If you want to start and run a Connecticut limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Connecticut LLCs.
The State of Connecticut requires you to file an annual report for your LLC. Annual report forms or notifications are automatically sent to your LLC's mailing address. You can file your annual report online at the SOTS website. The annual report is due by the end of the anniversary month of your LLC's formation. The current filing fee is $20.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do.
Connecticut, however, imposes a separate biennial Business Entity Tax (BET). The tax currently is $250 and is payable to the Department of Revenue Services. The tax is due on April 15 of every odd year (2015, 2017, and so on). You can pay the tax online at the DRS website or on paper using Form OP-424, Business Entity Tax Return.
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Connecticut, like almost every other state, taxes corporation income. Connecticut calls this a corporation business tax. In Connecticut, the business tax is based on several different possible methods, such as a flat 7.5% of net income. There is also a $250 minimum tax. The tax is payable to the DRS. Use the state's corporation business tax return (Form CT-1120) or file online to pay the tax. For more details, check the DRS website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Connecticut employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DRS. Begin by registering your business with the DRS either online or on paper (Form REG-1, Business Taxes Registration Application). Once you've registered, you'll need to file withholding taxes on a periodic basis. You'll also need to file an annual reconciliation of your LLC's tax withholding. You must do this online unless you receive a waiver from the DRS. For more information, including regarding online filings, check the DRS website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Connecticut Department of Labor (DOL). You can register for these taxes online or download and mail in Form UCT1A, Employer Status Report for Unemployment Compensation. Then, each quarter, use online interactive Forms UC-2 and UC5-A to report on wages and pay the UI taxes. For more information, including regarding online filings, check the DOL website.
If your LLC will sell goods to customers in Connecticut, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue Services and then make periodic sales tax payments for goods sold. You can register online or mail in Form REG-1. After you've registered, you'll receive a sales tax permit. Then, on a periodic basis—for example monthly or quarterly—you must submit sales tax returns to the DRR. You can do this on paper (Form OS-114) or online. For more information, check the DRS website.
If you will be doing business in states other than Connecticut, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Connecticut, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.