How to Start a Limited Liability Partnership in Connecticut | 2024 Guide

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Start a Limited Liability Partnership in Connecticut

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Connecticut. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Connecticut, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Connecticut LLP, all the steps in this article must guide you.

Steps in Starting a Limited Liability Partnership in Connecticut

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Connecticut, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Connecticut General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

– WEBINARCARE EDITORIAL TEAM

Steps in Starting a Limited Liability Partnership in Connecticut

To form a limited liability partnership in Connecticut, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Resident Agent, filing for Certificate of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Connecticut, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Connecticut business registry. Ensure that your chosen name follows Connecticut naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Connecticut Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Connecticut- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Connecticut Secretary of State business name database and Connecticut Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $60 and mail name reservation fee of $60. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by one method, by mail, which costs around $10. In addition, the DBA’s validity in Connecticut is Indefinite, which you can file in the Connecticut Secretary of State.

You can check out how to file a DBA in Connecticut for clearer understanding.

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Step 3: Designate a Resident Agent

In Connecticut, you’ll need to designate a Resident Agent for your LLP. The Resident Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Connecticut Resident Agent Services to serve as your LLP’s Resident Agent, ensuring that they meet Connecticut requirements.

However, If you plan to become a Resident Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Connecticut Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Connecticut Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Connecticut laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Connecticut. The default laws in Connecticut might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Connecticut Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Connecticut Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Connecticut.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Connecticut LLP. Additionally, obtain the necessary Connecticut Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Connecticut to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Connecticut Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Connecticut, and local levels.

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Advantages of Forming a Limited Liability Partnership in Connecticut

While the specific advantages of forming an LLP in Connecticut can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Connecticut:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Connecticut.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Connecticut may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Connecticut.

Cost of Forming an LLP in Connecticut

The cost of forming an LLP in Connecticut may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Connecticut Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Connecticut instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership (LLP) in Connecticut?
An LLP is a form of business structure that provides the owners (partners) with limited personal liability and share profits and losses.
How is an LLP formed in Connecticut?
An LLP is formed by filing a Certificate of Registration with the Connecticut Secretary of State and paying the required fee.
Can anyone form an LLP in Connecticut?
No, at least two partners are required to form an LLP, but there is no limit on the maximum number of partners.
What is the difference between a general partnership and an LLP in Connecticut?
A general partnership does not offer limited personal liability for its partners, while an LLP does.
Do all partners in an LLP need to be from Connecticut?
No, one or more partners can be from out of state and still be part of an LLP in Connecticut.
Can an LLP in Connecticut have foreign partners?
Yes, an LLP can have foreign partners, as long as they are qualified to do business according to Connecticut laws.
What is the advantage of forming an LLP instead of a sole proprietorship in Connecticut?
An LLP offers limited personal liability for its partners, while a sole proprietorship does not.
Does an LLP need to obtain any specific license or permit to operate in Connecticut?
It depends on the nature of the business, but some industries might require additional licenses or permits.
Does Connecticut require LLPs to obtain liability insurance?
No, Connecticut does not require LLPs to obtain liability insurance, but it is advisable to do so.
Can an LLP and a general partnership share the same name in Connecticut?
Yes, an LLP and a general partnership can share the same name in Connecticut, as long as both entities are different businesses operating in different markets.
Is there a minimum contribution requirement for each partner in an LLP in Connecticut?
No, there is no minimum contribution requirement for each partner in an LLP in Connecticut.
How is the taxation of an LLP in Connecticut?
LLPs are taxed as pass-through entities, meaning that the profits and losses are reported on each partner’s personal income tax return.
Do LLPs in Connecticut have to file separate tax returns?
No, LLPs in Connecticut are not required to file separate tax returns, but they are required to file an information return with the IRS.
Are Connecticut LLPs required to maintain formal records or minutes of meetings?
Yes, LLPs in Connecticut are required to maintain formal records or minutes of meetings, including decisions made and signed by all partners.
Can an LLP in Connecticut have silent partners?
Yes, an LLP in Connecticut can have silent partners, but their liability is limited to their investment in the business.
Can an LLP in Connecticut have non-partner employees?
Yes, an LLP in Connecticut can have non-partner employees, and they will be considered regular employees for employment purposes.
How does a partner’s retirement or resignation affect an LLP in Connecticut?
A partner’s retirement or resignation may dissolve the LLP in Connecticut, unless the other partners agree to buy out their interest and continue the business.
Can an LLP in Connecticut be dissolved voluntarily?
Yes, an LLP in Connecticut can be dissolved voluntarily by the partners, as long as all obligations and debts are paid and the Certificate of Registration is withdrawn.
Can an LLP in Connecticut be dissolved involuntarily?
Yes, an LLP in Connecticut can be dissolved involuntarily by court order, for example, due to fraud or illegal activities.
Is there an annual report requirement for LLPs in Connecticut?
Yes, LLPs in Connecticut are required to file an annual report with the Connecticut Secretary of State and pay the required fee.
What information is included in the annual report for an LLP in Connecticut?
The annual report for an LLP in Connecticut includes the name and address of the LLP, the name and address of each partner, and a brief description of the business activities.
Can an LLP in Connecticut change its name?
Yes, an LLP in Connecticut can change its name by filing a Certificate of Amendment with the Secretary of State and paying the required fee.
Can partners in an LLP in Connecticut be held personally liable for the LLP’s debts or obligations?
No, partners in an LLP in Connecticut are protected by limited personal liability, and they are generally not individually liable for the LLP’s debts or obligations.
What is the difference between a limited partnership and an LLP in Connecticut?
A limited partnership consists of at least one general partner and at least one limited partner, with the latter having limited liability. An LLP, on the other hand, can have multiple partners with limited liability.
How long does it take to form an LLP in Connecticut?
It typically takes 5-7 business days to form an LLP in Connecticut, but it can vary depending on the workload of the Secretary of State’s office.
Do Connecticut LLPs need to obtain a Federal Employer Identification Number (FEIN)?
Yes, Connecticut LLPs need to obtain a FEIN from the IRS for tax reporting purposes.
Is there a formation deadline for LLPs in Connecticut?
No, there is no formation deadline for LLPs in Connecticut, but it is advisable to form the LLP before starting any business activities.
Can an LLP in Connecticut convert to a different business structure, like an LLC or corporation?
Yes, an LLP in Connecticut can convert to a different business structure, subject to certain criteria and requirements.
Is Connecticut a good state to form an LLP?
Yes, Connecticut is generally considered a good state to form an LLP due to its favorable tax laws and friendly business environment.
What is a limited liability partnership (LLP)?
A limited liability partnership is a type of partnership where each partner’s liability is limited to their investment in the partnership.
Who can form an LLP in Connecticut?
Any two or more persons can form an LLP in Connecticut.
Is there a minimum capital requirement for forming an LLP in Connecticut?
No, there is no minimum capital requirement for forming an LLP in Connecticut.
Can professionals like lawyers and accountants form LLPs in Connecticut?
Yes, Connecticut allows professionals like lawyers and accountants to form LLPs.
Do LLPs need to draft a partnership agreement in Connecticut?
While it is not required by law, it is advisable for LLPs in Connecticut to have a partnership agreement.
What should be included in an LLP’s partnership agreement in Connecticut?
An LLP’s partnership agreement in Connecticut should include the partners’ agreements on management, profit-sharing, and decision-making.
Are LLPs in Connecticut required to have a registered agent?
Yes, every LLP in Connecticut must have a registered agent.
Can a partner run the LLP’s day-to-day operations in Connecticut?
Yes, a partner can run the LLP’s day-to-day operations in Connecticut if they are designated as such in the partnership agreement.
Can an LLP have both general and limited partners in Connecticut?
Yes, an LLP may have both general and limited partners in Connecticut.
Is an LLP required to file an annual report in Connecticut?
Yes, LLPs in Connecticut are required to file an annual report with the Connecticut Secretary of State.
What is the deadline for filing an LLP’s annual report in Connecticut?
The deadline for filing an LLP’s annual report in Connecticut is on or before the last day of the month in which the LLP was initially formed.
What happens if an LLP doesn’t file an annual report in Connecticut?
Failure to file an LLP’s annual report in Connecticut can result in the suspension or revocation of the LLP’s registration.
Can an LLP in Connecticut be sued?
Yes, an LLP in Connecticut can be sued if it violates its obligations.
Is an LLP liable for the debts of another LLP in Connecticut?
No, an LLP is not liable for the debts or obligations of another LLP in Connecticut.
Are the partners in an LLP in Connecticut personally liable for the LLP’s debts?
No, partners in an LLP in Connecticut are not personally liable for the LLP’s debts.
What taxes do LLPs in Connecticut pay?
LLPs in Connecticut are subject to Connecticut state taxes.
Are LLPs in Connecticut exempt from income tax?
No, LLPs in Connecticut are subject to income tax.
How can an LLP qualify for tax-exempt status in Connecticut?
LLPs can qualify for tax-exempt status in Connecticut if they meet certain guidelines laid out by the state.
What type of insurance should an LLP in Connecticut consider getting?
An LLP in Connecticut should have general liability insurance, as well as errors and omissions insurance for professional services.
Can LLP partners serve on the Board of Directors of a Connecticut corporation?
Yes, LLP partners can serve on the Board of Directors of a Connecticut corporation.
What if an LLP in Connecticut wants to dissolve or terminate its operations?
An LLP in Connecticut may dissolve or terminate its operations by filing a certificate of cancellation.
What happens to an LLP’s assets and liabilities when it dissolves in Connecticut?
When an LLP dissolves in Connecticut, its net assets will be distributed among the partners in accordance with their respective interests.
Can a foreign LLP conduct business in Connecticut?
Yes, a foreign LLP can conduct business in Connecticut if it registers with the Connecticut Secretary of State.
What is the qualification process for foreign LLPs to conduct business in Connecticut?
Foreign LLPs must file a certificate of authority application with the Connecticut Secretary of State and comply with all other state requirements.
What happens if a foreign LLP fails to file a certificate of authority in Connecticut?
A foreign LLP may be subject to fines and other penalties if it fails to comply with Connecticut registration requirements.
Does Connecticut recognize domestic partnerships?
No, Connecticut does not recognize domestic partnerships.
Can a domestic partnership register as an LLP in Connecticut?
A domestic partnership cannot register as an LLP in Connecticut; however, the partners of a domestic partnership could opt to form an LLP.

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Conclusion

Starting an LLP in Connecticut may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Connecticut.

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