One of the brightest spots for Connecticut‘s small business owners is the incredibly high per capita personal income (PCPI) of the Nutmeg State’s denizens. In fact, the Bureau of Economic Analysis reported that Connecticut’s PCPI for 2015 was 140 percent of the national average, at nearly $67,000. This is a boon to small business owners in areas where wealth is highly concentrated, as there is more disposable income to go around despite the state’s elevated cost of living.
Connecticut’s manufacturing industry continues to be highly diversified. Jet aircraft engines, helicopters, and nuclear submarines have given the state pre-eminence in the production of transportation equipment. Connecticut also is a leader in such highly skilled and technical fields as metalworking, electronics, and plastics.
Connecticut has 322,805 small businesses, according to the most current federal data available. Of those 322,805 small businesses in Connecticut, 94,723 have employees. The remaining 228,082 are Connecticut small businesses that have no employees.
Though companies are springing up throughout the state, the startup core of the Connecticut is located on the southern coast. New Haven is the heart of Connecticut’s startup scene. For several years, the city has been cultivating a reputation as boasting a tech scene in a league of its own. The greater New Haven area is home to global giants like pharmaceutical company Bristol Myers Squibb and medical technology manufacturer Medtronic. More recently, it has been the birthplace of the coworking space The Grove, Tangoe, a global provider of IT Expense Management (ITEM), as well as software companies Continuity and Square 9 Softworks.
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The most common business structures are sole proprietorship, partnership, limited liability company (LLC), and a few different types of corporations—the standard corporation (often called a C corporation or “C corp”), the small business corporation (often called an S corporation or “S corp”), and the benefit corporation (often called a B corporation or “B corp”).
The most common business structures are:
Happens when you operate your business as yourself. There is no separate legal entity created; the law treats you and your business as one person. You are responsible and personally liable for all business activities or wrongdoing.
The same thing as a Sole Proprietorship, but just with 2 or more people. Like a Sole Proprietorship, a Partnership doesn’t create a separate legal entity and the partners are responsible and personally liable for any business activity or wrongdoing.
A more complex legal structure that requires a board of directors, corporate officers, and shareholders. Corporations don’t usually work for most small business owners since they face double taxation. Corporations can be beneficial to companies that are looking to raise capital investment, take the company public, or have large healthcare expenses for their employees. The most common types of companies that form Corporations are high-growth technology and startup companies.
Unlike a Sole Proprietorship or a Partnership, a Corporation is a separate legal entity from its owners (called shareholders). It provides them with personal liability protection.
A legal entity that combines the benefits of a Corporation and a Sole Proprietorship/Partnership.
An LLC in Connecticut is a separate legal entity under the law. And like a Corporation, it provides personal liability protection for the owners. If the LLC is sued, the owner’s personal assets – like their home, cars, and bank accounts – are protected. And like a Sole Proprietorship/Partnership, an LLC has pass-through taxation (so there’s no double taxation).
A Connecticut LLC is the most popular option and a good choice for people who want to run a small business for two reasons:
Unlike a Sole Proprietorship (and a Partnership), your Connecticut LLC’s assets are separate and distinct from your personal assets. In the event your LLC gets sued, your personal assets are protected.
And unlike a Corporation, your LLC is not subject to double taxation. Instead, your LLC’s profits will “pass-through” to your personal tax return and federal taxes are paid just once.
Choosing a business name is important, you want to make it easier for your customers to remember it, here are some tips:
Depending on the business structure you chose you will need to register your business.
For Connecticut DBA (Doing Business As) go to:
For Corporations go to:
For LLC’s go to:
With limited exceptions, most businesses require an Employer Identification Number (EIN), also known as a Tax ID Number. An EIN is used to identify a business in its federal tax filings. Without an EIN, you can’t hire employees or open a business bank account.
– Open a business bank account:
– Get a business credit card:
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
Here are some links for Connecticut Businesses:
Selling products? Check Connecticut Resale Permit
Your brand is the image customers have of your business, so it’s important to determine who is your audience and what is the message that you want to project. That way, your company’s image will be what you intend it to be. It should be strategic and intentional.
Creating an optimized website helps you to gain important visibility for the right terms. A website is a powerful sales tool and one that allows you to address your customers’ concerns, give them the information they need to make a decision and create compelling calls to action.
In addition to a website, you should also consider other avenues for promoting your business online: