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Editorial 6 MIN READ

Connecticut in early 2023: what an LLC actually costs here

A $120 certificate, an $80 report due every March 31, and a tax stack that does more work than the headline rate suggests

The Editors
Staff, Incorporator.org
6 min read Updated
Contents 5 sections
  1. The mechanics
  2. The March 31 report that catches people
  3. The tax stack that does the real work
  4. Who Connecticut actually fits
  5. Sources

Connecticut LLC costs $120 to form and $80 a year to maintain, with the annual report due March 31 for every entity regardless of when it was organized. That is the spine. The rest of the story is why Connecticut ends up more paperwork-heavy than the sticker price suggests.

This is a guide for someone filing in early 2023, with the fees, the statutory hooks, and the tax rules that actually apply to a Connecticut entity this year.

The mechanics

You form a Connecticut LLC by filing a Certificate of Organization with the Secretary of the State through the business.ct.gov online portal. The fee is $120, paid at filing, and the online channel is the default; the paper form exists but the state pushes you toward the web form in practically every piece of outbound communication. The certificate is short: entity name, principal office, email address, the name and address of the registered agent, and the signatures of the organizer and the agent accepting appointment.

The statute is the Connecticut Uniform Limited Liability Company Act, codified at CGS § 34-243 et seq. Section 34-247 governs formation and the content of the certificate; § 34-247d specifies the registered-agent requirement; § 34-247h governs amendments. The CULLCA has been in force since July 1, 2017, when it replaced the older statute, and by 2023 the body of administrative practice around it is settled.

Standard online processing is typically same-day to a few business days. There is no published expedited fee for LLC formation the way Delaware sells tiered turnaround; Connecticut does not run a menu. For most filers the online form clears quickly enough that the question does not come up.

You will still need an EIN from the IRS (Form SS-4, issued instantly online), an operating agreement (not filed with the state but expected by any bank, counterparty, or court asked to respect the entity), and a decision about federal tax classification. Single-member defaults to disregarded; multi-member defaults to partnership; an S-corp election under IRC § 1362 is a separate filing on Form 2553.

The March 31 report that catches people

Every Connecticut LLC owes an annual report with an $80 fee, due March 31 every year, for every entity on the rolls. This is the single most distinctive piece of Connecticut compliance. Most states tie the report to the anniversary of formation; Connecticut uses a single fixed date and applies it to every entity, whether you organized in February 2023 or February 2003.

If you miss March 31, the statute imposes a $50 late fee and the Secretary of the State begins the dissolution clock. Under CGS § 34-267c, an LLC that fails to file for two consecutive years can be administratively dissolved, at which point you lose the name, lose the entity shield until reinstatement, and pay to come back. The practical cost of an administrative dissolution, once you add the reinstatement fee, the back reports, and the cleanup at the bank, typically runs into several hundred dollars and a week of calendar time.

The form itself is trivial: confirm the principal office, the registered agent, and the member or manager listing. Most Connecticut LLCs should treat the annual report as a March calendar entry that never moves, not as a once-a-year decision. Set it against a bank statement and it files in ten minutes.

The tax stack that does the real work

Connecticut's headline is that it has no franchise tax in the Delaware sense. A Connecticut LLC taxed as a partnership or disregarded entity does not owe a flat state-level entity tax just for existing. That framing is accurate and also slightly misleading, because Connecticut runs a pass-through entity tax on top of the member-level income tax that does the functional work of one.

The Pass-Through Entity Tax was enacted in P.A. 18-49 and, for tax years beginning in 2018, applied to every Connecticut pass-through as a mandatory entity-level tax. Connecticut was the first state in the country to put a PTET on the books, moving within months of the 2017 federal cap on the state-and-local-tax deduction at IRC § 164(b)(6). The design point was the SALT cap workaround: by taxing the entity, Connecticut moved the state income tax off the member's Schedule A (where it was capped at $10,000) and onto the entity's federal return as a deductible business expense. IRS Notice 2020-75 blessed the structure federally in November 2020.

P.A. 19-186 softened the mandatory design into something closer to elective in later years, and P.A. 22-118 continued adjustments, but the operational takeaway in 2023 is that any Connecticut LLC with non-trivial income needs to model the PTET alongside the member-level tax, not after it. For a practicing CPA this is routine; for a founder filing their own returns, it is the single place Connecticut surprises people.

On the corporate side, a Connecticut LLC electing C-corp treatment under IRC § 7701 owes the Corporation Business Tax. The statutory rate sits at 7.5% of Connecticut net income under CGS § 12-214. A 10% surcharge applies through income year 2023 under P.A. 22-118, which pushes the effective rate to 8.25%. The surcharge is a line of legislative carryover; it has been extended in one form or another for over a decade, and each extension is fought in the revenue bill of the biennium. The minimum tax is $250. By comparison, Delaware's corporate income tax is 8.7% on income apportioned to Delaware, but most Delaware entities formed for holding or venture purposes never have Delaware apportionment and so pay the $300 franchise tax instead.

Estate and gift tax are the other Connecticut distinctive. Connecticut is the only state that levies a gift tax at the state level, and it also levies an estate tax. Neither applies to the entity itself, but both shape the planning around who should own the Connecticut LLC, and at what value, if the family balance sheet is large enough to matter. For most operating businesses this is noise; for a family holding company it is the conversation.

Who Connecticut actually fits

Run the comparison straight. Connecticut charges $120 to form and $80 a year. Delaware charges $90 to form and $300 a year for an LLC. Connecticut is cheaper on the recurring line by $220 a year, and that gap compounds. For a single-member LLC operating entirely in Connecticut, forming at home is the right move on cost, on audit risk, and on the absence of a foreign-qualification filing elsewhere.

Where the calculus inverts is income complexity. The PTET is a meaningful piece of return prep the first year you hit it, and the 10% corporate surcharge makes Connecticut an unfriendly home for a C-corp holding income-producing assets. If you were going to incorporate in Delaware anyway, either because you expect venture financing or because your counsel wants Chancery jurisdiction, the Connecticut savings at formation do not outrun the Delaware legal infrastructure over the horizon that matters.

For most Connecticut-resident founders running a local services business, a rental LLC, or a two-person professional practice, form in Connecticut, put March 31 on the calendar in ink, and move on. For anyone raising institutional capital or parking long-held appreciated assets inside an entity, the decision belongs with a tax advisor before the certificate is filed, not after.

The Connecticut file is not expensive. It is just more administratively textured than the $120 sticker suggests, and founders who treat the $80 report as optional or the PTET as a footnote are the ones who end up paying for it twice.

Sources

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