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If you’re a savvy entrepreneur and someone who loves open space, good food, and the great outdoors, why not consider a Vermont LLC when starting your next business venture? Business in the Green Mountain State is taking off, and the quality of life is high. In fact, Vermont gets top marks in national surveys for its education, lifestyle, and affordability. Whether you’re just starting out or you’re looking to take a step back and become independent from the rat race, now is a great time to form a business in Vermont. And doing business through an LLC in Vermont can offer you a variety of advantages that we discuss below.
To ensure that you and your business get the full tax and liability protection of forming an LLC, you’ll need to form your business correctly. Read on to find out how we can help you navigate the winding mountain roads of Vermont’s LLC laws and register a business in Vermont quickly and correctly.
The ways we can help you get your business started don’t stop once your LLC is formed. Our suite of business services sets you and your new LLC off on the right foot. We’ll tell you how to get started.
These guidelines are for starting a domestic LLC, which means an LLC formed within Vermont. If your business has already been formed as an LLC in Massachusetts, Connecticut, or New Hampshire, for example, and you want to start doing business in Vermont, you would follow the process for foreign LLCs.
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.
To register a business in Vermont, you need to decide what to call it. 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 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. 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.
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 a Vermont LLC name reserved. Filing online to reserve your chosen LLC Vermont name holds the name for 120 days for a fee. Our business name reservation service can handle it for you.
Don’t let your LLC in VT get left behind without a web presence. If someone can’t find your business on the web, how will they know you exist? When you’re coming up with a business name, be sure to confirm that your company’s preferred domain name is also available. Our domain registration service can help you secure the online name that will best serve your company.
If you have a multi-location business or have plans for multiple locations but want to keep your business entity format simple, you might consider getting a “doing business as” (DBA) name. While a DBA name — sometimes known as a “fictitious name” — is not mandatory to have for your LLC, Vermont business owners can get one quickly if they need one. Our VT DBA service can help you file.
The intellectual property (IP) for your LLC in Vermont is more valuable than you may realize! Federally trademarking your intellectual property can save you lots of headaches and heartache down the road. Checking 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 IP 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 marks similar to yours that have been registered exclusively with the State of Vermont.
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Next, to form your LLC in VT, you’ll need to choose a registered agent. A “registered agent” is someone who is authorized to receive legal notices on behalf of your business. This can be either an individual or a company, and 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. Your registered agent needs to be a Vermont resident, and they must be qualified to conduct business within the state. They’ll need to be physically located in Vermont — no P.O. boxes are allowed.
Having a professional 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 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 or, worse, a notice of a judgment against you because you missed prior 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 are 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.
We can help keep your Vermont business registration compliant by connecting you with a registered agent. Our Registered Agent Service ensures that someone will be available to receive important legal, tax, and other notices from the state.
The third step in the process to register a business in VT as an LLC is to file your Articles of Organization with the Secretary of State. 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. We can also serve as your LLC Organizer. Organizers aren’t LLC members — they do the heavy lifting and then take a step back so you can run the business!
Have the following information on hand before you complete your Articles of Organization:
Having this information handy can make getting your documents completed and filed a breeze. 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 Vermont 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. 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 Department 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 Oct 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.
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. Having one can make your company very attractive to potential investors, too. Operating Agreements also 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 corporate laws when resolving internal disputes.
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.
Once your VT LLC is formed, you can apply for your Employer Identification Number (EIN). A Federal Employer Identification Number (FEIN) or Federal Tax Identification Number, is a number granted by the Internal Revenue Service (IRS). It’s like a Social Security number for your business. You’ll 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.
Can filing as an S corp lower my taxes?
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 maximum 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 your 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 protects 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.
We can help
Our Vermont LLC formation service helps get Vermont entrepreneurs up and running quickly. Our business compliance services work with you throughout the lifecycle of your company to not only help you get started but to help your business grow and thrive. Let us take care of formation, compliance, and more, so you can focus on what you love.
Disclaimer: The content on this page is for informational 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.
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 other 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. Our fees are an additional cost, depending on which services you select. However, we can save you a ton of time and be a huge help as you form your business.
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 Vermont 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. 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 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.
The State of Vermont also taxes businesses. Your LLC business taxes may 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.
When filing online, it takes about 3-7 business days to confirm your filing and form your LLC. If you choose to file by mail, it can take more than two weeks.
No, you don’t need to file your LLC’s operating agreement with the state or any government agency. If someone claiming to be from a government agency demands you file your operating agreement with the state, be sure to call and confirm their identity after independently checking their phone number.
Most entrepreneurs elect pass-through taxation at the state and federal levels. A qualified accountant can explain the benefits and drawbacks of S corp and C corp elections and how they can impact your personal and professional tax burdens.
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 can help. 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.
A “doing business as” name isn’t mandatory in Vermont. However, if you have several business locations or would like to use a DBA, filing a Fictitious Business Name Statement is a straightforward process. You can also use our VT DBA service to file.
Not everyone foresees that members will leave your LLC, or die, or simply disappear when they are 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 share 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 don’t need a business plan to form your LLC, but having a business plan can put you ahead of the game. A good plan also contains information on the business’s founders, market research, and potential financing sources. Having a business plan can make your business very attractive to potential investors as you navigate the start-up period.
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