Connecticut is a state with a long and storied history. European colonists established what would eventually be Connecticut back in 1636, and towns sprung up on the banks of the Connecticut river, leading it to be called the River Colony. Largely due to a war with the Pequot people that inhabited the area, these river towns created a central government to pool resources and raise a militia. After the Pequot War the population swelled, and Connecticut received its royal charter in 1662.
Both it’s involvement in early American history and its natural beauty ensure Connecticut remains a top tourist destination – state officials estimate that tourism generates around $14 billion for the state economy. Well in line with its revolutionary history, Connecticut is also home to many of America’s major gun manufacturers, including Colt, Stag, and Mossberg.
Unfortunately, Connecticut is not the friendliest of states when it comes to small business. They do have a flat corporate tax, but the tax rate is set at 9% – the sixth highest of all states that collect corporate income tax. Connecticut’s regulatory business environment has also earned it a reputation of being meddlesome. However, small business owners reported that, despite of high taxes and heavy regulation, Connecticut has a very strong small business training and networking program. The state also has a fairly high median per capita income of $63,000, meaning a business could do very well in the wealthier parts of the state.
If you choose to form a corporation in Connecticut, there are a few things you should keep in mind.
- Connecticut law dictates that your company must designate itself as a corporation by including a form on incorporated (inc.) or corporation (corp.) in its name.
- Connecticut does not require corporations filing for S-Corp status at the federal level to re-file at the state level. However, the state does expect S-Corps to file an income tax form if the company derived any income, gain, loss, or deduction from sources in Connecticut. It must then send a composite income tax payment on behalf of any nonresident, non-corporate shareholder, or pass-through entity that holds shares that earns $1,000 or more from those sources in Connecticut.
- Connecticut is known for its filing speed – the state typically boasts a turnaround time of two weeks, with rush filings only taking one week.