Deciding between forming an LLC in Connecticut or New Hampshire can be challenging due to the different regulations, taxes, and costs associated with each state.
Here we will break down the similarities and differences between Connecticut vs. New Hampshire LLCs to help you decide on what’s best for your business.
Connecticut vs. New Hampshire LLC
- Both Connecticut and New Hampshire require filing Articles of Organization and appointing a registered agent, with filing fees of around $100-$120.
- Connecticut has a progressive state income tax while New Hampshire offers a flat income tax on earned income.
- Connecticut boasts a skilled workforce and industry diversity but comes with higher living costs. New Hampshire’s tax-friendly landscape, including no sales or personal income tax, might attract businesses, though the workforce pool could be smaller.
|Connecticut LLC||New Hampshire LLC|
|In Connecticut, the formation fee for an LLC is approximately $120 when filing Articles of Organization.||In New Hampshire, the filing fee for forming an LLC is around $100 when submitting Articles of Formation.|
|It requires an annual reporting fee, which is approximately $80.||Its annual reporting fee is around $100.|
|Connecticut imposes a state income tax on personal, with rates ranging from 3.00 percent to 6.99%.||New Hampshire has a state income tax on personal, with a rate of 4%.|
|It has a 7.50 percent corporate income tax rate||It also has a 7.50 percent corporate income tax rate.|
|Connecticut imposes a sales tax of 6.35% on various goods and services, affecting consumer prices.||New Hampshire stands out by not imposing a state sales tax, potentially making goods and services more affordable.|
|Property taxes in Connecticut paid as a percentage of owner-occupied housing value is 1.79%.||Property taxes in New Hampshire aid as a percentage of owner-occupied housing value is 1.93%.|
Cost Breakdown of The Two
- Around $120 for filing Articles of Organization with the Connecticut Secretary of State.
- You’ll need to appoint a registered agent with a physical address in Connecticut. The cost for this service can vary, but it’s generally around $100-$300 per year.
- Connecticut requires annual reporting, which may have associated fees. The annual reporting fee was around $80.
- Around $100 for filing Articles of Formation with the New Hampshire Secretary of State.
- You’ll need a registered agent in New Hampshire. The cost can range from $100 to $300 per year.
- New Hampshire has a flat individual income tax.
Similarities Between Connecticut and New Hampshire LLC
Both states require filing specific formation documents with their respective Secretary of State’s office to establish an LLC. These documents typically include basic information about the business, its name, registered agent, and sometimes the management structure.
In both Connecticut and New Hampshire, LLCs are required to have a registered agent. The registered agent is responsible for receiving legal and official documents on behalf of the LLC. This ensures that there’s a reliable point of contact for important communications.
LLCs in both states offer limited liability protection to their members (owners). This means that the personal assets of members are generally protected from the debts and liabilities of the LLC, shielding them from certain legal and financial risks.
Both Connecticut and New Hampshire treat LLCs as separate legal entities from their owners. This separation allows the LLC to enter into contracts, own property, and engage in business transactions in its own name.
Both states allow for flexibility in how LLCs can be managed. LLCs can choose to be member-managed (managed by their owners) or manager-managed (managed by designated managers who may not be members).
Steps to Form LLC in Connecticut
- Select a unique and available name for your LLC that complies with Connecticut’s naming rules.
- Designate a registered agent with a physical address in Connecticut to receive legal documents on behalf of the LLC.
- Prepare and file the Articles of Organization with the Connecticut Secretary of State’s office.
- Pay the required filing fee, typically around $120, along with your filing.
- While not required, it’s recommended to create an operating agreement outlining the LLC’s internal operations and ownership structure.
- If your LLC will have employees or multiple members, you’ll need to obtain an Employer Identification Number (EIN) from the IRS.
- If applicable, register your LLC for state taxes and other necessary permits.
- Connecticut requires annual reporting. Make sure to file the necessary reports and pay any associated fees.
- Fulfill any ongoing requirements to keep your LLC in good standing, such as renewing the registration and adhering to tax obligations.
- With the LLC officially formed, you can now begin conducting business while following all state and local regulations.
Steps to Form LLC in New Hampshire
- Select a unique and available name for your LLC that adheres to New Hampshire’s naming rules.
- Designate a registered agent with a physical address in New Hampshire to receive legal documents for your LLC.
- Prepare and file the Articles of Formation with the New Hampshire Secretary of State’s office.
- Submit the required filing fee, typically around $100, along with your formation documents.
- While not mandatory, it’s wise to create an operating agreement outlining how your LLC will be managed and operated.
- If your LLC has employees or multiple members, obtain an Employer Identification Number (EIN) from the IRS.
- If applicable, register your LLC for state taxes and any required permits.
- Understand the taxation structure in New Hampshire, including BPT and BET, and ensure compliance with related tax obligations.
- New Hampshire requires annual reporting for LLCs. File the necessary reports and pay associated fees on time.
- Fulfill ongoing requirements such as renewing registrations, reporting changes, and adhering to tax and regulatory obligations.
- With your LLC established, you can legally commence your business activities while adhering to state laws and regulations.
Feature Comparisons Between Connecticut LLC vs. New Hampshire LLC
Connecticut: To form an LLC in Connecticut, you need to file Articles of Organization with the Connecticut Secretary of the State. You can file online or by mail.
New Hampshire: To form an LLC in New Hampshire, you need to file a Certificate of Formation with the New Hampshire Secretary of State’s Corporations Division.
Connecticut: Your desired LLC name must be unique and distinguishable from existing business entities registered in Connecticut.
New Hampshire: Your desired LLC name must also be unique and distinguishable from existing business entities registered in New Hampshire.
Connecticut: Connecticut charges a filing fee for forming an LLC.
New Hampshire: New Hampshire also charges a filing fee for forming an LLC.
Connecticut: LLCs in Connecticut are required to file an Annual Report and pay a filing fee to maintain good standing.
New Hampshire: LLCs in New Hampshire are required to file an Annual Report and pay a fee to keep their status active.
Connecticut: Although not required by law, an LLC operating agreement is highly recommended in Connecticut to outline the management and operating procedures of the LLC.
New Hampshire: Similarly, an LLC operating agreement is not required in New Hampshire, but it’s advisable to have one to define the internal workings of the LLC.
Connecticut: Connecticut requires the names and addresses of the LLC’s members and managers to be listed on the Articles of Organization, which becomes public record.
New Hampshire: New Hampshire requires the names and addresses of the LLC’s principal officers or members to be disclosed in the Certificate of Formation, which is also public information.
Connecticut has a diverse economy with strengths in finance, insurance, healthcare, technology, and manufacturing industries.
The state boasts a well-educated workforce, making it attractive for businesses that require specialized skills and expertise.
Proximity to major cities like New York City and Boston provides access to large markets and potential customers.
Connecticut hosts prestigious universities and research institutions, fostering innovation and collaboration opportunities.
The state’s regulatory environment can be considered more complex and costly compared to some others.
The cost of living in Connecticut, especially in metropolitan areas, can be relatively high.
New Hampshire is known for its business-friendly policies, including no state sales tax or personal income tax.
New Hampshire generally offers a lower cost of living and operating costs compared to neighboring states.
The state encourages and supports small businesses through various resources and programs.
New Hampshire’s natural beauty and recreational opportunities can be attractive for businesses in the hospitality and tourism sectors.
While New Hampshire offers a strong quality of life, its smaller population might limit the availability of certain skilled workers.
Connecticut vs. New Hampshire Taxes
Connecticut has a graduated individual income tax, with rates ranging from 3.00 percent to 6.99 percent.
Connecticut has a sales tax of 6.35% that applies to various goods and services, which can affect both consumers and businesses.
Property taxes can vary by locality, impacting the cost of business property and real estate.
Corporations in Connecticut are subject to a corporate income tax of 7.50%, which affects their tax liabilities.
New Hampshire imposes a flat Individual state income tax on earned income, with a rate of 4%.
New Hampshire is known for not having a statewide sales tax, which can make goods and services more affordable for consumers and potentially benefit businesses.
Property taxes vary by municipality, potentially affecting the cost of owning business property.
Flexibility in Rules and Regulations
Management Options: Connecticut allows LLCs to be managed by members (owners) or managers. This provides flexibility in how the business is structured and operated.
Operating Agreement: While not required by the state, an LLC operating agreement can be customized to define the internal management, ownership distribution, and financial arrangements of the business.
Member Information: Connecticut does not require the disclosure of members’ names and addresses in the Articles of Organization. This offers some privacy to LLC owners.
Management Flexibility: Similar to Connecticut, New Hampshire permits LLCs to choose between member-managed or manager-managed structures, allowing businesses to tailor management to their needs.
Operating Agreement: New Hampshire doesn’t require an operating agreement either, but having one can help clarify ownership roles, management procedures, and dispute resolution processes.
Privacy Consideration: Like Connecticut, New Hampshire does not mandate the disclosure of member information in the Articles of Formation, providing a degree of privacy for LLC owners.