Connecticut might look small on a map, but it’s considered a thriving business hub. It’s home to many leading companies in advanced manufacturing, bioscience, healthcare, and other fast-growing industries.
What you’ll learn
What you’ll learn
Key takeaways for Connecticut entrepreneurs
- You can register your business under an available name or choose a “doing business as” name instead.
- Common business structures include sole proprietorships, LLCs, and S corporations.
- LLCs and corporations must register with the state of Connecticut, while sole proprietorships don’t need to file any formation paperwork
- If you plan to hire employees, you’ll need to apply for a federal employer identification number.
- Connecticut requires most employers to pay unemployment insurance taxes and workers’ compensation insurance.
Following the right steps will help you get your company up and running faster. This guide explains how to start a business in Connecticut, from choosing a unique name to managing payroll and unemployment taxes.
Choose a business name and legal structure
You might have a company name in mind, but resist the urge to print business cards right away. Connecticut requires every business to have a distinguishable name.
To check if a name is available, use the Connecticut Secretary of State business search. This database includes all domestic entities formed in Connecticut, as well as foreign businesses registered to do business in CT. If your chosen name doesn’t have any results, you may be able to claim it when you register your business.
Alternatively, you can use a trade name, also known as “doing business as” (DBA). This provides public notice that an individual or group is operating under an assumed name. You’ll need to file this name with the local town clerk in the area where you’ll primarily conduct business. The cost is $20.
You’ll also need to choose a legal structure. Options many people choose from include:
- Sole proprietorship: A business owned and controlled by a single person. The proprietor is personally liable for the business’s debts and obligations. The owner also pays federal and state taxes on business income as part of their personal tax return. In Connecticut, entrepreneurs can establish a sole proprietorship without filing forms or paying fees.
- Limited liability company (LLC): Separates the business entity from the owner(s). They still decide how to run their company, but their legal exposure could be reduced. They may also be required to file quarterly estimated taxes.
- S Corporation: Designed for smaller businesses with fewer than 100 owners. These businesses can issue common stock and are taxed only once a year.
As you weigh these options, consider your long-term goals and risk tolerance. If you have significant personal assets, you might not want to risk losing them if your business faces a lawsuit. In that case, an LLC might make the most sense.
On the other hand, if your business is relatively low-risk, you might prefer the simplicity of a sole proprietorship.
Register your business with the state of Connecticut
Start the Connecticut business registration process by creating an account on the myCTBusiness portal. You’ll need this information:
- Your business name
- An email address and street address
- A North American Industry Classification System (NAICS) code number, which identifies the type of business you’re starting
- A contact person for the business
The state also requires additional documents depending on your chosen business structure. They also require a registered agent.
LLC costs
- The Connecticut LLC cost is $120 for a Certificate of Organization and $60 to reserve a business name.
- After you register your company, you’ll need to file an Annual Report between January 1 and March 31 and pay an $80 fee.
Corporation costs
- Corporations must pay $250 for a Certificate of Incorporation and $60 to reserve a name.
- Within 90 days, you’ll also need to file an Organization and First Report with the date of your company’s first meeting. This form costs $150.
- They also require an annual report, due on the last day of your anniversary month (ex. if you register in June 2025, it would be due June 30th 2026)and costs $150.
If you choose a sole proprietorship, you don’t need to file any formation documents with the state. However, you’ll still need to pay $20 to your local town clerk to register a DBA name.
Apply for federal and state tax identification numbers
If your small business has employees, you’ll need a federal employer identification number (EIN). Corporations and LLCs must also have an EIN to operate.
Apply for an EIN through the Internal Revenue Service (IRS). You must register your business with your state first (unless you’re a sole proprietor), so make sure you complete these steps in order.
You’ll also need to register your business with the CT Department of Revenue Services to obtain a Connecticut Tax Registration Number. You’ll use this number to pay sales and use tax.
Be ready to provide:
- Your federal EIN or, if you’re a sole proprietor without employees, your Social Security Number
- The business’s legal name, DBA name, or the sole proprietor’s name
- The business address
- Banking information
- The names and Social Security Numbers of the owners or officers
If you register for sales tax, the DRS will mail you an official tax permit/license.
We spoke with Kelly Rohrs, a CPA and small-business coach, to understand the most common mistakes that new Connecticut business owners make and how they can be avoided.
Don’t miss the November 1 personal property declaration
This is the Connecticut item new owners overlook most. If your business owns equipment, furniture, or computers, you generally have to file a declaration with your town assessor every year by November 1. Filing late or not at all can mean a 25% penalty on your assessment. Many new owners have never heard of it until the bill arrives.
— Kelly Rohrs, CPA and small business expert
Missing that filing deadline is an easy trap for new entrepreneurs to fall into, but staying proactive with local tax requirements can save you from steep, unexpected penalties. Kelly also recommends keeping a close eye on these three areas as you get your operations off the ground:
- Find out if your service is taxable: Many service business owners assume sales tax only applies to products. Connecticut taxes a long list of services, some at special rates (computer and data processing is taxed at 1%, for example), so check the DRS list before you send your first invoice.
- Watch the contractor-vs-employee line: For unemployment purposes, Connecticut uses the ABC test, which is stricter than the IRS standard. Calling someone a 1099 contractor doesn’t make them one, so get advice before you pay them to confirm you are classifying them correctly.
- Budget for the full cost of an employee: Between payroll taxes, unemployment insurance, workers’ comp, CT Paid Leave withholding, paid sick leave, and MyCTSavings once you reach five employees, the real cost of a hire runs well above the hourly wage. Run the numbers before you post the job.
CT business licenses and permits by industry
Different industries are required to obtain permits and there’s no universal one that covers every company type. Depending on your operations, you will need to apply for a license or permit with the appropriate agency.
Here is a breakdown of common regulatory bodies in Connecticut:
| Business Type | Governing Agency | Description |
| General Businesses | Department of Consumer Protection (DCP) | Issues permits for companies such as accountants and real estate, as well as construction and retail. |
| Healthcare | Department of Public Health (DPH) | Issues licenses for healthcare facilities and professionals to ensure quality care. |
| Insurance | CT Insurance Department (CID) | Provides specific permits, guidance, and support for insurance companies to do business in the state |
Set up payroll and employer obligations in Connecticut
Before you hire a single employee, you’ll need to follow Connecticut’s tax and compliance requirements.
- Start by registering your business online at ReEmployCT. You’ll receive an employer account number to pay unemployment insurance taxes. New employers typically pay 3% on the first $10,000 of each employee’s annual wages.
- Connecticut also requires most businesses to purchase workers’ compensation insurance to protect their employees. You can buy a policy through a licensed insurance company or, if you qualify, choose self-insurance. However, the latter option can be risky. A single injury or accident could lead to financial troubles, especially for small businesses. As a result, many companies stick with traditional insurance companies.
- State income taxes are another consideration. Connecticut uses a progressive tax system with rates ranging from 2.0% to 6.99%, depending on the employee’s income. As an employer, you’re responsible for properly withholding and reporting these taxes.
- CT Paid Leave requires employers to withhold 0.5% of employee wages and remit to the CT Paid Leave Authority.
- New hire reporting is required to the CT Department of Labor.
Payroll you can count on
“OnPay is simple to use and the customer support feature is outstanding! The customer support has been fantastic in their accuracy and promptness, every time I’ve needed them.”
— Scott Stevens, Silicon Valley Golf Performance Center
This paycheck calculator for Connecticut can help you estimate withholdings and your employees’ net pay. Of course, as a business owner, the last thing you want to do is calculate payroll by hand every payday. That’s a recipe for mistakes. Save time with OnPay’s payroll software. It automatically calculates each employee’s wages and federal and state tax withholdings. That way, you don’t have to worry about errors. It also generates reports so you can file paperwork faster.
Understand your ongoing compliance requirements
Connecticut is a relatively affordable place to start a business. Entrepreneurs can register an LLC for only $120, while a sole proprietorship only costs $20 to register a DBA. In most cases, you don’t need to hire a lawyer for this process.
Of course, running a business is often more complicated than filling out a few forms. OnPay can help you keep up with changing requirements and stay compliant as you grow. Contact us to learn more about how we can help your Connecticut business thrive. We are here to help!
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.