Are you looking to form a professional limited liability company (PLLC) in Connecticut, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Connecticut PLLC that is compliant and able to do business in the state.
The professional limited liability company (PLLC) is a specialized type of LLC that is intended for licensed professionals to offer their unique services. Connecticut PLLCs are LLCs formed to provide services rendered by licensed professionals such as dentists, chiropractors, physicians and surgeons, physician assistants, veterinarians, pharmacists, architects, professional engineers, certified public accountants and public accountants, psychologists, attorneys-at-law, licensed professional counselors, and licensed clinical social workers.
The Connecticut PLLC is typically more popular than a professional corporation (PC) because it’s a more flexible business type, but it still includes the personal asset protection and professional qualifications that make the PSC valuable.
PLLCs in Connecticut have relatively simple formation and maintenance requirements, several options for how they want to be taxed, and flexible management. From one-person businesses to multi-member PLLCs with several owners, the PLLC is a popular choice for a reason.
An important detail of the PLLC that differs from a traditional LLC is that liability protection is not shared across all members of the company. For example, if you operate a PLLC for physicians, your business structure does not shield each individual member from malpractice suits. Instead, each member is liable for their own malpractice insurance, and no member is liable for another member’s malpractice.
Your PLLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
The name of a professional limited liability company in Connecticut must contain the words “professional limited liability company” or the abbreviation “P.L.L.C.” or “PLLC.” “Limited” may also be abbreviated as “Ltd.”, and “company” may be abbreviated as “Co.”
Another aspect to consider is including language that explains what your business does. For example, if you’re a doctor, put the word “physician” or the initials “MD” in your PLLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your PLLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming a PLLC is to not get too attached to any one business name until you know that it is available for use. You can confirm whether a name is available by using the Connecticut Secretary of State’s Business Startup Tool to search for your chosen name. Once you confirm the name is available, you can reserve it for 120 days for $60 by mailing a completed Application for Reservation of Name to the Connecticut Secretary of State. Online applications are not currently accepted.
Every PLLC in Connecticut is required to designate a registered agent, which is the individual or business entity that receives government correspondence on behalf of your business, then forwards those documents to you.
The Connecticut Secretary of State describes a registered agent as “a responsible third-party who is registered in the same state in which a business entity was established and who is designated to receive service of process notices and correspondence on behalf of the corporation or LLC.” You can serve as your own agent if you are a resident of Connecticut, or appoint either a Connecticut resident over the age of 18 or another business entity registered with the Connecticut Secretary of State that has a Connecticut address.
Without a registered agent, you could lose your good standing with the state of Connecticut, and the state also has the right to dissolve your PLLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
At the end of the day, we recommend hiring a dedicated registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Once you are ready to form your Connecticut professional limited liability company, you will fill out the Certificate of Organization.
This is THE document that will register your PLLC with the state. You’ll want to ensure all of the following information is correct on the form:
You can file your Certificate of Organization with the Connecticut Secretary of State by either submitting a paper form or by submitting the form online.
The Connecticut Secretary of State imposes a filing fee of $120 to form a PLLC. An additional $50 fee applies for expedited service.
The processing time for Certificates of Organization can vary – you should contact the Connecticut Secretary of State for the latest estimates. Expedited processing is 24 hours.
After you register a PLLC in Connecticut, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for a copy of this document. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your operating agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your operating agreement, or you can create one from a free template online. You can read more about operating agreements here, but some of the basic information you’ll want to have includes:
The vast majority of PLLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important PLLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
PLLCs in Connecticut must pay the Business Entity Tax, which is administered by the Connecticut State Department of Revenue Services. Pass-through entities, which generally include PLLCs, are also subject to the Pass-through Entity Tax in Connecticut. Your business may need to pay corporation income tax (depending on the tax treatment of your PLLC), sales and use taxes, or other state taxes as well. Information about Connecticut taxation requirements for businesses can be found in the Getting Started in Business guide on the Connecticut Department of Revenue Services website. You can pay file and pay taxes online through the Taxpayer Service Center website.
Depending on where in Connecticut your business is located, you may also need to pay some local taxes. You should contact your local tax authorities to determine any taxation requirements. Resources for businesses in each of the four largest Connecticut cities can be found online: Bridgeport, New Haven, Stamford, and Hartford.
An occupation or trade license may be required in order to legally operate your business in Connecticut. The Connecticut Department of Consumer Protection’s website includes a list of licenses, permits and registration forms. Licenses for certain activities are also issued by the Connecticut Department of Energy and Environmental Protection. If you need assistance determining which licenses, permits, or registrations are required for your PLLC, you should contact the Connecticut Economic Resource Center.
If you would prefer to have a professional handle the paperwork for you, consider hiring an online business formation service.
Because of the often-complex nature of professional limited liability companies, some of our favorite service providers don’t offer PLLC formations, but there are still plenty of quality companies that do provide this service. A couple of our favorites for PLLC formation are LegalZoom and MyCorporation.
Another option would be to hire a business attorney to handle your PLLC formation. While this is certainly a more expensive route than using an online formation service, a lawyer’s expertise could come in handy when you’re forming a specialized business structure like this.
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Businesses in Connecticut are generally required to carry workers’ compensation insurance for their employees. Information on workers’ compensation insurance in Connecticut can be found on the State of Connecticut Workers’ Compensation Commission’s website. Though not required, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies pertaining to the profession practiced by your PLLC.
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year.
In Connecticut, you’ll need file certain tax forms to report your PLLC’s income. A description of these forms can be found in the Getting Started in Business guide on the Connecticut Department of Revenue Services website. The forms themselves can be found on the Connecticut State Department of Revenue Services website.
Every year, your PLLC will need to file an Annual Report online with the Connecticut Secretary of State. Annual Reports collect important information about your business to make sure that the information on file with the Secretary of State is accurate. If you fail to file the Annual Report, the Secretary of State may administratively dissolve your PLLC. You also won’t be able to get a “Good Standing” certificate, which may affect your ability to transact business.
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to best manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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