Starting a Business in Connecticut
Connecticut is a home to almost 350,000 small businesses. In fact, over 96% of businesses in Connecticut are small businesses with less than 500 people. The Nutmeg State has upsides and downsides to running a business. While there is a high tax burden and high cost of living, it is offset by factors such as a strong workforce, proximity to large metropolitan hubs, and its residents have the highest income per capita of any other state. The regulatory process is fair, but many still have a hard time securing the proper Business licenses. For growth opportunities, there are many incentive programs available in the form of tax credits, business grants, and loans. There are other activities you can perform while researching programs like trying to look up a Connecticut sales tax rate to pay Connecticut sales tax. If you are dealing with e-commerce or other internet related business, you may need a business license to operate online. This will depend on many factors such as what does your business do and where is it located. Also, you may need to gather the correct information before filing for an EIN number online. This is an important question because it may tie you up in undue administrative procedures if you don’t have the correct information.
The CT Secretary of State is the place to form a company. Once you are finished performing a corporation search, you will have to select a name for your business and file a company with the Connecticut Secretary of State. After which, you can apply online for an Employer Identification Number. In order to stay compliant and allow your company to operate within the bounds of the law, you will also need to go and obtain the Business Licenses you require. After your compliance issues are dealt with, you can focus on looking into the quality programs offered in Connecticut. Here are some of the incentives programs offered to qualified Connecticut businesses:
- The Equipment and Machinery Expenditure Tax Credit is available to qualified small businesses. The credit is based on a percentage of the amount spent on machinery and equipment located in a Connecticut facility. A credit of 5% is given to companies with 251 to 800 full time employees and a credit of 10% is given to a company with 250 or less employees respectively.
- The Fixed Capital Investment Tax Credit is available to companies for their incursion or remittance of fixed capital. Fixed capital refers to any new tangible personal property that meets specified state requirements. A tax credit of 5% of the amount incurred or remitted by a company for a new fixed capital investment is given.
- The Neighborhood Assistance Act Tax Credit is made available to businesses that make a cash investment of at least $250 to specified community programs. Businesses that invest into energy conservation projects are eligible for a tax credit of 100% of the cash invested. Those that invest into community outreach programs that support alcohol prevention or treatment are eligible for a tax credit of 60% of the cash invested.
- The Human Capital Investment Tax Credit is available to companies that have made expenditures for human capital investment. A human capital investment includes job training and worker education programs for employees in Connecticut. A tax credit of 5% of the amount incurred or remitted by a company for a human capital investment is given.
- Being the first state in the USA to recognize and implement enterprise zones, Connecticut provides incentives through its Enterprise Zone Program. Qualified businesses are those in the manufacturing and warehouse distribution industry as well as certain specific service businesses. The program offers an 80% abatement of property taxes on qualified real estate and personal property. It also offers a 25% or 50% credit on Connecticut corporate income tax.
- The Small Business Express Program was created to stimulate job growth by providing grants and loans to Connecticut’s eligible small businesses. The program includes the revolving loan fund (loans up to $100,000), the job creation loan fund (loans up to $300,000), and the matching grant fund (grants up to $100,000).