Connecticut LLC Taxes
When you set up an LLC in Connecticut, you must undertake certain ongoing responsibilities to stay in compliance. One of these is paying your business entity taxes.
The state of Connecticut has a number of taxes that LLCs must pay. These include sales tax and business entity tax. In addition, if your LLC has employees, you must also remit employee withholding and unemployment insurance taxes. The exact amounts that you must remit will vary depending on your payroll. By default, LLCs in the state of Connecticut are taxed as pass-through entities. This means that the LLC itself does not pay federal income tax. Instead, the income from the LLC passes through to its members, who must report it on their personal income tax returns.
However, LLC owners can elect to have their LLC taxed as a corporation by filing an extra form with the IRS. This can be beneficial for profitable LLCs because corporate tax rates are typically lower than personal income tax rates. In addition to state taxes, LLCs in the state of Connecticut must also pay business entity tax, which is levied at a rate of 7.5%. Moreover, if your company sells goods, it must also collect and remit use tax. In addition to these taxes, you may be required to file other reports and documents with the state of Connecticut.
How Connecticut LLCs File Taxes?
All Connecticut LLCs must file a state-level tax return. In addition, some multi-member LLCs must file a federal partnership return (Form 1065). All business entities in the state are subject to the state’s pass-through entity tax, which is levied at a flat rate of 6.99%.
LLC owners can elect to have their company taxed as a C-corporation for federal purposes by filing IRS Form 2553. If they choose this option, the LLC must pay a corporate business tax of 7.5% on all company profits.
The state also imposes an employer tax, which is a percentage of the company’s payroll. If the LLC has employees, it must also pay Federal Employer Taxes and State Unemployment Insurance Taxes. This information is usually reported on Form CT-1065 or CT-1120SI. In addition, the company must obtain a federal Employer Identification Number (EIN) from the Internal Revenue Service. The EIN is like a social security number for a business and is required to file certain types of tax returns.
