business to Connecticut, you must register your LLC as a foreign entity in the state. This requires filing a Foreign Registration Statement. The fee for registering a foreign LLC in Connecticut is $120.
If the name of your LLC isn’t available in Connecticut, you can register an alternative name by filing an Application for Registration of Name with a $60 fee. You can submit this application online or by mail.
Annual Cost for LLCs in Connecticut
When thinking about starting a Limited Liability Company (LLC) in Connecticut, understand the ongoing costs involved in keeping the LLC running. Considering these costs helps you estimate the total expenses of operating a Connecticut LLC and compare them with the costs in other states.
The main ongoing costs for a Connecticut LLC include an $80 annual report fee, which you must submit to the Secretary of the State every year. Connecticut laws require every LLC to have a registered agent. You can serve as your own agent or hire a professional service, with fees varying between $100 and $300 a year.
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How Much Does It Cost to Start an LLC in Connecticut With the Best LLC Service?
Tailor Brands LLC Formation Cost
In Connecticut, the initial cost to form an LLC is $120. There may be additional costs depending on the extra services you choose. Normally, it takes 2 to 3 weeks to process the paperwork. However, you can speed this up to 6 to 8 days for an extra $50 or even quicker to 3 to 4 days for an additional $100.
Tailor Brands offers several LLC plans. The Lite LLC plan is the most affordable option and includes LLC formation with standard processing times. It costs just the state filing fee. The Essential LLC plan is $199 plus state fees and offers LLC formation with faster processing, yearly compliance services, and an operating agreement. There’s an annual fee of $199 for continuing these services.
The Elite LLC plan is Tailor Brands’ highest tier at $249 plus state filing fees. It includes everything from the Essential plan, plus extra business tools like a free domain for a year, a DIY website builder, an online store, eight free logos, a digital business card, business card tools, and a social media post maker. Continuing these services costs an annual fee of $249.
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Additional Costs When Starting an LLC in Connecticut
Connecticut LLC Name Costs
Registering the name of your Limited Liability Company is free. The approval of your Connecticut LLC Name is included at no extra cost when the state approves your Certificate of Organization.
Despite what some online sources may say, LLC Business Name Reservations are usually not required. Most states, including Connecticut, don’t need a Name Reservation to form an LLC. Therefore, there are no fees in Connecticut for securing a business name.
Connecticut Registered Agent Costs
When forming an LLC in Connecticut, you must designate a Registered Agent, which could incur an annual fee ranging from $0 to $125. The primary responsibility of the Registered Agent is to accept legal documents and state communications on behalf of your LLC. They must be physically located within the state and available during normal business hours.
Opting to serve as your own Registered Agent or appointing someone you know can eliminate additional expenses. Hiring a Registered Agent service may cost between $100 and $300 per year. These services not only handle your legal notices but also provide additional business support and enhance your privacy.
It’s especially beneficial to use a Registered Agent service when:
- Connecticut law requires Registered Agents to have a physical address within the state
- Privacy issues may lead you to keep your address off public records; some companies might allow the use of their address for this
Connecticut Operating Agreement Costs
There’s no charge for an LLC Operating Agreement in Connecticut ($0).
A Connecticut LLC Operating Agreement serves as a written agreement among the LLC members. It includes detailed information about ownership, management, and profit distribution. Both Single-Member and Multi-Member LLCs should create an Operating Agreement, keep it with their business records, and give each member a copy.
Usually, other online platforms charge between $50 and $200 for LLC Operating Agreements.
Connecticut EIN Cost
An EIN Number, also known as an Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), is used for several purposes, such as filing income taxes, opening an LLC bank account, and hiring employees.
While many websites charge for getting an EIN, you can obtain one for your LLC for free. The Internal Revenue Service (IRS) allows you to get an EIN at no cost, and you can complete the online application in just a few minutes. This EIN number is crucial for starting your business bank account.
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Connecticut LLC Taxes
Connecticut LLC taxes include many different types that owners must pay, causing big differences in yearly costs.
Here are some taxes LLC owners pay:
Federal Income Taxes
The Internal Revenue Service (IRS) provides different tax options for your LLC. If your LLC is a Single-Member LLC, the IRS treats it as a Disregarded Entity. This means the LLC doesn’t need to file its own federal income tax return. The owner files the return and pays the taxes instead.
The taxation method varies based on who owns the LLC: if an individual owns it, it’s taxed like a Sole Proprietorship, and if another company owns it, it’s taxed as a branch of that parent company.
Multi-Member LLC Taxes
For LLCs with multiple owners, the default tax status is Partnership. The LLC must file a 1065 Partnership Return and give a Schedule K-1 to each owner, which shows their share of the profits. The owners then pay income taxes on their personal tax return (Form 1040) based on the income reported on the K-1.
Husband and Wife LLC Taxes
In community property states, a husband and wife who co-own an LLC can file taxes as either a Single-Member LLC or a Qualified Joint Venture rather than a Multi-Member LLC. However, states like Connecticut don’t allow the formation of Qualified Joint Ventures.
Electing Corporate Taxation
Besides their default tax statuses, an LLC can opt to be taxed as a Corporation by submitting Form 2553 for S-Corporation status or Form 8832 for C-Corporation status.
Choosing S-Corporation status can lower self-employment taxes for established businesses that are making a profit. On the other hand, C-Corporation status could be advantageous for larger employers regarding healthcare fringe benefits.
Connecticut State Income Tax
In Connecticut, Single-Member LLCs don’t file a state return; the owner reports the LLC’s profits or losses on their personal state tax return. Multi-member LLCs might file a state-level Partnership return, and the owners include their share of profits or losses on their personal state tax returns. Certain industries must pay specific business taxes.
Local Income Tax
Connecticut LLCs may have to pay local income taxes to their municipalities. It’s recommended that an accountant be hired to prepare and file these local income taxes. Also, checking local requirements is advisable.
Connecticut Sales Tax
In Connecticut, if you sell products, you may need to collect sales tax and get a Seller’s Permit from the Department of Revenue Services. You can register for this online or by mail. Registering for sales tax is essential for retail sales, and the names of the permits can vary.
Connecticut LLC Payroll Taxes
In Connecticut, LLCs with employees need to manage payroll taxes. This includes withholding federal and state income taxes and Social Security, Medicare, and unemployment taxes. Employers must register to withhold tax and meet other tax obligations. Due to the complexity and possible penalties, it’s often recommended to seek professional help.
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Connecticut LLC Cost FAQs
Conclusion
Setting up an LLC in Connecticut requires knowing initial filing fees, ongoing costs, and important choices like choosing a registered agent and deciding on a tax structure. The process starts with a $120 filing fee for the Certificate of Organization, followed by annual costs such as an $80 annual report fee and a required registered agent fee.
Professional LLC services such as Tailor Brands provide different plans to make the process easier. Making informed decisions and getting expert advice ensures compliance and long-term success for entrepreneurs establishing and maintaining their LLCs in Connecticut.
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