Connecticut LLC for Consultants — Services Mostly Exempt

Most professional consulting services are exempt from Connecticut's 6.35% sales tax. Combined with the PET election for higher earners, consulting LLCs in Connecticut can be tax-efficient despite nominal rates. For formation, see our LLC guide. For industries, see overview.

Sales Tax Status for CT Consultants

Exempt (no collection needed):

• Management and strategy consulting
• Business advisory services
• Marketing consulting (advisory)
• HR consulting
• Financial advisory (non-investment)

Taxable at 1%:

• Computer and data processing services
• IT consulting (if providing "computer services")

Line is sometimes unclear: Connecticut's DRS distinguishes between "consulting ABOUT computers" (potentially exempt) and "providing computer services" (1% taxable). Get a ruling if your work is borderline.

PET + S-Corp for CT Consultants

High-earning consultants ($150K+) should consider:

1. S-corp election: saves SE tax on distributions
2. PET election: makes CT tax fully deductible federally
3. Combined savings: $10,000-$25,000+/year

Connecticut's insurance and financial services consulting community (Hartford, Fairfield County) widely uses this structure.

FAQ

Do I charge sales tax on consulting?

For pure advisory/consulting services: no. For computer/data processing: yes (1%). For tangible deliverables (printed reports, physical media): yes (6.35%).