It’s no secret that Connecticut has a high standard of living for its residents. They also have the highest incomes in America. But what about budding entrepreneurs?
To start a Connecticut business, follow the steps below.
1. Make a business plan
Start your company with a business planning. Planning may seem daunting for entrepreneurs. However, it doesn’t have be. A business plan is an important step in expressing your overall understanding of the market.
- Which business do you want to start?
- A list of Smart goals
- Your business solves the customer problem
- How you can make your business stand out in the marketplace
- How you will attract your customers and who they are
- How to fund the company until it is profitable
- What are the goals and metrics that you will track?
- Which print and online marketing assets (such brochures, company website or print ads) will you invest in?
- Your long-term and short-term visions for the company’s growth and scale
A business plan is essential for many potential partners and creditors.
2. Select a business structure
You, the owner, must decide how to structure your business entity. There are many types of businesses available, each with its own pros and cons.
One-person businesses, general partnerships (GPs), corporations and limited liability companies are the most popular types of entity.
Sole Proprietorships In Connecticut
Unincorporated businesses and GPs can be set up for free. While taxation is simple, sole proprietors and general practitioners are subject to personal liability in the event that something goes wrong.
One example is when someone sues the business and seeks the personal assets of the owner.
By separating business and personal accounts, a legal entity such as a corporation or limited liability company can be formed to protect your personal assets.
The corporation structure provides liability protection. If your business goes under, your home, bank accounts and other assets will be protected. C corporations have a less than ideal tax structure that taxes income at both the corporate and personal levels.
S corporations offer liability protection, but they are more difficult to qualify for.
A Connecticut LLC can offer the best of both worlds. While LLCs are more complicated and require more paperwork than sole proprietorships, there are many benefits. An LLC legally separates your personal assets and the company. This is the biggest advantage.
It provides personal liability protection in the event that the business goes bankrupt or is sued. You will still be taxed only once on income in your personal tax return. This is just like a sole proprietorship.
Start an LLC in Connecticut
3. Calculate your startup costs
Before spending any money on your startup expenses, it is important to count them. It is helpful to consider costs in three different categories: fixed, ongoing, and one-time.
- Once-off costs are rare. One-time expenses include the design of a logo, building a website, making a prototype, and purchasing office equipment.
- Fixed costs are something that happens regularly. However, they don’t change with your sales. These include your accountant, rent, insurance, and attorney fees.
- For ongoing expenses, you will need to do more detailed planning and analysis. They can change depending on the business you have, but they are almost always there. Consider seasonal labor, product creation costs and shipping.
You should include estimates for payroll, health insurance, unemployment insurance and workers’ compensation costs if your business expands.
Keep in mind how your business will be promoted, including the company website, social media postings, advertising (such online, print and broadcast), as well as industry events. Find out the cost of each marketing strategy.
Although accessing funds to pay business expenses may take time, it is an important step in the startup process. Make sure you include this in your business plan.
4. Choose a business name
Have you chosen a name for your business? Connecticut, like most states has its own rules for choosing a name for a business.
Rules for choosing a business name
First, there is no way for two businesses to have the same name. According to the state, every company name must be distinct from each other and it is not allowed for duplicate titles. You can search the Connecticut Secretary-of-State website to see if there is a name available.
Register a Business Name
You can reserve a name from the state for a fee. This is a great way to keep the title if you don’t intend to incorporate your business within the next few months.
Restricted words are also not allowed in company names. Restricted words refer to words that are not appropriate or words that reference a government agency.
Buy a Domain Name
You may want to consider the matching domain name when you have settled on a company name.
5. Register your Connecticut company and open financial accounts
You will need to register your small company with the Connecticut Secretary Of State if you have chosen a business structure, such as an LLC, corporation or partnership.
Apply for an Employer Identification Number
A lot of businesses also need to obtain a federal employer ID number (EIN). This is your federal tax ID, which you can use to hire employees.
Notice: You can use your social safety number as your tax ID if you are a sole proprietor. However, most experts recommend that you obtain an EIN to avoid identity theft.
Register for a Business Bank Account
To avoid combining personal and business finances, you should open a bank account. This can cause confusion when it comes to tax time, making it difficult for you see the actual income and expenses of your business. You can make your personal assets more vulnerable because it can void the liability protections that you would have from an LLC/corporation.
You might also be able to apply for a business card, which will allow you to make small purchases and build your credit.
Apply for Connecticut Permits and Licenses
Next, you will need to apply for permits and licenses that are required to conduct business in Connecticut. Business licenses and permits are required for different industries. They can be required at the local, state, or federal levels.
You don’t have a central authority that can tell you what licenses and permits your business needs. This means you will have to do your own research or hire someone like us to do it for you.
To find out what coverage you business might need, speak to an insurance agent in Connecticut.
6. Connecticut is a great place to market your business
It’s important to consider how you will attract customers before opening doors in Connecticut. You can market your business to make people aware of your products and services. This is your chance to convince people why you are better than the rest. These are some ways to market your company:
- It is a crucial first step to create a marketing strategy. This creates a roadmap that will help you coordinate, deliver, measure and analyze your marketing activities.
- A company site is vital. It should showcase your products, tell customers about your business, and provide a way for them get in touch.
- You can use a variety of DIY marketing strategies to spread the word about your company. Open social media accounts to reach your potential customers.
- You can also add your business to free online directories like Yelp and Google My Business. These directories also offer customer reviews that can be used to help with digital word-of mouth marketing.
- Invite local media to your grand opening or to other events throughout the year.
Benefits of opening a Connecticut business
Connecticut is home to many large companies, including 14 on the 2021 Fortune 500 List. However, it also has approximately 350,376 small businesses that make up 99.4%.
The Connecticut Department of Economic and Community Development established the Office of Small Business Affairs to support small businesses. This office can help you find the right federal, state and non-profit organizations to assist your company.
Here are some examples of good businesses to start in Connecticut
More than 750,000 people work in Connecticut’s small-business economy. You may wonder what types of businesses might do well in Connecticut, as encouraging as this may sound.
The Small Business Administration (SBA), which lists these industries as the state’s largest employers, is a great source of inspiration:
- Social assistance and health care
- Food and accommodation
- Retail trade
- Expert, scientific and technical services
Connecticut has a strong track record in hosting small businesses. You might be tempted to move there, benefiting from a skilled workforce and high living standards.
Connecticut Business FAQs
- What tax regulations must be followed by LLC businesses in Connecticut? An annual Business Entity Tax must be paid by LLCs that were formed after January 1, 2002. For more information on tax requirements, visit the Connecticut State Department of Revenue Services site.
- What is Connecticut’s average income? According to the U.S. Census Bureau, the per capita income in Connecticut was $44,496, which is well above the national income at $34,103.
- What are the most important industries in ConnecticutAccording to the state website, Connecticut’s economy is dependent on advanced manufacturing, aerospace, defense, bioscience, healthcare, financial services and green energy.