Once you make up your mind about starting a limited liability company (LLC), the next matter you have to decide on is the place where you want to operate. A lot of entrepreneurs choose to start a business in the state where they live. While this may provide a degree of convenience, it is not necessary.
You can freely choose to form your LLC in any state. There is no requirement regarding your place of residence. Additionally, you can form the business in a state that is different from where you are planning to conduct your operations. You can choose the state that offers the most benefits and has the most business-friendly climate for your business.
Why Do Business In Connecticut
When looking for a state where you can start a business, consider Connecticut. Latest data shows that it is home to about 350,376 small businesses. The increase in that number is due to the positive business environment in the state. Aside from the salient benefits of forming an LLC, the state also offers various incentives that aim to help ensure business growth and stability.
- Benefits That Come With The Business Entity Structure
- Owners of LLCs enjoy limited liability protection.
- You do not have to maintain minutes of meetings or resolutions.
- You can select various ways of distributing the profits of the company.
- You can benefit from pass-through taxation, which prevents double taxation.
- State Incentives
Connecticut offers different incentive programs and other benefits to new businesses in the state. Some of these can even provide tax exemptions. There are also those that offer grants and loans. Check if your company qualifies for any of these benefits:
- Enterprise Zone – The Department of Economic and Community Development (DECD) has designated special zones across Connecticut. These are known as enterprise zones. If your startup company happens to be located in one of them, then you can benefit from various tax incentives. For example, you can get a 10-year corporate business tax credit, which will be 100% for the first three years. It will become 70% for the remaining seven years. You can also have access to low-interest or flexible business loans.
- Real And Personal Property Tax Exemptions – You can get this exemption if the business you are forming will acquire or install manufacturing equipment or machinery. If you qualify, you can have a 100% tax exemption for five years in newly installed manufacturing equipment or machinery.
- Sales And Use Tax Exemption – Startups in Connecticut can obtain sales and use tax relief available upon purchase of tangible personal property.
Apart from that, the state has several tax credit programs. It also has debt financing and investment capital programs. Check the official state website to find out if you can get support depending on your business industry and activities.
- Other Advantages
Aside from the incentives that startups can get, Connecticut also offers a strategic location for business. It is close to two major metropolitan areas, so you can expect the benefits of doing business in an urban center. At the same time, the state allows an escape from urban life. It is best for entrepreneurs who want the opportunities that urban environments provide but also do not want to maintain a company in a big city.
Additionally, you can find a talented labor pool in Connecticut. Your company can remain globally competitive with the help of highly skilled individuals. The workforce in the state is known for its productivity as well.
How To Start a Business In Connecticut
Starting LLCs in Connecticut requires the completion of the registration process. It includes the submission of formal paperwork and payment of a fee.
- Choose a company name.
The first thing you have to do when forming a business in Connecticut is to think of an appropriate company name. You may have to do a business entity name search to find out if the name that you want is available. You also need to follow the naming guidelines of the state.
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- You have to include the words “Limited Liability Company” or one of its abbreviations.
- You cannot use terms that could confuse your company with a government agency.
- If you want to use any of the restricted words, such as “bank,” “attorney,” or “university,” you will have to submit additional paperwork and make sure that a licensed individual is part of the company.
- Appoint a registered agent.
You have to appoint a registered agent who will agree to receive legal documents, important tax forms, notices of lawsuits, and other official government correspondence on behalf of the company. You can nominate an individual or a third-party organization like DoMyLLC.
- File the Certificate of Organization.
To formalize your registration, you will have to file a Certificate of Organization with the Secretary of State. You can submit online, in person, or by mail. The submission comes with a $120 filing fee.
- Submit the initial report.
The state requires all LLCs to file an initial report by the end of their formation month. The filing fee is $20. After that, the company will have to submit annual reports.
- Create an operating agreement.
While the state does not require the preparation of an operating agreement, having one is highly advisable. This internal document will outline the ownership and operating procedures of your company. If you want to learn more about creating an operating agreement, check out this article.
- Get an Employer Identification Number (EIN).
You may have to secure an EIN from the Internal Revenue Service (IRS). You can use this number in filing taxes, hiring employees, and opening business bank accounts.
Need Help?
If you want to start a business in Connecticut, you have to be prepared for the process that the state has set, but you can always get help from professionals. A third-party organization like DoMyLLC can handle the paperwork for you. Our team of experts can also provide you with a personalized solution to make sure that the service you get suits your specific circumstances. Contact us now to learn more.
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