The rules where you work $17
A first 30 days checklist, everyday forms, licenses, workers’ comp and taxes for Connecticut, with a yearly calendar. Instant PDF download.
Buy the packet: $17Digital product, all sales final. Informational only, not legal, financial, tax or business advice.
What Connecticut expects from a new trade business
Connecticut registers anyone doing home improvement work, and a home improvement contract missing the required terms generally can't be enforced against the homeowner. Sales tax here cuts unusually: the same plumbing or painting work can be taxed on an office building and not on someone's own house. Lien notices run on a 90-day clock.
Register for home improvement, license for the trades
Home improvement contractors register with the Department of Consumer Protection. It costs $120 plus $100 a year to the guaranty fund, takes at least $20,000 in liability insurance, and expires every March 31. The rules start at jobs over $200, and a home means up to six units, rentals included. You're exempt only if all your home improvement contracts total $1,000 or less in any 12 months. That counts all customers together, so a side business passes it fast. New home building falls under a separate chapter, and commercial work isn't home improvement. Salespeople register too. Your number goes in every ad, and every required permit comes before you start.
The state licenses the trades: electrical, plumbing, and heating and cooling, among others, through occupational licensing.
A home improvement contract isn't valid or enforceable against the owner unless it's in writing, signed by both, holds the entire agreement and the date, and shows your name, address, registration number, cancellation notice, and start and completion dates. A registered contractor or salesperson has to make it, and it must list related contractor companies from the last five years. Every one counts as a home solicitation sale, so the owner can cancel until midnight of the third business day. A court may still allow reasonable value in limited cases.
Violating the act's prohibited acts is a class B misdemeanor. Failing to refund within ten days of a proper written request is class A when the price is over $10,000. A construction attorney can check your contract.
Source: Conn. Gen. Stat. ch. 400, Home Improvement Act · Conn. Gen. Stat. ch. 393, occupational licensing · Conn. Gen. Stat. ch. 740, home solicitation sales
Who to call: an attorney near you
Comp: one employee, and the job site can make their workers yours
An employer in Connecticut is anyone using one or more employees for pay. That includes LLCs and corporations.
Your own coverage depends on your setup. A sole proprietor is outside the act unless they choose in by notifying the commission's chairperson in writing, and is then treated as an employer who insures their full liability. A partner is in unless the partnership elects out. A corporate officer can opt out by written notice. If you're an LLC member, ask.
If you hire a contractor or sub for work that's part of your trade, on premises you control, you can owe comp as if you'd hired their workers directly. Get certificates before they start.
An employer found without coverage faces a civil penalty of at least $500 per employee (that minimum is capped at $5,000) and up to $50,000, plus $100 a day after the finding. Knowingly and willfully going without is a class D felony for an owner, partner, LLC principal or officer. So is knowingly passing off employees as independent contractors, or giving the carrier false employee counts to pay a lower premium, which can also bring a stop work order. An insurance agent who writes contractors can set this up right.
Source: Conn. Gen. Stat. ch. 568, Workers' Compensation Act (31-275, 31-288, 31-291)
Who to call: an insurance agent near you
Getting paid: everything keys off 90 days
Connecticut's mechanic's lien steps, in order. Your claim has to be more than $10.
- Original contractor's affidavit: to get notices of intent, an original contractor lodges one with the town clerk within 15 days of starting. Skipping it doesn't hurt anyone's right to a lien.
- Notice of intent: unless you're the original contractor, or a sub whose written contract was assented to in writing by the other party to the original contract, give written notice to the owner and the original contractor. Do it after you start and no later than 90 days after you stop. Send it early. The owner gets credit for good-faith payments to the original contractor made before getting your notice.
- Certificate of lien: lodge it with the town clerk within 90 days after you stop working or furnishing materials. It's sworn, and it states the premises, the amount, who it's against and the date you started.
- Serve the owner a true and attested copy within 30 days of lodging it.
- Sue to foreclose and record a notice of lis pendens within one year of recording the lien. If the owner applied to discharge or reduce it, you get 60 days after the final outcome, if that's later. Otherwise the lien ends.
The town clerk handles these, not the county. Service has its own formal requirements, so a construction attorney can set up your process.
Source: Conn. Gen. Stat. ch. 847, liens (49-34, 49-35, 49-39)
Who to call: an attorney near you
Sales tax: it depends on whose building it is
Connecticut treats contractors as both a consumer and a retailer. Every contractor, subs included, needs a Sales and Use Tax Permit before the first job, even if the work isn't taxable. You generally pay sales or use tax on materials, supplies and equipment you use on the job, then charge and send in tax on your taxable services. The state rate in the Department of Revenue Services guide is 6.35%.
Which services are taxable depends on the property. Work like carpentry, electrical, plumbing, painting, roofing and siding is generally taxable on existing commercial, industrial or income-producing property. It isn't taxable on an owner-occupied home or new construction. Owner-occupied means one to three units used only for living, where the owner lives there or will when you finish. A rental house generally counts as income-producing.
A few services, like landscaping, maintenance and snow plowing, are taxable everywhere. A CPA who works with contractors can sort your jobs and your invoices.
Source: Connecticut DRS, IP 2018(2) Building Contractors' Guide to Sales and Use Taxes · Connecticut DRS, Ruling 2017-1
Who to call: a CPA or tax pro near you
LLC: $120 to form, $80 a year
Forming an LLC with the Connecticut Secretary of the State costs $120. The annual report is $80, filed January 1 through March 31. Keep it current or you risk administrative dissolution. Connecticut has no separate franchise tax on an LLC, though there's an elective pass-through entity tax.
LLC profit normally lands on your personal return, in Connecticut's graduated income tax, from 2% to a top rate of 6.99%. Whether an S-corp election or the pass-through election helps is a numbers question. Take your real figures to a CPA who works with contractors.
Source: Connecticut Secretary of the State, business services · Connecticut DRS, 2025 income tax tables · CT Business, LLC forms and fees
Who to call: a CPA or tax pro near you
Education, not legal or tax advice. Rules change. Confirm anything here with a licensed pro in Connecticut before you rely on it. Last updated November 2026.