LLC vs. Sole Proprietorship in Connecticut
Connecticut's $120 LLC formation fee buys full liability protection. With the $80/year annual report, that's $200 first year for a legal barrier between your personal assets and business risks. For formation, see our LLC guide. For comparisons, see overview.
Quick Comparison
| Factor | CT LLC | Sole Proprietorship |
|---|---|---|
| Liability | Full protection | None |
| Formation | $120 | $0 |
| Annual | $80/year | $0 |
| CT income tax | 3%-6.99% (same) | 3%-6.99% (same) |
| Federal tax | Schedule C (same) | Schedule C (same) |
| BET | If >$200K receipts (same) | If >$200K receipts (same) |
| PET available | Yes | Yes (CT allows for sole owners!) |
| Sales tax | Same | Same |
The CT-Specific Advantage
Connecticut's PET is available even to single-member LLCs (treated as sole props federally). This means forming a CT LLC and electing PET gives you BOTH liability protection AND the SALT cap workaround — benefits a sole proprietorship cannot provide in other states.
FAQ
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Get StartedIs $200/first year worth it?
Yes. A single client dispute or liability claim can cost $5,000-$100,000+. $200 for legal separation is minimal insurance.