Mission-driven businesses balancing profit with social/environmental impact
Nonprofit Corporation
Conn. Gen. Stat. § 33-1000 et seq.
Charitable, educational, religious organizations (501(c)(3) eligible)
Close Corporation
Overlay on stock corp
Small, closely-held businesses with relaxed governance (max 35 shareholders)
When to Choose Connecticut Corporation
✅ Form in Connecticut If:
Your business operates primarily in Connecticut
You're a Connecticut resident starting a company
You're a licensed professional needing a professional corporation
You want to avoid foreign qualification complexity/costs
You need straightforward corporate governance under modern statute
🤔 Consider Delaware If:
Raising VC funding: VCs typically require Delaware C-Corp
Planning IPO: Delaware overwhelmingly preferred for public companies
Complex cap table: Multiple share classes, preferred stock, anti-dilution provisions
Want Court of Chancery: Specialized business court with 200+ years of precedent
Connecticut vs Delaware vs Other States
Factor
Connecticut
Delaware
Wyoming
Formation Fee
$250
$89
$100
Annual Report
$150/year
$300/year (franchise tax)
$60/year
Year 1 Total
$400
$389
$160
Ongoing Annual
$150
$300+
$60
VC Preference
Neutral
✅ Preferred
Not typical
*Connecticut amounts in this comparison represent the listed Secretary of the State formation and reporting fees. Applicable taxes, including Corporation Business Tax, are additional.
⚠️ Connecticut Corporation Costs Are Higher
Connecticut has higher formation and ongoing filing fees than many states:
Year 1: $400 ($250 incorporation + $150 initial report)
Years 2+: $150/year for annual reports
These amounts exclude applicable state taxes.
This may be worth it if: You're doing business in Connecticut. Connecticut tax and filing obligations may arise from your activities regardless of where you incorporate, depending on nexus, entity classification, and applicable exemptions. Incorporating in Connecticut may also avoid the separate $385 foreign stock corporation qualification filing fee that otherwise could apply.
🔑 Key Concept: S-Corp is a Tax Election, Not an Entity Type
You form a Connecticut corporation under state law, then elect S-corporation tax treatment with the IRS using Form 2553. The entity is still a Connecticut stock corporation; "S-corp" only changes federal/state taxation.
C-Corporation (Default)
A C-corporation is taxed under Subchapter C of the Internal Revenue Code. This is the default status when you incorporate.
Taxation
Federal: 21% flat corporate tax on net income
Connecticut: 7.5% corporation tax on net income (for corps with $100M+ income, rate increases)
Double taxation: Corporation pays tax, then shareholders pay tax on dividends
An S-corporation elects pass-through taxation under Subchapter S by filing IRS Form 2553.
Taxation
Federal: No corporate tax; profits pass through to shareholders' personal returns
Connecticut: S-corps are not subject to Corporation Business Tax. They must file Form CT-1065/CT-1120SI when doing business in Connecticut or receiving Connecticut-source income. The 6.99% Pass-Through Entity Tax is optional, elected annually, and irrevocable for the elected tax year.
Avoid double taxation: S-corp income generally passes through to shareholders for federal and Connecticut income tax purposes rather than being taxed at the corporate level. Connecticut composite income tax payments and an optional Pass-Through Entity Tax election may still apply.
Self-employment tax savings: Owners can split income between salary (FICA subject) and distributions (not FICA subject)
S-Corp Eligibility Requirements
100 shareholders or fewer
Only U.S. citizens/residents as shareholders (no foreign owners)
One class of stock (voting/non-voting OK; different distribution rights NOT OK)
Not a financial institution, insurance company, or DISC
✅ When to Choose S-Corp
Profitable small/medium business (want to avoid double taxation)
Save on self-employment tax (FICA)
All owners are U.S. individuals
No plans to raise VC funding or go public
Side-by-Side Comparison
Factor
C-Corporation
S-Corporation
Federal Tax
21% corporate + dividend tax
Pass-through (taxed at shareholder level)
CT Tax
7.5% on net income
No Corporation Business Tax; optional 6.99% Pass-Through Entity Tax
Self-Employment Tax
N/A (salaries subject to FICA)
Salary subject to FICA; distributions NOT
Ownership Limits
Unlimited shareholders, any type
Max 100, U.S. individuals only
Share Classes
Multiple classes allowed
One class only
VC Funding
✅ Required
❌ VCs won't invest
Best For
Startups, VC-backed, IPO plans, complex cap tables
Profitable small businesses, family-owned, professional practices
Connecticut Professional Corporations (PCs)
A Professional Corporation (PC) is a corporation organized under Conn. Gen. Stat. § 33-182 et seq. to provide professional services requiring a state license.
Eligible Professions
Connecticut allows the following licensed professionals to form PCs:
Attorneys (lawyers)
Physicians & surgeons
Dentists
Chiropractors
Podiatrists
Optometrists
Psychologists
Veterinarians
Certified Public Accountants (CPAs)
Licensed Professional Engineers
Architects
Land Surveyors
PC Requirements
All shareholders must be licensed in the profession the PC practices
All officers/directors must be shareholders (thus, also licensed)
Corporate name must include: "Professional Corporation", "P.C.", "Professional Association", or "P.A."
State board approval: Some professions require pre-approval from licensing board before formation
Formation Fee & Annual Costs
Item
Cost
Certificate of Incorporation (PC)
$250
Annual Report
$150/year
Corporation Business Tax
Generally $250 minimum for corporations subject to that tax; separate from the abolished Business Entity Tax.
A Benefit Corporation is a for-profit corporation that elects benefit status under Conn. Gen. Stat. § 33-1350 et seq. to pursue general public benefit alongside profit.
Key Features
Dual purpose: Create shareholder value AND general public benefit
Annual benefit report: Report on benefit performance against third-party standard
Mission protection: Benefit purpose locked in Articles of Incorporation
Formation & Annual Costs
Same as standard corporations:
Formation: $250
Annual Report: $150
Corporation Business Tax: Separate from filing fees; generally $250 minimum for corporations subject to the tax
Benefit Report: Required (filed with annual report, no separate fee)
How to Form a Connecticut Corporation
1Choose a Corporate Name
Name must:
Include "Corporation", "Incorporated", "Company", "Limited" or abbreviation (Corp., Inc., Co., Ltd.)
Be distinguishable from existing CT business names
Not contain restricted words (bank, insurance, trust) without approval
2Appoint Directors
Connecticut requires at least one director. Directors don't need to be CT residents or shareholders.
3File Certificate of Incorporation
File with the Connecticut Secretary of the State online through Business.CT.gov.
Required Information
Corporate name
Number of authorized shares (must specify par value or no par value)
Registered agent name and CT address
Incorporator name and address
Initial directors (names and addresses)
Corporate purpose (can be "any lawful purpose")
Filing Fee
Stock corporations: $250
Nonstock/nonprofit corporations: $50
For Connecticut stock corporations, you must also file an Organization and First Report within 90 days after filing the Certificate of Incorporation. This separate $150 filing records the corporation's addresses, officers, and directors. You can file it online through Business.CT.gov.
4Create Bylaws
Bylaws govern internal operations. Must include:
Board size, election, terms, removal
Officer roles and duties
Shareholder meeting procedures
Stock issuance and transfer restrictions
Amendment procedures
5Hold Organizational Meeting
Adopt bylaws
Elect officers
Authorize stock issuance
Adopt corporate seal (optional)
Authorize opening of bank account
Adopt fiscal year
6Issue Stock
Issue stock certificates to initial shareholders documenting their ownership.
7Obtain EIN
Apply for Employer Identification Number (EIN) at irs.gov (free, immediate).
8Register with Connecticut DRS
Register for:
Corporation Business Tax, if applicable (7.5% net-income-base rate, subject to an alternative capital-base calculation and generally a $250 minimum)
Withholding tax (if employees)
Sales tax (if selling goods)
Register your business with the Connecticut Department of Revenue Services online through myconneCT.
Connecticut Corporation Annual Compliance
Requirement
Deadline
Fee
Organization and First Report (stock corporations)
Within 90 days after filing the Certificate of Incorporation
$150
Annual Report
Anniversary month of incorporation
$150
Corporation Business Tax Return (Form CT-1120, if applicable)
Generally May 15 for calendar-year taxpayers
Tax varies; generally $250 minimum
Federal Corporation Income Tax Return (Form 1120)
April 15 (calendar-year C corporations)
Varies (tax due)
Connecticut Corporation Taxes & Fees
Connecticut Corporation Business Tax
Connecticut corporations subject to the Corporation Business Tax generally calculate their liability using a 7.5% net-income-base tax and an alternative capital-base tax. The applicable tax is determined under the greater-of calculation and generally has a $250 minimum.
This is a separate tax from Connecticut's former Business Entity Tax, which has been abolished.
Connecticut abolished its former Business Entity Tax under Public Act 19-117. The former $250 BET and its separate filing requirement no longer apply to current tax periods. Connecticut's Corporation Business Tax is different and remains in effect. Corporations subject to that tax generally face a $250 minimum, with liability calculated under the applicable net-income-base or capital-base method. For a domestic stock corporation, the $250 incorporation fee and $150 initial report fee total $400 in initial state filing fees; subsequent annual-report fees are $150. Applicable Corporation Business Tax and other taxes are separate from those filing fees.
Corporation Business Tax (minimum, if applicable)$250
Minimum Annual State Cost (stock corporations subject to Corporation Business Tax):Generally at least $400 ($150 annual-report fee plus a $250 minimum Corporation Business Tax).
The actual Corporation Business Tax may be higher. It is calculated under the applicable net-income-base or capital-base method, rather than as a separate $250 charge added to 7.5% of profits.
Beneficial Ownership Information (BOI) Applicability
Connecticut corporations formed in the United States are exempt from FinCEN BOI reporting under current rules.
When BOI Reporting May Apply
Certain entities formed under foreign law and registered to do business in Connecticut may be reporting companies under the current FinCEN rule.
U.S.-formed corporations do not file BOI reports.
Certain foreign-formed entities registered to do business in Connecticut may still have BOI reporting obligations.
Filing Deadline
U.S.-formed corporations: exempt from BOI reporting.
Foreign-formed entities registered to do business in Connecticut: BOI reporting may apply unless an exemption applies.
New foreign reporting companies: initial BOI reports are generally due within 30 calendar days after registration becomes effective.
If BOI reporting applies, file through FinCEN's BOI E-Filing System.
Connecticut Corporation Formation Services
As an attorney licensed in California and Washington, I handle Connecticut formations and remain responsible for the work; filings follow Connecticut's procedures. I offer comprehensive corporation formation and ongoing legal support.
⚖️ How I work
For an accepted engagement:
I am admitted in California and Washington. I communicate with clients by email within the agreed scope.
C-corp vs S-corp tax analysis and election assistance