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Registration isn’t always required; for example, you can do business under your legal name without registering. However, registration offers certain advantages such as liability protections and tax benefits.
In many circumstances, you simply need to register your business name with your state and local governments. In Connecticut, applications vary depending on the type of business. You can register online or at a Connecticut State Department of Revenue Services office.
Federal registration is usually not required, but may be necessary for trademark protection or achieve tax-exempt status for a nonprofit business.
Paperwork can be tedious and take up valuable time, so entrepreneurs may be tempted to avoid it whenever possible. However, outlining expectations and guarantees in writing is an important way to protect your company.
Even if you only plan to have one or two employees on your staff, you’ll want to issue an offer letter with information such as the job responsibilities and salary. An employment agreement, or an employee handbook, should also cover important topics such as benefits, causes for termination, and how the employer expects the employee to behave. Depending on your company, you may also need to issue a confidentiality agreement.
When working with contractors, there should be a service agreement in place outlining the contractor’s responsibilities and liabilities. If your company provides services, you should have a similar agreement that you can offer to customers.
If your company sells a product, you may not need to make any formal agreements with your customers. For example, a bookstore doesn’t have you sign a contract whenever you purchase a book (although they’ll likely have a store policy on returns). However, if you are selling expensive items then a customer contract can help outline various responsibilities and expectations, such as warranties, liabilities, and payment terms.
Businesses are subject to certain license requirements, zoning rules, and other regulations, which vary from business to business and from state to state. Contacting the economic development authorities in the town where your business will be located is a good starting point, and will also let you know about any available tax credits or other incentives available to entrepreneurs. Visit our comprehensive list of Connecticut economic development commissions here.
The Connecticut Secretary of State provides a Business Startup Tool to guide entrepreneurs through the steps necessary to start a business in Connecticut and be in compliance with state law. The U.S. Small Business Administration also has a guide on staying legally compliant with state and federal laws.
While these resources can be helpful, the most efficient way to stay in compliance with all federal, state, and local laws is to contact a local attorney and/or accountant. This professional can help guide you through the process of setting up your business and make you aware of any regulations you’ll need to follow.
Your tax return is dependent on your company structure. Businesses structured as sole proprietorships and partnerships do not have a separate company tax return. LLCs and S Corporations use pass-through taxation, allowing business owners to report profits and losses on their personal returns. C Corporations are taxed separately from owners’ personal returns.