How to Start a Business in Connecticut in 2022: The Ultimate Step-by-Step Guide

How to Start a Business in Connecticut in 2022: The Ultimate Step-by-Step Guide

 

 How to Start a Business in Connecticut

For those who want to start a business in Connecticut, this article will perfectly guide you through the step-by-step process of registering a business in Connecticut.

 

According to a study by Phoenix Marketing International, Connecticut had the third highest number of millionaires per capita in the United States, with a ratio of 7.75%.

 

 

 

With the 9th best access to venture capital in the nation, Connecticut is a fabulous place to start your business. Start your business today with our simple step-by-step guide and gain quick access to financial and personal independence.

 

Connecticut Quick Facts

 

With limited natural resources, a well-educated and innovative population enabled Connecticut to achieve high levels of productivity. Connecticut's creative genius, manifested by innovators such as Eli Whitney, Samuel Colt, and Charles Goodyear, produced a large number of important inventions and patents.

 

Connecticut Quick Facts

 

The state is named after the Connecticut River, which runs through the state and is a major river in the United States

On August 22, 1902, Theodore Roosevelt became the first American president to drive an automobile while in office.

Connecticut has 169 cities, 21 towns, and 9 boroughs.

The Constitutional State is home to Samuel Colt, the inventor of the revolver.

Connecticut has the highest per capita personal income (over $70,000) in the country. However, the national average is $10,000.

Why Should I Start a Business in Connecticut

 

With more than 500 companies, pioneering start-ups, established leaders, emerging innovators, natural resources, cultural resources, nationally ranked schools and a productive work environment in Connecticut, the state remains open to original ideas and new ideas that enable businesses to thrive. Connecticut has proven to be a strong business destination for the following reasons:

 

READ ALSO: How to buy farmland for investment in 2022 | Expert guide

 

Strategic location

 

Connecticut is at the very center of the economy of the Northeastern United States. With easy access to Boston and New York, it costs less to reach one-third of the entire US economy and two-thirds of the Canadian market from here.

 

SEE ALSO: How to Start a Business in New York in 2022: The Ultimate Step-by-Step Guide

 

Quality of life

 

Connecticut ranks among the best states in the nation for quality of living. Great public schools, quaint suburbs, low crime rates, vibrant but manageable cities, access to exceptional health care and a wide range of leisure options are just a few of the reasons so many people like to live here.

 

Exceptional workforce

 

Connecticut's workforce is among the most skilled and productive in the country. So whether you're looking to staff your company with top talent or simply want to work alongside those you can respect and learn from, Connecticut is a great place for the right people.

 

Vibrant arts and culture

 

Connecticut is alive with the arts - from nationally acclaimed art galleries and museums to award-winning theaters and cultural events, from historic sites and major concert halls to local galleries and community fairs. Explore the diversity of experiences Connecticut has to offer.

 

Growing business sectors

 

Long known as a leader in advanced manufacturing, aerospace, finance and insurance, Connecticut is also home to thriving sectors in biosciences, green energy, technology and digital media. This array of rapidly evolving industries positions the state for continued growth.

 

How to Register a Business in Connecticut

 

You can register your business in Connecticut online or in person. To register online, you must make payment from your savings or checking account.

 

After registering online, be sure to print out a temporary license that you can use in the meantime.

 

 

 

You will receive your registration package with your permanent Connecticut tax registration number after 10-15 business days. Click here to register a new business online.

 

Alternatively, you can apply in person at their field offices during business hours. To apply, you must bring photo ID and a check or money order for the registration fee. This application must be signed by the individual owner, partner, corporate officer, LLC member, or other authorized person.

 

The registration  fee is $100 one-time permit fee.

 

How to Start a Business in Connecticut : CT Business Registration

 

To start a business in Connecticut, you need to follow certain steps. From licenses and permits to taxes and insurance, find out what you need to do to start a business in Connecticut.

 

#1 Choose a business idea

 

Before registering a business in Connecticut, you need to decide what type of business is right for you. Look for an idea that matches your interests, personal growth, and natural abilities. This will help you stay on track and make the best trading decision.

 

#2 Write a business plan

 

With a great business idea in place, you need a solid business plan to back it up.

 

Before committing a significant amount of money and other resources to your business, critically analyze your idea and create a game plan.

 

 

 

Writing a business plan helps you connect the dots and create a roadmap that will guide your business journey.

 

#3 Choose a Business Entity

 

Business entity refers to how a business is legally incorporated. It shows the legal structure of a company.

 

There are four types of business entities: sole proprietorship, partnership, corporation, and limited liability company (LLC).

 

 

 

Sole Proprietorship: This sole proprietorship is one of the easiest and cheapest of the four business entities. While the initial stage may be the biggest selling point, a major downside of sole proprietorship is that the owner is personally liable for the debts and actions of the business.

 

To establish a sole proprietorship in Connecticut, you do not need to file any organizational documents with the state.

 

Partnership: This business entity includes two or more people who run a business together. Just like sole proprietorship, there is no formal state filling. Also, like a sole proprietorship, a partnership has unlimited liability.

 

 

 

To form a partnership in Connecticut, you do not need to file any organizational documents with the state. Although not legally required, all partnerships must have a written partnership agreement. The partnership agreement can be very useful in the event of a dispute between the partners.

 

#4 Register a business name

 

Once you have chosen a business entity, the next step is to register a business name.

 

For LLCs and corporations, you will need to verify that your name is distinguishable from the names of other business entities already registered with the Connecticut Secretary of State (SOS). You can check the names by doing a  business entity search  on the SOS CONCORD system.

 

 

 

You can reserve a name that is available for 120 days by filing a  Name Reservation Request . There are certain naming requirements for LLCs and corporations (such as including a word such as “LLC” for LLCs or “Company” for corporations).

 

For a sole proprietorship or partnership in Connecticut, does this use a business name that differs from the legal name of the owner of the business (for a sole proprietorship) or the last names of the individual partners (for partnership) ?

 

If so, you must register a business name with the clerk of the city or town where you do business. For more information, see the relevant city or town website.

 

If you plan to do business online, you should also register your business name as a domain name. In order to avoid trademark infringement issues, try to do a federal and state trademark check to make sure the name you want to use is not the same or too similar to a name already in use. See  How to do a trademark search  for more information.

 

#5 Get licenses and permits

 

Certain licenses and permits will be required to operate a business in Connecticut, and those needed will vary depending on the activities and location of the business. Some common listings include:

 

General Business Licenses –  There is no state-of-the-art Connecticut business license; however, many cities require a business license to operate.

 

 

 

Connecticut Tax Registration Number  – Businesses can register for their  Sales Tax Permit , Withholding, and Other State Taxes with the Connecticut Department of Tax Services.

 

Business Licenses  – Certain services such as acupuncturists, family planners, landscape architects, and pharmacists require a license in Connecticut. Although not an on-company license, a license is required to operate.

 

Zoning Permit  – Many cities and/or counties require zoning approval before operating a business from a location, which sometimes includes home -based businesses.

 

SEE ALSO: How to Start a Home Business: The Ultimate Step-by-Step Guide

 

#6 Get an EIN

 

The Employer Identification Number or EIN, also known as the Federal Employer Identification Number or FEIN, is a nine-digit tax identification number issued by the Internal Revenue Service (IRS). This number identifies a business operating in the United States and is used to pay payroll taxes, complete tax returns, etc.

 

 If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Although you are not required to obtain an EIN, there are often business reasons for doing so.

 

Banks often require an EIN to open an account in the company's name, and other companies you do business with may require an EIN to process payments. You can obtain an EIN by completing an online application on the IRS website. There are no application fees.

 

#7 Get insurance

 

When starting a business in Connecticut, obtaining business insurance is essential to protect your business.

 

Most types of business insurance are optional, with the exception of workers' compensation insurance in most states. Some states will also require professional liability insurance for companies offering certain services and commercial auto insurance .

 

Even if insurance is not required, and if there is a lawsuit for fire, theft or personal injury, the business owner may have to pay out of pocket for damages and legal fees. Home-based businesses and side businesses may also consider business insurance, as personal home and auto insurance policies may not cover in the event of a business loss.

 

Connecticut LLC v Corporation

 

Traditionally, small business owners prefer LLCs - they have fewer annual requirements, flexible management, and great tax options that make them easier to manage.

 

Corporations generally require more maintenance, but are attractive to large business owners who wish to sell shares to investors. The established and well-defined corporate structure is also attractive.

 

But what about Connecticut? Are there any advantages for a Connecticut LLC over a Connecticut corporation?

 

Overall, Connecticut LLCs are cheaper and easier to maintain than Connecticut corporations. The cost of filing a certificate of organization is $120 compared to $250 for a certificate of incorporation.

 

Additionally, if your company authorizes more than 20,000 shares, you may end up paying higher filing fees. Both entities are required to file annual reports; however, LLCs will pay significantly less than corporations: $150 vs. $150.

 

Connecticut businesses also tend to be hit harder during tax time — paying 7.5% of annual revenue — plus an additional 10% if revenue exceeds $100 million.

 

The personal income rate will vary but will cap at 6.99%. Also keep in mind that corporations are often subject to double taxation.

 

Whether you start a Connecticut LLC or a Connecticut corporation will really depend on your personal business goals.

 

If you want to attract investors and don't mind paying a bit higher fees, a company is definitely your best bet. But, if owning a small business is more your goal, you should consider a Connecticut LLC.

 

Top Companies in Connecticut

 

As an open state for business, businesses always seek to establish their operations in an environment that allows businesses to grow and innovations to thrive. Here is our list of the top 15 companies in Connecticut:

 

United Technologies

XPO Logistics

Amphenol

Otis Elevator Company

Stanley Black & Decker

Aetna

Cigna

Delivery service

Western Connecticut Health Network

Xeros

EMCOR Group

Nestle Waters North America

Praxair

Harman International Industries

Final Thoughts

 

With more than 500 companies, pioneering start-ups, established leaders, emerging innovators, natural resources, cultural resources, nationally ranked schools and a productive work environment in Connecticut, the state remains open to original ideas and new ideas that enable businesses to thrive.

 

References

 

startyourbusiness.com - Guide to Starting a Business in Connecticut

nolo.com – Start Your Own Business in Connecticut: Seven Steps to Follow

portal.ct.gov - Connecticut State Department of Tax Services