Setting Up a Business Partnership in Connecticut

In Connecticut, you can form several types of partnerships: 1) General Partnership (GP), where all partners share equally in management and liability; 2) Limited Partnership (LP), which has both general partners who manage the business and limited partners who are primarily investors; 3) Limited Liability Partnership (LLP), which provides liability protection for all partners; and 4) Limited Liability Limited Partnership (LLLP), which combines features of LPs and LLPs. Each structure offers different levels of liability protection and management flexibility.

It depends on the type of partnership. For a General Partnership, no filing is required with the state, though it's formed automatically when two or more people operate a business for profit. However, Limited Partnerships (LPs), Limited Liability Partnerships (LLPs), and Limited Liability Limited Partnerships (LLLPs) must file a Certificate of Limited Partnership or Certificate of Registration with the Connecticut Secretary of State and pay the required filing fee. All partnerships should also register their business name by filing a Trade Name Certificate with the town clerk where the business is located.

While Connecticut law does not legally require a written partnership agreement, operating without one is extremely risky. A comprehensive written partnership agreement is strongly recommended as it establishes the rights, responsibilities, profit-sharing arrangements, decision-making processes, and procedures for resolving disputes or dissolving the partnership. Without a written agreement, your partnership will be governed by default provisions in the Connecticut Uniform Partnership Act, which may not align with your intentions or business needs.

Partnerships in Connecticut are generally considered 'pass-through' entities for tax purposes. This means the partnership itself doesn't pay income taxes; instead, profits and losses 'pass through' to the individual partners, who report them on their personal tax returns. Partnerships must file an informational return with both the IRS (Form 1065) and Connecticut (Form CT-1065/CT-1120SI). Additionally, partnerships in Connecticut may be subject to the Business Entity Tax of $250, due every other year. Partners may also need to make quarterly estimated tax payments on their share of partnership income.

In Connecticut, liability protection varies by partnership type. General Partnerships offer no liability protection—each partner is personally liable for all partnership debts and obligations. Limited Partnerships protect limited partners from personal liability (though general partners remain fully liable). Limited Liability Partnerships (LLPs) provide all partners protection from personal liability for partnership debts and for negligence of other partners, though partners remain liable for their own negligence. Limited Liability Limited Partnerships (LLLPs) combine these features, protecting limited partners completely and offering general partners protection from other partners' negligence.

In Connecticut, you must register your partnership name by filing a Trade Name Certificate (also called a DBA or 'doing business as') with the town clerk in each town where your business operates. This is required if you're operating under any name other than the legal names of the partners. Before registering, search the Secretary of State's business registry and local town records to ensure your chosen name is available. For LPs, LLPs, and LLLPs, your business name will also be registered when you file your formation documents with the Secretary of State.

Connecticut partnerships may need various permits and licenses depending on the nature of the business. These might include: 1) A Sales and Use Tax Permit from the Department of Revenue Services if selling taxable goods or services; 2) Professional licenses for certain occupations (e.g., attorneys, accountants, contractors) from relevant state boards; 3) Local business licenses or permits from your city/town; 4) Health department permits for food-related businesses; 5) Liquor licenses if applicable; and 6) Environmental permits for certain activities. Check with the Connecticut Department of Consumer Protection, your local town hall, and relevant industry regulatory bodies.

To dissolve a partnership in Connecticut, follow these steps: 1) Review your partnership agreement for dissolution procedures; 2) Hold a partnership meeting and document the decision to dissolve; 3) File a Certificate of Cancellation with the Secretary of State if you have an LP, LLP, or LLLP; 4) Notify all creditors, clients, and business associates; 5) Cancel business licenses, permits, and registrations; 6) File final tax returns; 7) Close business accounts; and 8) Distribute remaining assets according to ownership interests or partnership agreement terms. Consider consulting with an attorney to ensure proper compliance with all legal requirements.

Connecticut partnerships must maintain ongoing compliance with several requirements: 1) File annual tax returns (federal Form 1065 and Connecticut Form CT-1065/CT-1120SI); 2) Pay the $250 Connecticut Business Entity Tax every other year; 3) Maintain accurate financial records and partnership books; 4) For LPs, LLPs, and LLLPs, file Annual Reports with the Secretary of State and pay the required fee; 5) Renew any business licenses or permits as needed; 6) Update registration information if there are changes to the partnership structure, name, or address; and 7) Comply with any industry-specific regulations applicable to your business.