Selecting the ideal organizational structure for your business is a vital choice you must make when starting a new venture. Due to its flexibility and liability protection, creating a Limited Liability Company (LLC) in Connecticut is a preferred option for small company owners. This article will walk you through the steps of forming an LLC in Connecticut, including the paperwork needed, the costs involved, and typical mistakes to watch out for.

Documents  and Fee Needed to form an LLC in Connecticut

Choosing a Name for Your LLC

The first step in the process is picking the appropriate name for your LLC. The name you choose must adhere to Connecticut's naming regulations:

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  • "Limited Liability Company" or an acronym like "LLC" or "L.L.C." must be included.
  • Words like FBI or Treasury should not be used to refer to your LLC as a government organization.
  • Must be distinct from already registered Connecticut business organizations. On the website of the Connecticut Secretary of State, you may look for name availability.

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Once you've decided on a name that fits these requirements, you may reserve it with the Secretary of State's office for up to 120 days by submitting a Name Reservation Request. Although this step is optional, it is advised if you are not immediately prepared to submit your LLC formation paperwork.

Choosing a registered agent 

All LLCs in Connecticut are required to have a registered agent. A registered agent is a person or company in charge of receiving court papers and official communications on your LLC's behalf. The registered agent must be readily accessible during normal business hours and have a physical address in Connecticut. You may act as the registered agent for your LLC, but many company owners choose to use a registered agent service to make sure they get all necessary legal notifications. Choosing a reputable registered agent is essential since losing critical papers may have detrimental effects on your company.

Submit the Articles of Incorporation

You must submit the Articles of Organization to the Connecticut Secretary of State in order to formally establish your LLC. The name, location, purpose, and management structure of your LLC are all included in this document, along with other pertinent information.

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The following information should be in your articles of organization:

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  • Give the business location and the name of the LLC you have selected. Both a physical location and a postal address may be used for this address.
  • Be sure to provide your registered agent's name and address.
  • Indicate whether your LLC will be handled by members or by a manager. Manager-managed businesses are those that you pick a manager or managers to operate, whereas member-managed businesses are those that are collaboratively controlled by all members (owners).
  • The filing date or a future date that is 90 days from the filing date might be the effective date of the establishment of your LLC.

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The articles of organization may be submitted by mail or online. The filing charge was $120 as of my most recent information update in September 2021, but rates may fluctuate, so be sure to check the Secretary of State's website for the most latest pricing schedule.

Creating an operating agreement 

Although it is not necessary under Connecticut law, an operating agreement for your LLC is strongly advised. The management organization, ownership splits, profit allocation, and operational policies of your LLC are described in this internal document. It may be useful in settling member disputes and aids in proving the authenticity of the LLC. An Operating Agreement helps safeguard your limited liability status even if you are the only owner of your LLC by proving that your LLC is a distinct legal organization.

Get an EIN

In essence, your LLC's Employer Identification Number (EIN) functions as its Social Security Number. It is used to create a business bank account, hire staff, and submit federal and state taxes. It is necessary for tax reasons. The IRS will provide you an EIN without charge if you submit Form SS-4 online, via fax, or by mail. Many company formation providers include the ability to get an EIN on your behalf as part of their package if you'd prefer not to handle this procedure yourself.

Register for Connecticut State Taxes

Depending on the type of your company, Connecticut may need you to register for a number of state taxes. If you have workers, this may also include employer withholding tax, use tax, and sales tax. The Connecticut Department of Revenue Services offers tools and knowledge on filing state taxes.

Annual Reporting and Compliance

LLCs in Connecticut are obliged to submit a yearly report to the Secretary of State. The Annual Report of a Limited Liability Company contains facts about the members or management of your LLC, including their names, addresses, and other information. As of my most recent update, the filing cost for yearly reports is $20. If you don't submit this report, the state may dissolve your LLC.

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You may also need help in starting a business. Have a look at our guide on How to create an LLC - LLC Filing Steps.

Common Mistakes to Avert

Although it is not very difficult to form an LLC in Connecticut, there are certain typical mistakes that business owners should avoid:

Ignoring Compliance

Failure to submit yearly reports or pay state taxes, for example, may result in fines or possibly the dissolution of your LLC.

Financial Management

Combining personal and professional finances Maintaining financial segregation between your personal and company affairs is crucial for limited liability protection. The corporate veil might be breached and your personal assets can become subject to company responsibilities if you mix them.

Not Having an Operating Agreement

An Operating Agreement is strongly recommended but not necessary. Without one, your LLC could be subject to Connecticut law's default regulations, which might not be in line with your plans.

Selecting a registered agent

For legal compliance, it's essential to have a registered agent. Selecting an untrustworthy agent might lead to the loss of crucial paperwork or legal notifications.

Incomplete Records

Maintaining accurate records is crucial for LLCs. To remain organized and make tax preparation easier, keep complete financial and operational records.

Lack of Tax Planning

Speak with a tax expert to completely understand your tax responsibilities. Tax management mistakes might result in future financial difficulties.

Conclusion

Beginning an LLC for small company owners looking for flexibility, limited liability protection, and tax benefits might be a wise decision. You may build a solid foundation for your company and concentrate on its expansion and success by following the procedures suggested in this article and avoiding frequent errors. To make sure you comply with all legal and tax obligations unique to your firm, don't forget to speak with legal and financial experts.

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Sources 

https://www.incandgo.com/start-connecticut-llc/cost-to-form/

https://stepbystepbusiness.com/start-an-llc/connecticut-llc/

https://legal-explanations.com/formation/state/connecticut/

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