Does hiring createa tax presence in Connecticut.
Hiring a worker in Connecticut through Teamed does not create a taxable presence for you, because Teamed's local entity, not your business, carries the tax obligation.
At a glance
Connecticut tax exposure at a glance
Connecticut taxes corporations on income connected to the state at 7.5%, adds an additional surcharge of 10.0% for many corporations, and charges a flat minimum franchise tax of $250 regardless of profit. Registering your own LLC costs $120 through the Secretary of the State, on top of those ongoing tax obligations.
- Corporate income tax
- 7.5%
- Additional surcharge
- 10.0%
- Minimum franchise tax
- $250
- Franchise tax basis
- flat
- Formation / registration fee
- $120
Nexus basics
What creates a taxable presence in Connecticut
A permanent establishment risk shows up the moment your business has an ongoing footprint in a state, not just when you file paperwork on purpose. Employees working physically in Connecticut, a local office, or sustained economic activity connected to the state can all count as that footprint.
Once that footprint exists, Connecticut generally expects a corporation with income connected to the state to register and file, whether or not you intended to set up shop there. That is the exposure companies usually want to understand before they hire their first person in the state.
The corporate tax mechanics
How Connecticut taxes an entity once you have one
Once a company is registered or otherwise doing business in Connecticut, income connected to the state is taxed at 7.5%. Connecticut also layers an additional surcharge of 10.0% on top of that for many corporations, which meaningfully raises the effective rate on top of the base tax.
Even in a year with no profit, Connecticut applies a flat minimum franchise tax of $250 to registered corporations. That flat floor means the cost of carrying an entity in the state does not disappear just because business is slow.
Setting up your own entity
The cost of forming an entity if you want to hire directly
If you decide to register your own LLC or corporation in Connecticut rather than use an employer of record, the Secretary of the State charges a $120 filing fee to get that entity on the books. That fee is separate from, and in addition to, the ongoing corporate income tax, surcharge, and minimum franchise tax described above.
Those combined obligations are the real cost of a Connecticut entity: not just the one-time filing, but the annual tax exposure that keeps running as long as the entity exists, whether or not you are actively using it.
GEMO
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed builds and hands over a real entity once you outgrow the EOR model, across 100+ countries. We do the incorporation work, migrate your Connecticut employees onto your new entity's payroll, and hand you a functioning, compliant setup rather than a shell you have to finish yourself.
Before you commit
Sometimes an employer of record is the better fit
For a small or still-changing headcount in Connecticut, or while you are testing whether the market is worth a long-term commitment, an employer of record is often the more sensible answer, not a compromise. Talk to a member of the team about your specific plans, or run the numbers yourself in the crossover calculator before you commit to the ongoing tax exposure of your own entity.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local salaries and employer costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it.
For Connecticut specifically, that means Teamed can absorb the corporate income tax, the surcharge, and the minimum franchise tax exposure while you are small, then hand you a clean, already-compliant entity once your headcount and salary levels justify carrying those costs directly.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Connecticut tax presence questions
Does using an EOR in Connecticut avoid corporate income tax entirely?
Because Teamed's local entity is the employer of record, it carries any Connecticut corporate income tax, surcharge, and minimum franchise tax exposure, not your company. Your business does not need to register or file in Connecticut for that employee.
What is the minimum franchise tax in Connecticut?
Connecticut applies a flat minimum franchise tax of $250 to registered corporations, due regardless of whether the entity turned a profit that year.
Is there an additional surcharge on top of the corporate income tax?
Yes. Connecticut layers an additional surcharge of 10.0% on top of the 7.5% corporate income tax for many corporations doing business in the state.
How much does it cost to register an entity in Connecticut?
Registering a domestic LLC with the Connecticut Secretary of the State carries a $120 filing fee, separate from the ongoing corporate income tax, surcharge, and minimum franchise tax.
When does it make sense to form my own entity instead of using an EOR?
It depends on your headcount, salary levels, and how long you plan to stay in Connecticut. Use the crossover calculator or talk to a member of the team to weigh that against the tax costs described above.
Where these figures come from
Sources
These figures come from the Connecticut Department of Revenue Services (CT-1120 corporation business tax general instructions) and the Connecticut Secretary of the State (domestic LLC forms and fees).
Looking for a job in Permanent Establishment Risk yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.