Here are the general steps to apply for a business license or permit in Connecticut.
Step 1. Set up a Business Entity
A business license is not the same as a business registration. Business registration may provide liability protection (depending on the type of entity), whereas a business license does not. So, before applying for a business license, determine what type of company you want to register.
Available options include partnerships, limited liability companies (LLCs), and corporations. The choice affects which permits and licenses are needed. Register your desired entity with the Connecticut Secretary of State. This process can be done online through the Connecticut Business One-Stop website.
Part of the registration process is choosing a business name. To make sure your chosen name is available, start by running a name availability search through the Connecticut Secretary of State’s website. Make sure it is not too similar to existing names already registered or your application may be rejected.
To make sure your business name doesn’t infringe on someone else’s trademark, you can take an extra step by doing a trademark search on the USPTO website.
An Employer Identification Number (EIN) is issued by the IRS for your business. It is used for various tax purposes such as hiring employees, opening bank accounts and filing tax returns.
You can apply directly online with the IRS here. When filed online, EINs are usually issued immediately.
Step 2. Apply for Licenses and Permits
The steps may vary depending on factors such as your location, the nature of your business, and local regulations. Connecticut has made the process easier by creating a business checklist tool. This interactive tool allows you to enter specific information about your business. Based on that specific information, the checklist will inform you of what business licenses or permits you need.
However, this is a free resource and all information provided must be verified. One way to check is to go to the Department of Consumer Protection’s website and review the list of license and permit forms. You may need additional local or federal licenses or permits, so check with those agencies as the checklist is for state licenses only.
Professional licenses are official credentials issued by government agencies or professional associations that allow individuals to practice certain occupations or provide specific services. Licensing is important in many areas to protect clients, patients and the general public by ensuring that practitioners meet established standards of competence and ethical conduct.
In Connecticut, the Division of Occupational and Professional Licensing of the Department of Consumer Protection regulates several professional licenses. It covers a number of professions such as healthcare, real estate, accounting and cosmetology.
Obtaining a license involves completing accredited training, gaining practical experience, and passing standardized exams. Licensed professionals in certain professions must adhere to ethical standards such as codes of conduct and participate in continuing education to stay current in their field.
Sales and Use Tax Permits
A Connecticut Sales and Use Tax Permit is issued by the Connecticut Department of Revenue Services to allow businesses to collect and remit sales tax on qualifying retail sales or rentals of tangible goods and certain services.
Companies holding this permit are legally required to collect and remit sales tax on eligible transactions on a regular basis, usually monthly or quarterly. They must keep accurate records of taxes collected, exemptions and deductions claimed.
Although Sales and Use Tax Permits expire every two years, they are automatically renewed as long as you are in good standing with the Department of Revenue. Failure to obtain the necessary permit or failure to fulfill tax obligations can lead to serious legal consequences.
There is no universal federal business license that applies to all businesses in the United States. Instead, federal business licenses or permits typically apply to specific industries and their activities, similar to Connecticut licenses.
These licenses and permits help ensure that businesses comply with federal regulations. Here are some common federal licenses and permits:
- Federal Firearms Licenses
- Federal Aviation Administration certifications
- Federal Communications Commission licenses
- Licenses related to transport
- Food and Drug Administration Registrations
- Banking and Financial Services Licenses
- Environmental Protection Agency permits
Step 3. Maintain compliance
Once you obtain the necessary Connecticut business licenses, you must maintain compliance. Eligibility varies by license type. Most licenses have a periodic renewal period that must be observed. Failure to renew your license may subject you to fines and fees.
Businesses that sell taxable goods or services in Connecticut must comply with their tax obligations, such as withholding and paying taxes regularly. Businesses operating in the food service sector may also be subject to health and safety inspections to determine compliance with sanitation standards. Companies working with hazardous materials must comply with state environmental regulations.
Eligibility is not limited to the state. Depending on your license, you may have to comply with federal and local regulations.