Corporation, LLC, partnership, and sole proprietorship creation documents must be filed with the Secretary of State’s office in Connecticut. For corporations, the articles of incorporation are necessary, whereas for LLCs, the articles of organization are. Contrarily, partnerships and sole proprietorships must register a trade name certificate with the town clerk’s office where the business is located even though they are exempt from filing formal formation documents.
Connecticut residents who start a business must additionally pay a number of state taxes. The business entity tax, a yearly flat fee paid by all companies registered in the state, is one of these taxes. Depending on the kind of company and the quantity of allowed capital, the tax’s amount varies. For the first $1,000,000 of allowed capital, for instance, LLCs and partnerships pay $250, whereas corporations pay $300, plus $10 for each subsequent $1,000,000.
The pass-through entity tax is another tax that Connecticut business owners need to be aware of. Businesses that are categorized as pass-through entities, such as LLCs, partnerships, and S corporations, are subject to this tax. These businesses do not pay corporate income tax; instead, they pass along profits and losses to their owners, who are then responsible for paying taxes on their personal income tax filings. The minimum tax for the pass-through entity tax is $250 and is 6.99% of the entity’s Connecticut source income.
A business entity tax return, Form OP 424, must also be submitted annually to the Department of Revenue Services by business owners in Connecticut. Businesses must fill out this form in order to record their earnings and determine their tax obligations. The first day of the month after the federal income tax return’s due date, which is typically April 15th, is when the return must be filed.
Finally, entity formation documents are crucial legal records that create a company as a distinct legal and tax entity from its owners. Business owners in Connecticut are required to pay multiple state taxes, including the business entity tax and the pass-through entity tax, and a number of different business entities must file these paperwork with the Secretary of State’s office. Additionally, business owners must submit a yearly Form OP 424 business entity tax return to the Department of Revenue Services. To avoid fines and maintain the efficient functioning of their companies, business owners must comprehend and abide by these rules.