Articles of Organization

After your Connecticut LLC is named, you must file articles of organization with the Commercial Recording Division of the LLC Filing Office (part of the Connecticut Secretary of State's office) along with a $60 filing fee. The articles must be signed by one or more authorized persons as laid out in the LLC operating agreement. Organizers may be either natural persons or legal entities, and there must be at least one organizer.

The articles of organization for your new Connecticut LLC must include the following information:

• The LLC's name
• The name and street address of the LLC's resident agent
• The street address of the registered agent
• The duration of the LLC, either perpetual or for a set amount of time

The articles may also include other items that the members wish to include (as long as they don't conflict with state law), even if they are also included in the operating agreement.

Your LLC is officially "organized" once the signed original of the articles of organization is received by the Secretary of State's office, and it is determined to be in compliance with state requirements.

Registered Agent and Office

All Connecticut LLCs are required to have a registered in-state agent. This agent is the person or office designated to receive official state correspondence, including notice if the LLC is served with a lawsuit.

A registered agent in Connecticut may be an individual state resident; a domestic corporation, limited partnership, LLC, or statutory trust; or a foreign corporation, limited partnership, or LLC authorized to do business in the State of Connecticut.

The registered office may be (but is not required to be) the LLC's place of business. The registered agent must have a business office identical with the registered office, which should generally be open during normal business hours.

Operating Agreement

Almost as critical for the LLC as the articles of organization is the operating agreement. There isn't an official state requirement to have an operating agreement, but it's a vital internal document that specifies how your LLC will operate on both the day-to-day and strategic levels.

The operating agreement should list the LLC's members, specify how much each member has invested, explain how profits will be divided, and state how much proportional "weight" each member has when issues are voted upon-this is known as "members in interest." Unless the articles of organization or the operating agreement say otherwise, voting power in a member-managed LLC is vested in each member according to his or her current capital account balance with the LLC.

The operating agreement may also set forth meeting requirements such as the amount of required notice, what constitutes a quorum, voting rules, and so on, but it doesn't have to. Normally, however, the operating agreement does list requirements for the LLC that are already listed in state law and regulations. It can also include such items as restrictions or constraints on the power of the members to adopt, amend, or repeal the operating agreement.

If there is more than one member, the operating agreement must initially be approved unanimously in writing by the members. Unless otherwise stated, subsequent changes to the operating agreement must be approved by two-thirds of the members in interest.

Membership in the LLC

Unless specified otherwise in the operating agreement, managers are elected (and removed) by majority vote and serve for an indefinite term.

An LLC is required to have at least one member. Members may become a member of or acquire an interest in the LLC when it is first started, or with the written consent of a majority in interest of the members.

To join the LLC, the prospective member usually needs to make some kind of contribution-for example, pay cash or transfer property to the LLC-or undertake a binding obligation to do so.

Unless prohibited by the operating agreement, a member can withdraw from the LLC at any time upon 30 days' notice to the other members. If the withdrawal is in violation of the operating agreement, the member can be held personally liable for financial damages caused by their withdrawal, including the cost of paying someone else to perform services that were expected to be completed by the withdrawing member.

Unless otherwise provided in the articles or operating agreement, a member who resigns is not entitled to be paid for his or her interest, but only has a right to receive what LLC profits and other distributions that would be paid to an assignee of an economic interest in the LLC (such as ongoing profits and capital distributions on liquidation of the LLC).

Ongoing Requirements

Compared to other states, Connecticut has minimal reporting and disclosure requirements. Each LLC must keep the following records available at its office for review or inspection:

• Names and addresses of all members and managers
• A certified copy of the articles of organization and any amendments
• Executed copies of any powers of attorney related to any certificate or amendment
• Operating agreement with any amendments
• A copy of the LLC's federal, state, and local income tax returns for each year
• Status of the LLC's business and financial situation, including cash on hand
• A description and statement of the agreed value of the property or services contributed by each member, the amount that each member has agreed to contribute in the future, and the date on which each became a member

Also, it's a very good idea to keep on file and available the minutes of the meeting of the board and any committees of the owners or members.

Dissolution

An LLC is dissolved when any one of the following events occurs:

• Event(s) specified in the certificate of formation or operating agreement
• A unanimous member vote to dissolve (unless a certain percentage or proportion is stated in the certificate of formation or operating agreement)
• An event that makes it unlawful for the LLC to continue
• The LLC's duration as specified in the articles of organization or the operating agreement expires (if the LLC is not perpetual)
• A court order ordering dissolution

If the sole remaining member of the LLC resigns or withdraws, the LLC will automatically dissolve unless, within 90 days, the personal representative of the last member agrees to continue the LLC and consents to serve as an LLC member or appoints another person in his or her place.

Taxes

All LLCs and corporations formed in the State of Connecticut are required to file an annual report and to pay a flat annual franchise tax of $250. The annual report filing fee is $25. Taxes and annual reports are to be received by March 1st of each year. The minimum tax is $75, with a maximum tax of $165,000.

Articles of Incorporation

Connecticut state laws require new corporations file articles of incorporation with the Secretary of State, which must include the following:

• At least one incorporator must sign and file the articles of incorporation.
• There must be at least one incorporator, either a natural person of legal age or a legal entity.
• The number of shares that the corporation is authorized to issue

Connecticut does not require a forming corporation to specify a par value for their shares. The maximum number of shares that can be authorized for the lowest filing fee of $150 is 20,000. Most incorporators authorize common shares with equal voting, dividend, and liquidation rights and no special restrictions. If you wish to authorize one or more special classes of shares, you must specify the name of each class and the number of shares per class. If you do specify different classes in this section, the total number of shares of each class listed should equal the total number of authorized shares.

A Connecticut corporation may be formed for any lawful business activity, except that of a bank and trust company, savings bank, or savings and loan association. The actual purpose is not required to be listed in the certificate.

The registered agent must also sign the articles of incorporation, indicating acceptance of the appointment.

Connecticut also permits optional provisions to be included in the certificate of incorporation for corporations wishing to specify additional criteria, including:

• A corporate purpose
• Names and addresses of initial directors
• Regulations regarding the powers or authority of the corporation, board of directors, or shareholders
• Shareholder liability for corporate debts under certain circumstances

The filing fee is $50 plus a minimum $150 franchise tax, payable to the "Secretary of State." An Organization and First Report form must be filed within 30 days of the corporation's organizational meeting; the filing fee for this report is $75.

Registered Agent and Office

Connecticut corporations must have a registered in-state agent-a natural person who is a Connecticut resident-who is designated to receive official correspondence from the state. The registered agent must have a business office that is the same as the registered office.

Bylaws

A corporation should keep its bylaws available at its principal executive office, but it is not required to file them with the state. The incorporators or board of directors should adopt the corporation's bylaws at their first meeting, insuring that there is no conflict with the articles of incorporation or state law. They should also keep the bylaws updated as time goes on.

Bylaws set forth the corporation's basic operating principles from both the managerial and legal perspectives, and should include, as a minimum:

• The authority of directors, how many there are, and how long they serve
• Officers' duties and responsibilities and how long they serve
• How major decisions are reached, with or without meetings
• How, when, and where shareholders' and directors' meetings are held
• How the corporation's stock is issued
• Requirements for publishing annual financial information to shareholders

Directors and Officers

The board of directors is responsible for making the corporation's major decisions. There must be at least one director. The number of directors should be specified in the certificate of incorporation, the bylaws, or both. If the certificate of incorporation establishes the number of directors, it can only be changed by amending the certificate.

Directors are elected at the first annual shareholders' meeting and at each annual meeting thereafter, unless their terms are staggered.

The officers of a corporation oversee the day-to-day operations of the organization and carry out the strategic decisions made by the board of directors. Their titles and duties are stated in the bylaws and/or specified by the board, but they must be organized so as to be able to sign instruments and stock certificates that comply with state law. One of the officers will have the duty of recording the proceedings of shareholders' and directors' meetings. An officer may hold more than one office simultaneously unless the certificate or bylaws state otherwise.

Required Reports

Connecticut corporations must file an annual or biannual report with the Connecticut Secretary of State. The first report must be filed within 30 days after its organizational meeting. This report must include the corporation's name, its principal office, and the names and addresses of the directors and officers.

A corporation shall mail required annual financial statements to each shareholder within 120 days after the close of each fiscal year. If a shareholder requests it, a corporation must send its most recent annual report and financial statement.

Taxes

Corporations pay a corporate business tax for being able to conduct business in a corporate capacity in Connecticut. Corporations can calculate their tax under two alternative methods-tax measured by net income and the minimum tax-and pay the higher of the two. If the tax measured by net income is less than $250, the corporation pays the minimum tax, which is never less than $250.