What are the LLC Costs in Connecticut

The LLC State fee in Connecticut is $120 for filing the articles of organization. If you’re planning on forming a limited liability company it’s best to learn about the possible costs in advance, like additional registrations, business licenses, and more. Read this post to understand what is relevant for your business and plan your budget accordingly.

Connecticut LLC Costs Summary

The total cost of forming an LLC can vary a lot, depending on licenses and services. You’ll spend at least $220 for your initial filing and a seller’s permit. That could increase to $400-$1,000 if you need some licenses/permits or use some LLC formation services. In certain situations where expensive licenses and extensive legal help are needed, the total cost could come to several thousand.

The annual costs associated with maintaining your LLC could be just $80 a year. They could be closer to $480-$880 if you need some licenses/permits or use a registered agent service. In select scenarios, you could have $1,000+ in annual fees should an expensive license be needed.

Many first-time entrepreneurs are wary of how much starting a new LLC costs. They may have operated as sole proprietors or never been self-employed. In either case, most first-time entrepreneurs don’t know the fees and expenses associated with forming an LLC – and that can, understandably, make an entrepreneur anxious.

The good news is that Connecticut is one of the more affordable states to have an LLC. Here’s a breakdown of how much an LLC in Connecticut costs to form and run.

Some of the LLC costs are unavoidable state fees, but others are discretionary expenses for things like an LLC formation service. You can go through each step yourself if total cost is the most important factor. LLC formation services can provide an affordable way to complete each step more easily and quickly, though.

Many entrepreneurs find that using an LLC formation service is within their budget. A service also lets entrepreneurs focus more on their business, rather than wading through official forms.

You’ll have to decide whether doing things yourself or using a service is best for your situation. Reviewing the costs should help with that decision.

General costs of the steps of forming a Connecticut LLC

There are several key steps involved in forming an LLC in Connecticut. Below is a brief explanation of each step involved, and what you can expect to pay for each one. Some have no required costs, while others have varying ranges of what you can pay.

Connecticut name reservation

You’ll need a name for your Connecticut LLC that no other business in the state is using or has reserved.

You’ll find the full detailing of Connecticut’s LLC naming requirements in the state’s Uniform Limited Liability Act Sec. 34-234k.

The most important consideration is that no other business is currently using your name. You can use the Business Records Search on business.ct.gov to check existing business names. Doing an advanced search will let you look specifically at active names. There’s no fee for completing searches.

Once you have a good and available name, you can secure it without any fee. Simply register the name when filing your LLC’s Certificate of Organization, and you won’t pay any name-specific fee (state filing fee applies).

There are a couple of other options that do come with additional fees:

• Name Reservation: A Name Reservation lets you reserve your LLC name for up to 120 days. You can do this by completing the Application for Reservation of a Name by mail. There’s a $60 fee for the name reservation.
• Trade Name (DBA): A Trade Name is commonly referred to as a DBA. This lets your LLC operate under a name other than its official one. You might use a trade name to operate without “LLC” or for other branding purposes. A trade name is filed with your local town, city or county clerk. The fee for a trade name is $10. The trade name doesn’t expire once registered, so there’s no annual renewal requirement.

Estimated cost for naming your Connecticut LLC: $0-$70.

Filing Articles of Organization

Filing a Certificate of Organization (sometimes Articles of Organization) is when you officially form your Connecticut LLC. The certificate can be filed by mail, or filed online by creating a ct.gov account.

A Certificate of Organization is when you pay the $120 Connecticut LLC fee. This is the one unavoidable fee, and will need to be paid regardless of whether you file yourself or use an LLC formation service.

Estimated cost for filing the Certificate of Organization: $120.

Appointing a registered agent

Every LLC in Connecticut is required to have a Registered Agent. This individual or entity will receive legal and official correspondence on behalf of your LLC, and they must be physically located within the state.

You can act as your own registered agent if you reside in Connecticut, or you can hire a registered agent service. A registered agent service can afford privacy, and let you focus on your business rather than dealing with routine official mailings. You might also hire a service if you’re moving out of state, but will keep your business going.

There’s no fee for appointing a registered agent, and being your own registered agent is free Hiring a registered agent service can be between $200 and $400, although costs can vary. (Changing your registered agent in the future requires filing a form and costs $50.)

Estimated cost for a registered agent: $0-$400.

Creating an operating agreement

An Operating Agreement is a legal document that explains your LLC’s ownership structure, each member’s role, how distributions are to be paid, and how the business can be dissolved. It can include many other pertinent details, too.

Connecticut doesn’t require an operating agreement, but having one is strongly recommended. If you’re the only member of your LLC, drafting an agreement will make you think through important details and situations. If you’re starting the LLC with other members, the agreement will define everyone’s roles and distributions.

Writing up your own Operating Agreement is allowed, but perhaps not the best choice. Using an LLC formation service for this step can help ensure that your agreement is well-written. This isn’t a document that you want to make mistakes on. In some cases, hiring an attorney to help draft a thorough agreement might even be advisable.

Drafting an Operating Agreement yourself doesn’t cost anything, while hiring an attorney can be $1,000 or more. Using an LLC formation service only for an operating agreement might be less than $100, but bundling this with other services usually provides the best value/

Estimated cost for an operating agreement: $0-$1,000.

Other annual and additional Connecticut LLC costs

In addition to the above LLC formation costs, there may be some other expenses to budget for. These include situation-specific costs, and annual expenses required annual fees.

Business licenses & permits

Your LLC will almost certainly need a Sales and Use Tax Permit. You might need other permits or licenses too, depending on where your business operates and what it does.

A Sales and Use Tax Permit (sometimes called a Seller’s Permit) is required in order to collect sales tax. Assuming your LLC is selling taxable goods and services in the state, you’ll have to apply and pay for the permit.

The fee for a Sales and Use Tax Permit is $100. The permit expires every two years, but is renewed at no cost so long as the business remains in good standing. You can apply through MyConnectCT, and clicking on “New Business/Need a CT Registration Number?”

You could need to complete other statewide license applications or registrations. For example, locksmiths must be registered, childcare providers must be licensed, and liquor stores need to be licensed. There are requirements for other industries as well.

You might also need local permits or licenses. These could include county, town or city approvals:

• Permits: Usually for specific projects, such as a construction project. A contractor may need a permit to renovate or construct a specific building.
• Licenses: Usually for ongoing work within an industry. A contractor might need a license to do construction work within a jurisdiction.

Another example that demonstrates the differences are driver’s licenses and permits. A truck driver needs a commercial driver’s license to operate large commercial vehicles. If taking an oversized load through a local town, they might also need a permit to shut down roads temporarily. The permit would only apply to the particular transport for which it’s issued.

You can check local license and permit requirements by contacting the city/town and county clerks where your LLC operates.

Fees for permits and licenses can vary. Some local ones might be free or less than $50. State licenses for selling liquor can range from a few hundred to several thousand, depending on where the alcohol is being sold. Most are quite affordable, though.

Estimated cost for licenses and permits: $100-$400 (more for certain industries)

Annual Report

All LLCs in Connecticut need to file an Annual Report by March 31. The report is filed through the Connecticut Secretary of State’s website, specifically the Business Services Division. You generally need to supply just some basic information, such as the registered agent, a member/owner’s contact information, and the LLC’s tax code (if applicable).

An annual fee of $80 must be paid when filing the Annual Report. This is an unavoidable LLC cost in Connecticut. (Connecticut doesn’t have a franchise tax for LLCs.)

Estimated cost for annual report: $80.

What expenses you can write off

The good news is that many of the costs associated with forming and maintaining an LLC are tax-deductible. Deducting allowed expenses can greatly reduce your LLC’s taxable profits. This can be especially helpful in the first year, when LLC formation costs are higher and revenues might be lower.

You should consult a qualified tax professional, such as a Certified Public Accountant (CPA) before taking any deductions. In general, you can usually deduct the following:

• Certificate of Organization filing fee
• Sales and Use Tax Permit fee
• Other license/permit fees
• Trade Name fee
• Name Reservation fee
• Registered Agent costs
• LLC formation service costs
• Attorney costs

Connecticut LLC filings fees

Fees are taken from the fee schedule as detailed in the state’s site.

Conclusion

Connecticut is a business-friendly state with affordable LLC costs. Determine which state fees you’ll need to pay, and whether you should use any LLC formation services, many business owners do. You can then accurately budget, and begin getting your LLC started.

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