How to Incorporate a Connecticut S Corp

Choose a name for your S corporation

First things first, all businesses are required to have a name to operate. To be a legally valid business name, it must be unique. A unique name reflects your brand identity and makes it more memorable for the public.

Connecticut’s state guidelines specify that all S corps must include “Corporation,” “Company,” or a similar word in their company name. You can also use abbreviations instead of the entire phrase.

Reserve your corporation name

Once you decide on a name, it is possible to reserve it so other companies cannot take it while you are incorporating your business. Reserving a name is optional but highly recommended so you don’t lose it.Business owners are allowed to reserve their new names for up to 120 days. If the incorporation is not completed within this timeframe, the name is released and can be used by anyone. Reserving a business name costs $60.

Determine your registered agent

Finding a suitable registered agent is essential for new S corporations in Connecticut. A registered agent will handle important papers such as tax forms or legal notices. You must trust this person to report any paperwork received promptly.

Registered agents have specific qualifications they need to fulfill before being a valid option. First, the agent must have a physical address in Connecticut. They must also be available during regular business hours. As for who you can choose to be your registered agent, it can be anyone who fits the previous criteria. You can hire a friend or even appoint yourself, though many companies hire a professional for safety reasons.

File the Certificate of Incorporation

Connecticut requires that all S corps file the Certificate of Incorporation before being incorporated. This legal document contains all essential details related to your business, including its name, purpose, address, and registered agent information.

The Certificate of Incorporation can be filed by mail or online, though both options cost $250.

Create corporate bylaws

Corporate bylaws are the blueprints for a business’s operations. These rules outline everyone’s roles in the company and how the owners should run it. Before enforcing the bylaws, the board of directors must approve and adopt them.

The law in Connecticut does not require companies to make bylaws, but they are strongly recommended to help the company operate smoothly.

Distribute stock to shareholders

Shareholders are given some power over the company through stocks issued to them. The amount of stock given determines each member’s level of ownership. Shareholders provide their thoughts about significant business decisions before they go through.

File Form 2553

Filing form 2553 is necessary to give your company the S corp status. This form must be signed by all shareholders and submitted within a specific time frame after forming your corporation. Once this document is approved, your company will officially be considered an S corporation.

Get your Employer Identification Number (EIN)

Applying for an Employer Identification Number is the next important step for new business owners. This number is required for many business functions, mainly paying taxes and opening a business bank account. Because of this, businesses would not be able to operate without receiving an EIN from the IRS.

Obtain necessary permits and business licenses

Permits and licenses are often required for any business before they can work. With sufficient qualifications and permission, companies could avoid legal punishment for operating.

Each business might need different licenses depending on their industry. Some industries, like the medical industry, need permits focusing on client health and safety, while sales tax permits help sell products. Check with your town or city to find out what you need. 

Visit Connecticut’s Department of Consumer Protection website to determine your necessary permits.

Register for state taxes

All businesses in Connecticut are legally required to register for state taxes. Connecticut’s myconneCT registration application process gives users an easily accessible method for completing this registration. 

Depending on the circumstances, applying for registration may involve a small fee. Check the Connecticut State Department of Revenue Services for more information on potential costs.

File annual reports

The last step towards forming your S corp is filing your annual report. This report updates the government about the current state of your business. 

Filing an annual report costs $150 and must be completed before a given deadline.

• Liability protection: An S corp has limited liability, protecting the owners’ assets from business-related seizure.
• More credibility: Incorporating a business makes it more trustworthy for customers and shareholders. Building more trust among investors and customers increases the likelihood that they would be willing to support the business.

• Business continuity: S corps are very stable business entities and will continue to exist if the owner changes. This continuity allows them to grow without worry of disruption.
• Tax benefits: S corps are not required to pay federal income taxes. The corporation passes all profits and losses to the shareholders, who then report them on their tax returns.