04 May, 2018

Opening a Business in Connecticut

Also nicknamed The Land of Steady Habits, Connecticut is the southernmost state in the New England. However, portions of it are often grouped with New York and New Jersey as the Tri-state area. Connecticut has it has the highest per-capita income (estimated in 2013 at $60,847) Human Development Index (0.962), and median household income in the United States.

When it comes to Connecticut’s most developed industries, finance and insurance occupy the first two places, while the industry of manufacturing comes in third. Historically, the state was a center of gun manufacturing.

If you’re an entrepreneur ready to start his own business in Connecticut there are a few basic steps that you need to take. We’ve created a short guide to help you get a clearer picture regarding the process that you are about to undergo.

 

 But before we got further into that, let’s see what types of business structures you can choose from.

·         LLC

·         Sole Proprietorships

·         Partnerships

·         Corporations

·         S Corporations

The most important thing when choosing a business structure is to discuss it with your financial, legal or business adviser. Taking into consideration that one of the most popular structures used by entrepreneurs in the United States is the LLC we are going to address the steps of forming this type of business.

 

1. Creating a business plan

Having a well-written business plan before you actually take further steps of forming your business is recommended by most business experts. However, entrepreneurs tend to frequently neglect this step and treat it superficially. In today’s digital world it should be easy for anyone to get the right information and put together a great plan to guide them through the process of starting a business

Although business plans don’t have any specific formula, there are some elements that should be included: executive summary, business overview, marketing, employees, management and financial projections.

Luckily for the entrepreneurs of today, the internet has a lot of resources to offer when it comes to creating a good business plan. If you struggle to structure your plan you can find plenty of templates online for free. You can even find various Business Plan Software that will make your job even easier.  

 

2. Name your business

The next step of starting a business in Connecticut is of course to name it. Finding a suitable name that reflects your company and is also easy to remember for your potential prospects is an essential element for your success.

When Corporations and LLCs register as businesses they need to be uniquely named. You can even check for name availability online by going on the Connecticut Secretary of State website.

 

3. Obtain a Tax ID number

The Tax ID number or the Employer Identification Number or EIN (sometimes known as FEIN) is a nine-digit identification number obtained from the Internal Revenue Service (IRS).

You can file for the EIN online and only spend a few minutes to get it done. But if you prefer to mail you can file it that way as well. For any uncertainty regarding this process, you can find several websites that can guide you step by step.

 

4. Applying for licenses and permits

Although considered a dreaded part of the process of opening a business, applying for licenses and permits is not as complicated as one may think. Before being able to operate your business you will most likely need to register with a variety of agencies.

If your future company will sell, rent or lease, you will need a Connecticut Sales Tax Permit from the Connecticut Department of Revenue Services. 

Depending on the type of employees that you will be hiring you may need Professional & Occupational Licenses. For example pharmacists, acupuncturists, architects and many more need these kinds of licenses.

Most towns and cities in Connecticut also require you to obtain Local Business Licenses. The requirements for these kinds of licenses depend on the local entity’s specific rules. You may find more information regarding this by contacting the mayor’s office, city hall or the local economic development office.

5. Financing your business

Getting the right amount of money to open a business can be quite challenging. However, nowadays there are more options than ever. Ruling out getting financing for your business from your savings or with the help of your family or friends, there are quite a few methods you could try to put together the funds needed.

·         Bank loans. A loan approval process from banks can take from 2 weeks to 6 months depending on the amount of money that you need to borrow.  

·         SBA loans. The Small Business Administration offers loans that are more advantageous than the ones you can get from the bank.

·         Angel Investors. Angel Investors are usually individuals who have a lot of capital and want to invest in business idea full of potential.

·         Crowdfunding. This has become quite a popular method of raising money. There are a few platforms that you can try. All you need to do is properly market your business idea and have people from all over the world support you with small amounts of money.

·         Peer-to-Peer Lending. If the bank isn’t an option for you, peer-to-peer lending might be the best choice. You can get personal loans that usually go up to $35,000-$40,000. There are quite a few platforms that you can access in this sense.

·         Grants. Getting a business grant is obviously one of the best ways to get your funds together. Each state has to offer a few grants and of course there are national grants that you can access.

 

6. Create the right team

Having the right people besides you when starting a business, is essential. While creating your business plan you should focus on the characteristics you want your employees to have. This way during the hiring process you will be able to make easier choices and pick the people who you think are the best for the evolution of your company.

But before you start doing all the hiring, you should know that you need to first of all register as an employer with the IRS Connecticut Department of Revenue Services and the Connecticut Department of Labor.

 

To conclude, starting a business in Connecticut will require you to follow all of the steps above with a lot of interest. Doing the proper research at the right time can help your business properly develop even from the early stages of operations.