Connecticut at a glance
Partnership law
RUPA (revised)
LLC default split
Equal per-capita
Operating agreement
Not required
Community property
No
Formation cost
$120
Annual cost
$80 annual report fee
Connecticut adopted RULLCA, defaulting to equal per-capita distributions for LLCs. The state imposes both an income tax and a business entity tax on LLCs.
Default partnership rules in Connecticut
Connecticut adopted RUPA, which treats the partnership as a separate legal entity. Profits and losses are shared equally by default. Partners have equal management rights and owe fiduciary duties. A partner can bind the partnership in ordinary business matters. The partnership can own property and sue or be sued in its own name.
The most important takeaway: profits are split equally by default in Connecticut, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including Connecticut.
LLC defaults in Connecticut
Connecticut follows RULLCA, defaulting to equal per-capita distributions among members regardless of capital contributions. Members share equal management authority in a member-managed LLC. An operating agreement is not required but is recommended. Connecticut imposes a business entity tax of $250 on certain LLCs, in addition to the annual report fee.
Because Connecticut follows RULLCA with equal per-capita defaults, LLC members should pay special attention to their operating agreement. Without one, a member who contributed 90% of the capital gets the same share of profits as a member who contributed 10%. Use our equity calculator to determine a fair split based on actual contributions.
What happens when a partner leaves in Connecticut
Under Connecticut's RUPA, a partner's departure does not automatically dissolve the partnership. The partnership continues, and the departing partner is entitled to a buyout at fair value. The partnership must settle with the departing partner within a reasonable time. Wrongful dissociation may result in reduced buyout amounts.
A written partnership agreement should still address departure terms specifically, including how the buyout value is calculated, the payment timeline, and any non-compete provisions. While RUPA provides a default framework, the details of a buyout can still lead to disputes if not spelled out in advance. Understanding the concept of dead equity is important for managing these situations. Learn more about how dead equity affects businesses.
Marriage and business equity in Connecticut
Connecticut is an equitable distribution state. Business interests are divided equitably in a divorce, with the court considering the length of the marriage, contributions, and economic circumstances. Connecticut courts have broad discretion in dividing marital property and can consider all property, including assets owned before the marriage.
Even though Connecticut is not a community property state, marriage can still affect your business equity. In equitable distribution states, courts divide marital property based on what is fair, which may include business interests acquired or grown during the marriage. A clear equity agreement and proper documentation of ownership can help protect your business in the event of a divorce.
Formation and cost considerations in Connecticut
| Formation cost | $120 |
| Annual/recurring cost | $80 annual report fee |
| State income tax | Yes |
| Partnership law | RUPA (revised) — partnership continues after departure |
| LLC default distributions | Equal per-capita (RULLCA) — all members get equal share |
| Operating agreement | Not required (strongly recommended) |
Frequently asked questions
What are the ongoing costs for a Connecticut LLC?
Connecticut LLCs pay an $80 annual report fee. Some LLCs also owe a $250 business entity tax. Combined with the $120 formation fee, first-year costs are at least $200 before professional fees. Connecticut also imposes a state income tax on LLC profits.
How are partnership profits split in Connecticut?
Under RUPA, Connecticut partnerships split profits equally among partners by default, regardless of capital contributions. A written partnership agreement can establish any profit-sharing arrangement the partners choose.
Does Connecticut require an operating agreement?
No, Connecticut does not legally require an operating agreement. However, without one, the state's RULLCA default rules apply, splitting profits equally regardless of capital contributions. A written operating agreement is strongly recommended for any multi-member LLC.
Can a partner leave a Connecticut partnership without dissolving it?
Yes. Under RUPA, a partner's departure is a 'dissociation,' not a dissolution. The partnership continues, and the departing partner is bought out at fair value. The partnership only dissolves if the remaining partners decide not to continue or if other dissolution triggers occur.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Partnership laws in neighboring states
Disclaimer: This page provides general information about Connecticut partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in Connecticut for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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