The majority of states, including Connecticut, require that your LLC have a registered agent. As a result, you cannot act as your own registered agent, but you may select a substitute. The registered agent must be accessible to receive legal documents during regular business hours and have a physical location in the state where the LLC is registered.
Depending on the state and the service provider, hiring a registered agent has a range of costs. The typical cost of engaging a registered agent in Connecticut is between $50 and $200 each year. When compared to the potential legal costs you can face if you don’t fulfill the registered agent requirement, this is a minor price to pay.
The fact that an LLC needs more paperwork and procedures than a single proprietorship is one of its drawbacks. LLCs must provide yearly reports, keep track of meetings and decisions, and adhere to other legal obligations. This can be expensive and time-consuming, particularly for small enterprises without a separate legal department.
The degree of liability protection provided by each entity is vital to take into account while choosing between an LLC and a sole proprietorship. A sole proprietorship is simple to establish and run, but it offers less protection than an LLC. Unlike a sole proprietorship, where the owner is individually liable for all corporate debts and responsibilities, an LLC protects the owners’ personal assets from business liabilities.
An LLC’s status as a pass-through entity for tax purposes is one of its tax advantages. This indicates that the LLC does not pay federal income tax; instead, the business’s gains and losses are passed through to the owners’ individual tax returns. For small enterprises who want to avoid double taxation, this may be useful.
In conclusion, Connecticut is one of the majority of states that require LLCs to have a registered agent. Although engaging a registered agent has a cost, it is a minor thing to pay considering the legal protection it offers. The degree of liability protection, as well as the necessary paperwork and procedures, are key factors to take into account when choosing between an LLC and a sole proprietorship. Finally, an LLC is a well-liked option for small enterprises who seek to avoid double taxation because of its tax advantages.