Vermont — land of artisanal cheese, Bernie’s mittens, and now, potentially, your new Vermont LLC. If you think choosing the perfect local IPA is a challenge, try deciphering the labyrinthine paths of Vermont’s LLC laws. It’s akin to navigating a Vermont backroad in mud season: confusing, messy, and a bit stressful.
But don’t pack up your flannels and maple syrup just yet. We’re here to serve as your GPS through the Green Mountain State’s business formation terrain. You focus on crafting your future Ben & Jerry’s flavor or farm-to-table eatery, and we’ll handle the legalese and paper shuffling. Our guide will elucidate the quirks of starting an LLC in Vermont faster than you can say “Champlain Lake sunset.”
Besides this handy guide, our services are designed to assist budding entrepreneurs like you to not only start but also efficiently run and grow your Vermont limited liability company, ensuring it thrives like Vermont maple trees in spring.
To be clear, this guide is for those who aim to start a domestic LLC, that is, an LLC concocted right here in Vermont’s fertile business soil. If you’re starting a foreign LLC (one created in another state, a professional limited liability company (PLLC), or any other type of LLC, you’ll need a separate guide.
Once you’ve decided to create an LLC, Vermont has some basic filing rules. To be as prepared as possible to start a Vermont LLC, you’ll want to gather your basic business information to have on hand. But first, let’s get into the business formation steps required by the Vermont Department of State. We’ll discuss each one below.
Choose a unique name. To register a business in Vermont, you need to decide what to name your LLC. One of the most important parts of forming an LLC in VT is to choose a name that will describe your business and help you stand out from other businesses like it. Selecting a name for your LLC is also the first step required to register a business in VT.
When you start a Vermont LLC, the Secretary of State’s rules say you need to have a unique name. That means you’ll need to search all the other business names in Vermont to make sure the one you picked is different. Our VT business search page can help. Bear in mind that slight changes in wording (such as using different articles or abbreviations) are usually not enough to make a name distinguishable from another.
The Secretary of State also has a few rules about what needs to go into your business name. Those rules include:
You may want to review Vermont’s naming guidelines, since being well-prepared is the best way to start an LLC in Vermont.
The Vermont Secretary of State office doesn’t take trademarks into consideration when approving your business name, so checking to make sure your desired name isn’t trademarked at the state or federal level can some you from legal headaches later.
Searching the United States Patent and Trademark Office (USPTO) website to see whether your business name or logo is federally trademarked can help ensure that your desired business name is unique and eligible for a trademark.
It’s also a good idea to check the Vermont Department of State Business Services Division website to confirm there are no state trademarks similar to yours that have been registered with the State of Vermont. You can do this by conducting a search on the Vermont Secretary of State website.
It’s also wise to do extensive internet searches for your desired business name, including checking domain names, social media sites, and online phone directories.
As you search for available business names, check if relevant domain names are available for those business names. A website is an affordable marketing tool that can drive customers to your business. You want a domain that aligns with your LLC name, making the website easy for search engines to find. Check out our domain name registration and domain name search services for more information.
If you’ve come up with the perfect name but haven’t ironed out the details for filing your Articles of Organization, that’s okay. You probably want to know how to get an LLC name reserved. Filing online to reserve your chosen LLC Vermont name holds the name for 120 days for a fee.
If you plan to do business with a name other than the LLC’s legal registered name, you must register an assumed name with the Vermont Secretary of State. Your assumed name, also called a “DBA” or “doing business as” name, should be unique and distinguishable from other registered business names. However, it doesn’t need to include an identifying designator. Learn more on our Vermont DBA page.
Name your LLC
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Name a registered agent for your business. Next, you’ll need to choose a registered agent for your LLC in VT. A “registered agent” is someone who is authorized to receive legal notices and certain state correspondence on behalf of your business.
A Vermont registered agent can be an individual, a business, or a nonprofit with a physical street address in Vermont — no P.O. boxes are allowed. Vermont requires that all LLCs have a registered agent. You’ll need to identify them on the VT LLC form you file with the Secretary of State.
Having a registered agent is an important part of business compliance. If you decide to serve as your own registered agent instead of hiring a professional, you could encounter serious problems if the state or a process server can’t find you when it needs to reach you. Unfortunately, this happens more often than you think.
A non-professional agent’s absence or oversight can have serious consequences for your VT LLC. A registered agent’s failure to respond to the state’s requests or inquiries means that the state can dissolve your LLC and you’ll lose your limited liability protection. On a more basic level, you could also miss critical information, like notification of a lawsuit, and have a judgment rendered against you because you missed service of process. While this wouldn’t cause you to lose your LLC registration, it could become very costly for your business.
In Vermont, you’re allowed to serve as your own registered agent. However, it’s not recommended. Business owners don’t want to be served even routine legal paperwork in front of clients or employees. Additionally, your registered agent needs to confirm that they’re always available to receive papers for you during normal business hours. If you’re acting as your own registered agent, running your own business may prevent you from doing that.
Our registered agent service can help keep your Vermont business registration compliant by connecting you with a registered agent. Our Vermont registered agent service ensures that someone will be available to receive important legal, tax, and other notices from the state.
File your LLC paperwork with the state. The third step is to file your Articles of Organization with the Secretary of State. You can do this online via the Vermont Secretary of State website. You’ll also need to pay a filing fee of $125.
We understand that when you go to register a business in VT, it can be intimidating, especially for first-time entrepreneurs. That’s why we offer business formation plans to help you feel confident and get the paperwork done correctly. That being the case, we’ll still go over the steps below.
Have the following information on hand before you complete your Articles of Organization:
Having this information handy can make getting your documents completed easier. You can also purchase our Expedited Filing Service for a small fee. While this doesn’t impact how quickly the State of Vermont will process your documents, it helps us prioritize your LLC.
When you file your Articles of Organization, many states ask whether your LLC will be run by the members/owners (member-managed) or by a manager (manager-managed). There’s a difference between the two types of management, and it’s a good idea to think carefully about what’s best for your business.
Member management is good for smaller businesses with only a few owners. However, some LLCs prefer to appoint or hire a professional manager instead. Sometimes, the professional manager is even a member of the LLC. The manager-managed type of management is helpful when some LLC members prefer to be passive investors only. Vermont permits both types of management.
Regardless of which management structure you choose, you’ll need to file your Articles of Organization only once. If you end up making any changes down the road, you can file Vermont Articles of Amendment with the Vermont Secretary of State, along with a fee. If you do need to file an amendment, we have an amendment filing service that can handle it for you as well as our Worry-Free Compliance service, which includes two amendment filings every year.
One of the many perks of working with us to get your documents filed is that if we file your Articles of Organization, we can help keep you organized as well. Once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard. The ZenBusiness dashboard is a great tool for business owners to keep their Articles of Organization and other important paperwork digitally organized.
Delaying your filing can be a smart choice for investors who start businesses near the end of a calendar year. This can spare your business the hassle of filing taxes for only a short period of the current year, particularly if you don’t anticipate sales or other business activity. Worse, you could find you need to scramble to do short-term work just to pay the unexpected taxes your LLC is going to incur by starting up on October 29th.
Ordinarily, an LLC, if approved, becomes effective on the date of submission. However, you have the option to tell the state that you want your effective date to be at a later time. In Vermont, you can choose to have your LLC’s effective date be up to 90 days past the date you submit the filing.
Compose an LLC operating agreement. Next, you’ll want to create a Vermont operating agreement. This agreement isn’t required by law, nor do you need to file it with the state. However, an operating agreement is a governance tool for your small business that spells out how your business will be organized and operated.
Operating agreements allow you to set the rules and regulations for your LLC (within reason and in alignment with state laws), so most companies prefer them to relying on one-size-fits-all state LLC laws when resolving internal disputes. Having an operating agreement can make your company more attractive to potential investors, too.
The benefits of having an operating agreement in place include:
When you begin drafting your operating agreement, you’ll undoubtedly find additional benefits for your company. You’ll also find more items to include in your governance procedures. Often, LLCs have unique rules to codify so they can run properly. An operating agreement is a terrific place to do that.
Sometimes, owners of single-member LLCs think they don’t need an operating agreement for their business. However, potential investors, future business partners, and others may want to see your agreement since an operating agreement demonstrates good governance practices. In fact, some banks require a copy before they’ll let you open a bank account, and some insurance companies require one on file before they’ll issue a policy. In the absence of other members, your operating agreement can also spell out what you want to happen to the business if you die or become incapacitated.
Here are some basic items you may want to include in your LLC’s operating agreement:
We offer a customizable template to help get you started with drafting your operating agreement.
Get an Employer Identification Number (EIN). Once your VT LLC is formed, you can apply for your EIN. Also known as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number, an EIN is a number granted by the Internal Revenue Service (IRS). It’s like a Social Security number for your business. You’ll likely need an EIN before you can hire employees, apply for a business bank account, and pay taxes.
It’s possible to file for your LLC’s EIN through the IRS website, by mail, or by fax. But to save you time, we can get it for you. Our EIN Service lets you run your business while we deal with the IRS.
They say that one of the only things that’s certain in life is taxes, and that’s true with your LLC as well. You’ll need to register your business with the VT Department of Taxes. You can do so online. Once you’re on the website, you can follow the instructions to open an account and register your business.
If you hire employees, you’ll need to register for payroll taxes, pay unemployment tax, and provide workers’ compensation insurance for your employees. You’ll be able to pay your taxes through this account, as well.
The LLC business structure is meant to be flexible, including in how it’s taxed. By default, an LLC is taxed as a sole proprietorship if it has only one member or a partnership if it has multiple members. This appeals to most owners of LLCs because it avoids “double taxation,” where a business pays corporate taxes and then the individual owners pay tax again on their income.
Because LLCs enjoy so much flexibility, they can choose how they want to be taxed. Some LLCs opt to be taxed as a C corporation or an S corporation. Being taxed as a C corporation comes with double taxation; however, C corporations have the widest range of tax deductions. For some businesses, this can be very attractive.
S corp is short for “Subchapter S Corporation.” It’s not a separate type of company; rather it’s a tax election and is geared toward small businesses. Having your LLC taxed as an S corp has pass-through taxation like a standard LLC but allows you to designate yourself as an “employee-owner.” You can therefore split your income into your salary and your share of the company’s profits. You’ll pay self-employment taxes on your salary but not your profits.
The IRS scrutinizes S corps closely, and you’ll need to meet specific requirements to qualify. Be sure to speak to a qualified tax professional about which of these tax elections could be right for your business.
With your EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is not only critical for keeping your day-to-day finances straight, but it will also be a huge help at tax time. It also helps protect you from liability by preventing you from mixing your business and personal funds.
We offer a discounted bank account for your new business. Our online banking system allows for transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, try ZenBusiness Money. Our app can help you create invoices, receive payments, transfer money, and manage clients all in one place.
Once you’ve finished the steps above, you’re (literally) in business! You’ve taken the first steps toward building your dream company. But there’s a lot more to know than just how to start an LLC in Vermont.
You need to know about things like hiring employees, getting business licenses and permits, getting additional financing if you need it, how to make changes in your business, and how to stay in compliance with the government.
Our many services can not only help you form your LLC (our LLC formation service starts at $0), but our business experts can also give you long-term business support to help start, run, and grow your business.
We’ll be with you all the way, whether you’re starting a vintage clothing shop in South Burlington or a moving company in Essex. Reach out to us to learn more about what we can do for you.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
ZenBusiness is a financial technology company and is not a bank. Banking services provided by Thread Bank; Member FDIC. The ZenBusiness Visa® Debit Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. Your funds are FDIC insured up to $250,000 through Thread Bank; Member FDIC.
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There’s no central place to check to see every license or permit you might need, so you’ll have to do some research. Depending on factors like your profession, industry, and location, you may require federal, state, and local business licenses and permits to operate. Our Business License Report Service can do the work for you, saving you precious time and letting you focus on your company.
The fee for starting an LLC in Vermont is $125. Fees can change over time, so confirm with the Vermont Secretary of State. There may be other costs depending on additional state services you want, such as a business name reservation or an assumed name.
LLCs combine the liability protection of a corporation with the tax savings of a sole proprietorship. These features make them very popular with both new and experienced business owners. Some key LLC benefits include:
While you have many different structures to choose from when starting your business, an LLC can provide you with the personal and professional flexibility you need to achieve your personal and professional goals.
LLCs provide the benefit of avoiding “double taxation.” The business pays no federal income tax, instead passing the income straight through to the LLC’s owners. Then, each business owner pays taxes on the earnings as regular income. This is unlike most corporations, in which profits are taxed twice — first at the business level and again at the individual shareholder level.
The IRS administers federal taxes based on each member’s share in the LLC. Members also might be required to pay self-employment tax to the IRS to make up for the fact that they don’t pay employer withholding taxes like those related to Medicare or Social Security from their paychecks.
The LLC tax structure can save business owners a significant amount of money compared to a traditional C corporation. However, LLCs can elect to be taxed as a C corporation. This can sometimes benefit larger LLCs because of the wide range of tax deductions a C corp offers. Talk to your tax professional if you think this might be right for your business.
Some LLCs elect to be taxed as an S corporation. An S corp has more restrictions and greater scrutiny from the IRS, but it can save members of certain LLCs a lot in self-employment taxes. It also avoids the double taxation you would have from being taxed as a C corporation. Our S corp service can help you set up an LLC with S corporation status. But before you decide how to have your LLC taxed, we highly recommend consulting a tax professional.
You also have a few other forms of federal taxation to keep in mind. For example, you’ll likely need to pay self-employment taxes on your share of the LLC’s profits. These are the taxes that go toward Social Security and Medicare. Fortunately, LLC members can deduct half of the self-employment taxes paid as a business expense.
When it comes to state income taxes, Vermont will tax you in the same manner you’ve chosen to be taxed at the federal level. But Vermont also has a Business Entity Income Tax for the privilege of doing business there. LLCs that elect to be taxed as partnerships or S corporations must file a Business Entity Income Tax return with the Commissioner of Taxes. As of this writing, the minimum tax is $250.
Other Vermont taxes your business may need to pay include:
In addition to the above taxes, you might need to pay taxes based on your city. Check your municipal website for more information. To better understand your state tax burden, visit the VT Department of Taxes website for more information. Also, consult a tax professional.
When filing online, it normally takes one business day to confirm your filing. If you choose to file by mail, it can take approximately 7-10 business days, not counting the time in transit.
No, you don’t need to file your LLC’s operating agreement with the state or any government agency. It’s an internal document for your LLC.
By default, LLC owners only pay federal taxes on their personal income from the LLC. The LLC isn’t separately taxed.
Some LLCs (particularly those with high earnings) may choose to file taxes as either an S corporation or a C corporation. This option can have some advantages for certain LLCs. You can learn more about how these methods of taxation compare on our LLC vs. S corporation and LLC vs. C corporation pages.
In evaluating these options, seek advice from a qualified tax professional.
Vermont state law doesn’t permit the Series LLC business structure. A Series LLC is one in which several separate LLCs operate under one LLC entity.
If you want to dissolve your business, you’ll need to file the Articles of Dissolution with the Vermont Secretary of State. First, you’ll need to pay off any business debts, sell off assets, and distribute any remaining profits among the members. Your operating agreement can provide a clear roadmap and instructions in the case of dissolution. In the absence of an operating agreement, VT’s LLC laws will determine how your LLC will be dissolved. To learn more, see our page on Vermont business dissolution.
The process for transferring ownership of your Vermont LLC is typically in your operating agreement. You’ll likely need a purchase agreement where the previous owner sells their LLC interests to the buyer. Next, the Articles of Organization are amended to reflect the change in ownership. You’ll want to file these amended Articles of Organization with the state.
Yes. Visit the Assumed Business Name Registration page on the Vermont Secretary of State website and follow the instructions there. You’ll also need to pay a filing fee.
Not everyone foresees that members will leave your LLC, die, or become incapacitated when they’re first launching a business. Fortunately, your operating agreement will typically detail your LLC’s procedures for removing members from the business. Additionally, you’ll need to follow your agreement’s procedures outlining how the removed member’s ownership interest will be distributed.
Finally, you’ll need to file Vermont Articles of Amendment to update your LLC’s Articles of Organization with the state.
Yes, Vermont requires LLCs to file an annual report. You’ll need to file through the Secretary of State’s online system and pay a $45 fee.
You’re not legally required to have a business plan to form your LLC, but having a business plan can put you ahead of the game. A good plan contains information on the business’s founders, market research, and potential financing sources. Having a business plan can make your business more attractive to potential investors as you navigate the start-up period.
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