Connecticut Regulation of LLC’s Rendering Professional Services

Professional Limited Liability Company Members Limited to Those Licensed in that Profession

Generally, a limited liability company, or “LLC”, may be formed in the State of Connecticut for the transacting of any business or promotion of any purpose which is lawful. Due to the exposure for liability of a partner in a partnership, many professionals choose to create a limited liability company when joining with other professionals to render professional services. However, Connecticut has placed additional regulations on the formation of an LLC that is to provide professional services.

A limited liability company may only be formed to render professional services if (1) each member of the limited liability company is licensed or otherwise authorized by law to render the professional service involved, (2) the LLC will render only one specific type of professional services and services ancillary to that purpose, but may not engage in any business other than the rendering of the professional service for which it was formed, and (3) the LLC can only render its professional services through members, managers, employees and agents that are licensed or otherwise authorized by law to do so.

What does the State of Connecticut consider to be a “professional service”? A professional service is one that requires a member of that profession that wishes to render those professional services to first obtain a license or legal authorization. Currently this list includes:

  • Dentists
  • Naturopaths
  • Chiropractors
  • Physicians and Surgeons
  • Doctors of Dentistry
  • Physical therapists
  • Occupational therapists
  • Podiatrists
  • Optometrists
  • Nurses
  • Nurse-midwives
  • Veterinarians
  • Pharmacists
  • Architects
  • Professional engineers
  • Landscape architects
  • Real estate brokers
  • Insurance producers
  • Certified public accountants and public accountants
  • Land surveyors
  • Psychologists
  • Attorneys-at-law
  • Licensed marital and family therapists
  • Licensed professional counselors
  • Licenses or certified alcohol and drug counselors and
  • Licensed clinical social workers

The law does allow certain professions to form an LLC together if (a) each member of the limited liability company is licensed or otherwise authorized by law to render any of the professional services involved, (b) the limited liability company will only render the types of services involved and those services ancillary to that profession, and (c) the LLC only renders it’s professional services through members, managers, employees and agents who are licensed or otherwise authorized by law to render the professional services involved. Psychology, marital and family therapy, social work, nursing and psychiatry professions can be combined. Medicine, surgery, occupational therapy, social work and alcohol and drug counseling professions can be combined. Medicine, surgery and chiropractic professions can be combined.

If a member of an LLC that renders a professional service loses their license or authorization to render that professional service, they are deemed to be disassociated from the LLC as an operation of law.

It should be noted that a limited liability company rendering professional services is liable up to the full value of its property for any negligent or wrongful acts or misconduct committed by any of its members, managers, agents or employees who are engaged in rendering professional services on behalf of the LLC. Members, managers, agents and employees engaged in rendering professional services on behalf of the LLC are only personally liable for the negligent and wrongful acts or misconduct committed by himself or herself or any person directly under his or her supervision. However, as is the entire point with forming limited liability companies for rendering professional services, individual members are only responsible for the liabilities of the LLC to the extent of their interest in the LLC, unless it is their wrongful conduct that led to the liability.

If you are looking to form an LLC for the purpose of rendering a professional service, you will need the help of an experienced business attorney. Forming an illegal LLC or failing to think through the business organization process can create civil and potentially criminal liabilities for its members, cost the members a lot of money, and eventually lead to the downfall of the organization. The regulations discussed in this article are only some of the regulations imposed on professional services by the State of Connecticut, and every profession will have its own specific regulations. The Law Office of Eugene Glouzgal offers a range of business services including LLC formation. Contact us today for a free consultation by phone at 203-794-6691, by e-mail at Glouzgal@CTAttorney.us or by using our interactive messaging and scheduling assistant.

Which Services Are Subject to Sales Tax in Connecticut?

Taxable Services in the State of Connecticut

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Do I need to charge sales tax for my services?

One of the obligations when setting up a new business is registering your business with the State of Connecticut Department of Revenue Services. Business owners will then need to remit tax payments to the State through the online portal. The two most common taxes that business owners are responsible for remitting are 1) the entity tax and 2) quarterly sales tax. It is common knowledge that any business that sells goods (for example books, cars, clothing, etc.) needs to charge sales tax. What about businesses that offer services? What about Doctors, Repairmen, house keepers and dog walkers? Below is a list of taxable services in the State of Connecticut which should help business owners answer the common question: “Do I need to charge sales tax for my services?”

Your business must register for a Sales and Use Tax permit and remit sales tax on a quarterly basis if your business provides:

  • Advertising;
  • Business analysis and consulting;
  • Cable and satellite services;
  • Computer and data processing;
  • Contractor services;
  • Cosmetic medical procedures;
  • credit information and reporting;
  • Employment agencies;
  • Extermination services;
  • Flight instruction and chartering;
  • Furniture repair;
  • Health and athletic club services;
  • Intrastate transportation services (taxis, limos, etc.)
  • Janitorial services;
  • Landscaping and horticultural services;
  • Lobbying or political consulting;
  • Locksmith services;
  • Maintenance services on real property;
  • Manicure, pedicure and other nail services;
  • “Miscellaneous personal services” including Babysitting bureaus, Bartering services for individuals, Birth certificate agencies, Buyers’ clubs, Car title and tag services, Checkroom concessions or services, Coin-operated service machines, Comfort station operations, Consumer buying services, Dating services, Debt counseling to individuals, Depilatory salons, hair removal or hair waxing, Diet workshops, Escort services, Genealogical investigation services, Hair weaving or replacement services, Locker rental, Marriage bureaus, Massage parlors, Porter services, Quilting for individuals, Rest room operations, Scalp treatment services, Shopping services for individuals, Steam baths, Tanning salons, Tattoo parlors, Turkish baths, and/or Wedding chapels;
  • Mooring and storage;
  • Motor vehicle repairs;
  • Motor vehicle towing and road side service;
  • Packing and crating;
  • Painting and lettering;
  • Parking;
  • Personnel training;
  • Pet grooming, boarding and obedience training;
  • Photographic studio services;
  • Piped-in music for businesses or professional establishments;
  • Prepaid telephone calling;
  • Private  investigation, protection, patrol, watchman and armored car services;
  • Radio or television repair;
  • Refuse removal on commercial or industrial property;
  • Renovation or repair to commercial or industrial property;
  • Repair of electrical or electronic devices;
  • Repair or maintenance of personal property, or sale of warranties/guarantees to repair;
  • Sales agent for the sale of tangible personal property;
  • “Services to industrial or commercial real property” including management, repair, renovation, and/or voluntary evaluation, prevention, treatment, containment or removal of hazardous waste or contaminants;
  • Sign painting and lettering;
  • Spa services;
  • Stenographic services;
  • Storage and mooring of non-commercial vessels;
  • Storage space;
  • Swimming pool cleaning and maintenance;
  • Telecommunications services;
  • Telephone answering services;
  • Warranty and service contracts for tangible personal property; or
  • Window cleaning.

The above list is based on information obtained from the CT DRS website as of the date of this article (March 7, 2014). The laws governing the taxable services in Connecticut are constantly changing. There are also additional regulations imposed by the State on many industries. Therefore, any new business should seek the assistance of an experienced Connecticut business attorney to make sure they are fully compliant with State Tax as well as all other regulations of that business.

If you are being audited by the DRS, or if DRS is threatening to close down your business, contact our law office for a Free Consultation. We can discuss your issues and advise you on how we can help you or your business moving forward. You can contact us by phone 1-203-740-1400 to discuss your options.