Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in Connecticut, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting a Connecticut LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
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What’s the least amount I have to pay to form an LLC in Connecticut?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your Connecticut LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
CT LLC Start-up costs
There are two primary start-up costs in Connecticut. The most important one (and one of the biggest ones, really) is the Certificate of Organization. The fee for this document is $120. That’s lower than some states, but higher than many others. You can’t avoid this cost, though. After all, the Certificate is what officially forms your business in the state. Without it, you’re not a recognized business.
A lot of Connecticut LLCs will also need to obtain licenses. Unlike many states, Connecticut does not require a general business license that applies to every entity in the state. That said, a lot of LLCs will need to obtain professional licenses. For instance, Connecticut requires professional licenses for accountants, real estate appraisers, and many more. If you think you’ll need to get a professional license, check out the Department of Consumer Protection. Here, you’ll find links to a wide variety of licensing boards.
Since there is such a wide variety of license types, we can’t list all of the different license application fees. But you can reasonably expect to pay an application fee when you get one.
Ongoing costs for an LLC in CT
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Thankfully, you don’t have to worry about renewing a state general business license. But if your business needs one or more professional licenses, you will need to renew it periodically. Each Connecticut licensing board has its own policies for renewals, though, so we can’t really list them. This guide would be tedious if we did. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In Connecticut, one of your biggest annual costs will be taxes. Income taxes are definitely one of the most common taxes, too. The individual rates range between 5-6%, but those taxed as corporations will pay the state Corporation Business Tax. There are a few exemptions, but the majority of LLCs will be subject to it. If you’re involved in the sale of a qualifying good or service, you’ll also need to collect and pay the state sales tax. There’s a 6.35% rate for this tax.
There’s also a wide variety of miscellaneous business taxes that might apply to your LLC: cigarette taxes, real estate taxes, and solid waste taxes are just a few examples. If you think a miscellaneous tax might apply to your business we recommend checking out the Connecticut State Department of Revenue Services.
Annual report
Most states require LLCs to file some version of an “annual report,” or a document that informs the state about the current standing of your business. This document is usually required in addition to annual tax reports, since it usually includes information about your business address, members, your registered agent, and so on.
Connecticut only accepts online annual report filings through their online business portal, CONCORD. When you log into CONCORD, you’ll find the due date for your report; every LLC has a slightly different due date. Online filing is also the only option available to you. There is an $80 filing fee, too.
What are the discretionary costs to form a Connecticut LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since Connecticut doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using a Business Registry Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Certificate of Organization, or by filing an Application for Reservation of Name. You should only file this form if you’re not yet ready to file your Certificate. Otherwise, you’d be wasting your hard-earned cash. Connecticut requires a $60 reservation fee. Once you complete the process, your business name will be protected for 120 days (day 1 of the period is the filing date).
2. Obtaining a Trade Name
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Certificate of Organization, is the legal name of your business. A trade name, sometimes called a DBA, an assumed name, or a fictitious name, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
A Trade Name acts kind of like a nickname for your business; some LLCs and corporations also use Trade Names to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use a Trade Name, if it differs from your legal name, you need to register it before you can use it.
Quick note: unlike a lot of states, Connecticut does not handle Trade Name registration at the state level. Instead, if you want to use a Trade Name, you’ll have to declare it with your local county clerk. Before you jump into registering, please double-check that your Trade Name hasn’t already been claimed by an incorporated entity. If a corporation, LLC, or similar entity has already claimed your desired name, you can’t use it.
We can’t list the fee to declare a trade name here simply because each county clerk has a different fee. The same goes for the renewal process. Whenever you do declare your name, be sure to double-check with your county clerk to learn what the requirements are in your area. For more information on this process, check out our guide to Connecticut Trade Names.
3. LLC formation services
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Paperwork is a massive hassle. And unless you’re starting an LLC to help other Connecticut residents with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting a Connecticut LLC: the Certificate of Organization, annual reports, professional license applications—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of options, with Zen Business offering packages starting at $49. You can also take a look at other well known services like LegalZoom, Northwest, and Incfile that have other types of pros.
These services are completely optional; you can DIY your Connecticut LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying. Some services charge one-time fees, and others tack on “free services” that will cost you next year. If you don’t read the fine print, you can get slapped with unexpected service fees. And surprise bills are never fun.
4. CT Registered agent services
Connecticut law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; Connecticut allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 Connecticut registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Expedited filing fees
If you file your Certificate of Organization online, then your business filings will be processed within three business days. Mail-in filings take longer. If that’s too long to wait, you can speed things up by filing an Expedited Service Request. This document requires a $50 fee, but it will ensure that your documents are filed within 24 hours (upon receipt).
If you’re in a rush, this request might be well worth filing. The fee isn’t unreasonable, so you can let your budget and your timetable determine whether you expedite or not.
6. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search Connecticut business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting a Connecticut LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (but if you’re on a limited budget, the $120 fee for the Certificate of Organization might seem a bit high). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your Connecticut LLC off on the right foot. We wish you and your new business the best!