There are many requirements to starting a business in Connecticut, one of these is your Connecticut business taxes.
While it is possible to operate a business without taking care of your tax obligations, doing so will guarantee that your business will be short-lived. From late payment penalties to tax liens to business closure, these could all happen to you.
Now, the processing of filing and complying with the requirements for Connecticut business tax may be slightly hard to understand at first, but you have to remember that this must be done for your business to operate legally and to stay in good standing with the IRS.
Also, your business may qualify for several business taxes based on its nature and structure. Use this guide then to help you fulfill those obligations.
When seasoned entrepreneurs tell you that there are many Connecticut business tax requirements, you better believe that it really is numerous. Now the challenge to comply with these requirements may be great, but there is a way to overcome this and prepare all necessary forms.
The Department of Revenue Services features a Sales Tax Information section where you can find all the information required to comply with your business taxes.
From business registration, exemption certifications, sales and use tax information to filing sales tax returns, basically all the tax information you need can be found here.
In Connecticut, the business tax income is called the corporation business tax. If you are forming a Corporation in Connecticut, you pay this tax type for the privilege of conducting business in said state. A minimum amount of $250 should be paid in taxes or a rate of 7.5% per annum, whichever is applicable for your business.
Other business structures are not required to pay for corporation business tax, but rather, the individual shareholder is liable to declare their income and individually pay their federal and state tax obligations. The same case holds true for structures such as partnerships, sole proprietorships, and Non-Profits. For more information on compliance of corporation business tax, see the Connecticut’s Department of Revenue Services website.
As a business owner, you may hire a number of employees in the future. In this regard, you may be obliged to file and pay for a Connecticut Unemployment Insurance as stipulated by federal law and to be administered by the state’s Department of Labor.
This tax is to be collected annually to fund for persons who become unemployed in the state. A business may qualify for this tax type depending on several criteria. For further details on the Unemployment Compensation Tax, you can check this section of the Connecticut Department of Labor.
A sales tax and a use tax are two separate business tax types that may require your compliance. These all have to depend on the nature of your business. A sales tax is applicable if you plan to sell goods or provide services. Note that there are special sales tax rates imposed on certain sales.
On the other hand, your use tax is collected for your taxable purchases that have not been covered by Connecticut sales tax. This happens in cases when purchases you’ve made are done outside of the country or the state.
Again, there are several preconditions that should be met to verify if your business has to comply with these requirements, so visit the state’s Department of Revenue Services website to get a full idea of what you need to do.
With all the prerequisites that must be taken care of to get started on your business venture, it’s easy to get lost on all the complex preconditions and the paperwork to comply with Connecticut business taxes.
However, this should not be reason enough to pass up these requirements or else your business will be in trouble. Instead, here are top resources that will prove helpful to your tax life.
FreshBooks, Xero, and QuickBooks are small business accounting softwares that will simplify the accounting process for you. They help you keep track of your finances, taxes, and expenses – on a budget. Visit each review and start a free trial to see which is right for you.
Please note that this article is for informational purposes only, and is not legal or tax advice. For specific answers on Connecticut business taxes or even starting a new business, your accountant is the best professional to talk to.