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Doing business in

Connecticut

Navigate Connecticut’s business landscape with ease—whether you’re incorporating, expanding, or managing tax compliance. Commenda helps you stay ahead with automated solutions for incorporation, compliance, and tax filings.
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connecticut

Business Overview

Connecticut has a strong presence in finance, insurance, manufacturing, and defense industries. The state offers proximity to major Northeast markets, a skilled workforce, and excellent infrastructure. Its ecosystem supports innovation, particularly in advanced manufacturing, healthcare, and financial services.

Key Facts & Figures

Category Details
Capital Hartford
Major Cities Bridgeport, New Haven, Stamford, Hartford, Waterbury
State Sales Tax Rate 6.35%
Local Sales Tax Rate No local sales tax
Corporate Income Tax 4.55% flat rate
Physical Nexus Threshold Physical presence through employees, offices, or independent agents
Economic Nexus Threshold $100,000 in annual sales and 200 transactions

Did you know?

Connecticut is a global leader in insurance, with Hartford nicknamed the ‘Insurance Capital of the World,’ hosting headquarters for major insurance companies like Travelers and The Hartford.

Setup & Compliance

Connecticut business formation involves several state agencies with specific registration requirements.

Business Setup Process in Connecticut:

  1. Choose Your Business Structure: Consider tax implications and liability protection needs.
  2. Register Your Business: File formation documents with the Connecticut Secretary of State.
  3. Register with Tax Authorities: Register with the Department of Revenue Services for relevant tax permits.
  4. Obtain Business Licenses: Research and secure necessary state and local business licenses.
  5. Register as an Employer: Register with the Department of Labor if hiring employees.

Ongoing Compliance Requirements:

  • Annual Reports: Most business entities must file annual reports with the Secretary of State.
  • Business Entity Tax: Connecticut imposes a $250 annual business entity tax on LLCs, LLPs, and S-Corps.
  • Sales and Use Tax: Businesses must collect 6.35% state sales tax on taxable transactions.
  • Paid Family and Medical Leave: Connecticut employers must participate in the state’s PFML program.
  • Industry Regulations: Certain industries have specialized licensing and regulatory requirements.

Hiring & Payroll

Connecticut has comprehensive employment laws that often exceed federal requirements.

Connecticut Payroll Taxes:

  • Unemployment Insurance: Rates from 1.9% to 6.8% on first $15,000 of wages.
  • Paid Family and Medical Leave: 0.5% employee contribution.
  • State Income Tax Withholding: Required based on CT-W4 form.

Connecticut Labor Laws:

  • Minimum Wage: $14.00 per hour (increasing to $15.00 on June 1, 2023).
  • Paid Sick Leave: Employers with 50+ employees must provide 1 hour for every 40 worked, up to 40 hours annually.
  • Paid Family and Medical Leave: Up to 12 weeks of paid leave.
  • Sexual Harassment Prevention Training: Required for all employees.
  • Final Paychecks: Due on next regular payday after termination.

State Incentives

Connecticut offers comprehensive economic incentives to support business development.

Key Business Incentives:

  • Manufacturing Reinvestment Account: Financial support for manufacturing businesses.
  • Angel Investor Tax Credit: Encourages investment in early-stage businesses.
  • Research and Development Tax Credit: Supports innovative company development.

Small Business & Startup Support:

  • Connecticut Small Business Development Center: Comprehensive business advisory services.
  • First Five Program: Significant incentives for large job-creating businesses.
  • Next Gen Cybersecurity Incentives: Support for technology and cybersecurity companies.

Regulatory Considerations

Connecticut provides a structured regulatory environment with emphasis on business integrity.

Key Business Regulations:

  • Data Privacy: Comprehensive laws protecting consumer and business data.
  • Environmental Compliance: Strict regulations for manufacturing and industrial operations.
  • Professional Licensing: Mandatory licensing for various professional services.

Additional Regulatory Areas:

  • Financial Services Regulation: Strict oversight of financial and insurance businesses.
  • Small Business Support: Regulatory guidance for emerging enterprises.

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