Connecticut LLC Taxes

Since 2010, Connecticut has seen a growing number of businesses being started within the state. Yet, as more business owners choose to start their ventures in the state, many may find it challenging to understand the business taxes involved. 

Regardless of the size of your business, if you operate a limited liability company (LLC) in Connecticut, you will need to ensure you stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you will need to pay for your Connecticut LLC.

Recommended: Schedule a free consultation with an accountant to stay on top of your taxes. 

Connecticut LLC Taxes Owed

Like in other states, Connecticut LLCs benefit from pass-through taxation, meaning the business’s profits pass through to the members’ individual tax returns. This means that the LLC as an entity will not pay taxes to the federal government or the state. Instead, LLC owners must pay taxes on their portion of the income made from the LLC. 

In Connecticut, LLC owners can expect to pay the following taxes:

Federal Taxes

Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.

Federal Self-Employment Taxes

It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%. 

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.

Connecticut State Taxes

Every state has its own laws dictating how individuals and businesses are taxed. For example, the sales and income tax rates vary from state to state. Below are some of the important taxes that are likely to affect your Connecticut LLC.

Connecticut Income Taxes

The state income tax rate in Connecticut is 6.99%. This puts it slightly higher than a majority of the other states but still lower than those at 9% or higher.

Connecticut Sales and Use Tax

6.35% is the state sales tax rate for purchasing goods in Connecticut. While many other states often have additional local sales tax rates, which can further increase prices, Connecticut does not. 

This is a definite benefit to doing business in Connecticut as you will not have to worry about different sales tax rates depending on where you buy or do business within the state itself. 

Register for a Connecticut Sales Tax Permit

If your business sells taxable goods or services, you must register with the Department of Revenue Services and acquire a Sales Tax Permit. If you do not register for the permit before operating or selling taxable goods, your business will receive a fine of up to $500.

See the Connecticut Department of Revenue Services website to learn more.

Additional State Taxes

Connecticut’s Department of Revenue oversees the collection of various taxes that businesses may have to pay depending on their location, industry, and number of employees. 

These are a few taxes that business owners in Connecticut may be responsible for paying:

  • Alcohol Tax
  • Tobacco Tax
  • Motor Vehicle Fuels Tax
  • Controlling Interest Transfer Tax

More information on these taxes can be found on the Department of Revenue Services website.

Connecticut Local Taxes

Local laws between counties and cities in Connecticut often have their own differences and/or alterations. Regardless of where you live in Connecticut, we recommend you check with your local jurisdiction and ensure that your business obtains the proper local permits and follows any local regulations that may impact your business’s operation.

Connecticut LLC Compliance

To remain in good standing and compliance with the State of Connecticut, your LLC will need to obey the state and local laws. While LLCs do not actually file taxes with the state itself, they must file an annual report every year to remain in compliance.

Connecticut LLC Annual Report

Every Connecticut LLC is required to file an annual report with the Connecticut Secretary of State. This can only be done online through the Business One Stop Portal. Your annual report will be used to ensure you are still operating within Connecticut and to keep your business’s contact information current.

Each year you will need to file the annual report, which costs $80. The report is due between January 1 and March 31, with it only being able to be filed between those dates.

If you would like to learn more about how to file this report, you can read our Connecticut LLC Annual Report guide.

LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure that you handle your business taxes correctly.