Going from having an entrepreneurial vision to making it a reality means going through the registration process. This process involves navigating a series of decisions and filing with the appropriate agencies. From selecting the ideal business structure to choosing a name, securing necessary permits, and registering for state taxes, there are several steps to follow.
Our step-by-step guide is designed to simplify this experience by providing instructions to help you confidently navigate Connecticut’s business registration requirements.
Related: Starting A Business In Connecticut Checklist
Step 1: Choose a Business Structure
When starting a business in Connecticut, deciding on your business structure is the first step. This choice impacts your legal status, tax obligations, and personal liability. Let’s examine the four most common business structures:
Related: Comparison of Business Structures
Sole Proprietorship
A sole proprietorship is an individual that decides to go into business for themselves. This is the easiest and least expensive of the four entities to set up, as there is no state filing. The ease of startup is a big selling point; however, a major downside to the sole proprietorship is that the owner is personally responsible for the company’s debts and actions. If the business is sued, the owner’s personal assets are potentially at risk.
Related: How to Start a Sole Proprietorship in Connecticut
General Partnership
General partnerships consist of two or more people conducting a business together. Like the sole proprietorship, there is no formal state filing. Also, like the sole proprietorship, the partnership has unlimited liability. If the partnership were to be sued, the partner’s personal assets would be equally at risk.
Related: What is a partnership?
Corporation
A corporation is a business structure that is a separate legal entity from its owners. While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the major advantage is that they provide personal asset protection for the owners should the corporation be sued. The downsides are the compliance requirements and administrative burdens of having a board of directors, annual meetings, issuing stock certificates, appointing a Connecticut registered agent, and more.
Related: How to form a Connecticut corporation
Limited Liability Company (LLC)
The Limited Liability Company is a popular business structure because it provides the liability protection of a corporation with the ease of operation of a sole proprietorship. The Limited Liability Company does not have all of the burdens of the corporation and has the greatest tax flexibility of the four entities.
Related: How to form a Connecticut LLC
Step 2: Select a Business Name
After choosing your business structure, the next step is selecting and registering your business name. This process varies depending on your business type and whether you’re using your personal name or a distinct business name.
- Sole Proprietorships and Partnerships:
- If not using the owner’s full name, register for a Connecticut Trade Name Certificate
- File with the Town Clerk’s Office in your business location
- Corporations and LLCs:
- A name is chosen when registering the entity with the state however, before filing, be sure to do a Connecticut business name search to ensure the name is available
Step 3: Federal Employer Identification Number (FEIN)
A Federal Employer Identification Number (FEIN), also called a Federal Tax Identification Number, is a unique nine-digit code assigned by the Internal Revenue Service (IRS) to businesses in Connecticut.
Many businesses in Connecticut need an Employer Identification Number (EIN), but the necessity varies based on your business structure and activities. This includes:
- All Corporations and multi-member Limited Liability Companies (LLCs)
- Partnerships (General, Limited, and Limited Liability Partnerships)
- Businesses with Employees (This includes sole proprietorships and single-member LLCs that hire workers)
Sole proprietors and single-member LLCs with no employees can use the owner’s social security number.
To get an EIN, apply online through the IRS website.
Step 4: Connecticut Sales and Use Tax Permit
Many businesses operating in Connecticut need the Connecticut Sales and Use Tax Permit. This permit allows companies to collect sales tax on behalf of the state and remit it to the Connecticut Department of Revenue Services.
Businesses in Connecticut must obtain a Sales and Use Tax Permit if they:
- Sell goods
- Rent or lease goods
- Provide taxable services
- Operate hotels, motels, or lodging houses
To get your Sales and Use Tax Permit, complete Form REG-1, and submit it to the Connecticut Department of Revenue Services.
Step 5: Resale Certificate
Connecticut businesses that buy goods for resale can benefit from obtaining a Connecticut Resale Certificate (CERT-119) from the Connecticut Department of Revenue Services. This document allows companies to purchase inventory without paying sales tax, helping to improve cash flow as the retailer collects the sales tax from their customer.
Step 6: City Business Licenses
While Connecticut doesn’t require a general state-wide business license, many cities have their own licensing requirements. These local regulations vary based on the city and the nature of your business activities. Here’s an expanded look at licensing requirements in several Connecticut cities:
New Haven: New Haven requires business licenses for specific types of establishments:
- Amusement-related businesses (e.g., bowling alleys, arcades)
- Pool halls
- Street vendors
- Contractors
Hartford: Hartford has licensing requirements for various businesses, including:
- Dance halls
- Pawnbrokers
- Second-hand dealers
- Laundromats
- Food vendors
- Tobacco retailers
Stamford: Stamford has a broader requirement: all businesses operating within city limits need a business license.
Step 7: Occupational Licensing
Numerous occupations and professions in Connecticut require specific licenses or registrations before practitioners can legally offer their services. While specific requirements vary by profession, here are some examples:
Healthcare Professionals:
- Acupuncturists
- Athletic trainers
- Nurses
- Pharmacists
- Physicians
- Dentists
- Optometrists
Mental Health Professionals:
- Psychologists
- Social workers
- Marriage and family therapists
Other Professionals:
- Architects
- Landscape architects
- Engineers
- Surveyors
- Real estate agents and brokers
- Attorneys
- Accountants
Various state agencies oversee licensing for different professions, such as the Department of Public Health: Regulates, the Department of Consumer Protection, the Connecticut Bar Association, and the Department of Education.
In addition to these, some businesses require specific licenses beyond individual professional licenses. These include:
Food-related Establishments: These businesses typically need licenses from local health departments and may require additional state permits.
- Restaurants
- Food trucks
- Bakeries
- Grocery stores
Childcare Facilities: Licensing for these facilities is usually handled by the Connecticut Office of Early Childhood.
- Daycare centers
- Home-based childcare
- After-school programs
Salvage Dealers: These businesses often require licenses from both state and local authorities.
- Auto salvage yard
- Scrap metal processors
Other Specialized Businesses:
- Liquor stores (require a liquor license)
- Tobacco retailers
- Firearms dealers
Step 8: Local Building & Zoning Permits
Before leasing or purchasing a property for your business, it’s important to understand if there are any building, zoning, or signage limitations.
Zoning: In Connecticut, zoning regulations are set by local governments. Before starting your business, consult your local planning and zoning department to confirm that your business activity complies with zoning laws. If you plan to operate from home, you may need a home occupation permit issued by the local zoning department.
Building Permit: If you’re constructing, altering, or repairing a building for your business, you’ll need a building permit from your local building department. This permit ensures the project follows the Connecticut State Building Code. In most municipalities, the local building department handles permits. For example, in New Haven, the Building Department issues them.
Signage Permit: If you plan to put up a sign for your business, you typically need to get a sign permit from your local government. Each city or town has its own regulations. For instance, in Bridgeport, the Building Department issues sign permits, while the Zoning Enforcement Officer handles them in Stamford.
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