Form a Vermont Professional Limited Liability Company Today. A Vermont professional limited liability company (PLLC) is a business form similar to an LLC. The difference is that a PLLC’s members are professional licensed service providers.
It provides a level of protection from liability for its members. PLLCs offer flexible management, are easier to set up than a professional corporation, and its members may receive tax benefits. We’ll walk you through setting one up and a few common questions we get asked.
Who can form a PLLC in Vermont?
In Vermont, licensed professionals form PLLCs. There’s no definitive list of specific professionals that may form a PLLC in Vermont. Professionals can include doctors, dentists, accountants, veterinarians, and lawyers, as well as a range of others who require a license to practice.
There are several benefits for professionals who form a professional limited liability company, including:
- An easy start-up process
- Affordable $125 filing fee for registration
- Separation of the PLLC entity from members’ personal assets
- Easy online taxes with Vermont’s myVTax web portal
What are the steps necessary to form a Vermont PLLC?
Here are eight steps on the path to forming a Vermont PLLC:
1. Choose a name
Your PLLC’s name should reflect the professional group it represents. There are a few rules to keep in mind when naming it:
- The name cannot be the same as another business. Nor may it be similar enough to another that it causes confusion. You may seek a waiver of this rule from the Vermont Secretary of State (SOS) if the other similarly named entity agrees.
- The words “professional limited liability company,” “professional limited company,” “PLLC,” or “PLC” must appear at the end of the company name. Abbreviations may contain periods if desired.
- A company shouldn’t use words that might confuse it with a government agency, such as “FBI” or “FDA.”
- Language that could offend, such as obscene or discriminatory language is prohibited, including negative references to age, gender, or race.
- Check whether your preferred business name is available using the state’s database. Check domain names, which are useful for setting up social media and web pages. ZenBusiness offers a convenient service to check the availability of domain names.
- If you have a name you like but aren’t ready to incorporate, you can reserve it through the Secretary of State for 120 days, after which you will have to apply again. ZenBusiness’s name reservation service can help.
2. Select a Vermont registered agent
The state of Vermont requires that PLLCs designate and maintain a registered agent and office to receive legal documents and other notifications. The agent must:
- Be a resident of Vermont, or a company authorized to do business in Vermont
- Maintain an office with a street address (not a P.O. box) and a static phone line
Forward changes in the agent’s address or name to the SOS office.
ZenBusiness’s expert staff can help locate a registered agent with its registered agent service.
3. Complete and file Vermont Articles of Organization
The Articles of Organization document is the route to the formation of a PLLC with the Vermont Secretary of State. It includes whether members or non-member employees will manage the PLLC. ZenBusiness provides all the information you need to submit your Articles of Organization to the Secretary of State for approval. The document must include:
- The PLLC’s name
- The registered agent’s name and physical office address
- An office address for the PLLC
- The end date of the company’s fiscal year
- Description of the PLLC’s purpose and structure
- List of members/owners
Articles of Organization can be submitted online. Mail or hand-deliver paper copies to:
Vermont Secretary of State Corporations Division
128 State St.
Montpelier, VT 05633-1104
A $125 fee is required, payable to the Vermont Secretary of State.
4. Create a Vermont operating agreement
Although an operating agreement doesn’t have to be filed with the state in Vermont, it’s a valuable document to have on hand. It outlines the rules and policies to guide its membership and avoid confusion and conflict as it moves forward. It articulates the members’ responsibilities as well as those of the managers. The operating agreement describes the process for internal changes and how to dissolve the entity should the members feel it is necessary.
5. Handle tax obligations
A professional LLC in Vermont pays taxes at the federal, state, and local levels. Before it can file taxes, the PLLC will need an Employer Identification Number (EIN). Acquire EINs from the Internal Revenue Service. This is something you can apply for yourself, or ZenBusiness can help with its EIN number service. The number identifies your business and aids in filing state and local taxes.
A Vermont PLLC doesn’t pay corporate income taxes at the federal level, but its members have to pay individual federal taxes on their share of the PLLC’s profits.
This category doesn’t include employees or officers/managers of the business who receive a salary and incur expenses. They pay personal federal tax. PLLC members have the flexibility to choose which IRS designation they want to apply for taxation purposes. It’s wise to consult with a business tax attorney or other tax professional to help iron out the wrinkles.
The company needs to file a Business Entity Income Tax return (BI-471) with the Commissioner of Taxes. If a member receives income from the activities of the PLLC, they must also file a BI-471. The typical minimum tax for filing a BI-471 is $250. The form may be completed and filed online. Businesses are liable for other state taxes, including sales and use tax and meals and rooms tax. A tax professional or tax attorney will make identifying and filing state taxes easier and quicker.
Local taxes vary; check with the county and municipality in which your PLLC is located.
6. Obtain business licenses and permits
It is the PLLC’s responsibility to obtain all licenses and permits applicable to it. There isn’t one place that identifies all licenses and permits needed because they may have federal, state, or local origins. ZenBusiness can sort it all out and provide you with the best advice on which licenses and permits you need. They can also help with applications.
In Vermont, there isn’t a general business license. Individual towns and cities may require a license to operate or a permit for specific activities.
The U.S. Small Business Administration can provide information about federal and Vermont state licensing requirements.
7. Acquire insurance for your Vermont PLLC
There are three basic types of insurance most PLLCs will need:
- General business insurance: Covers losses or lawsuits that arise from the business’s management or errors.
- Workers’ compensation insurance: Covers the cost of employee medical care and expenses. The accident or illness must be the result of the business and its operations.
- Professional malpractice insurance: Covers suits and other issues associated with the performance of members’ practices.
8. Open a business bank account
A bank account that has no direct association with individual members’ accounts is important. It is used to pay employees, cover expenses, and perform the PLLC’s core practices. More than one person in the PLLC can have access to the accounts, and the bank must retain individuals’ signatures on file. These persons can be members, employees, or other authorized individuals.
Ready to Kick Start Your Business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
Vermont PLLC FAQ
What are the filing fees for a Vermont PLLC?
The filing fee for a Vermont PLLC is $125.
Do I need a lawyer to form a Vermont PLLC?
While not required by the state, an attorney is useful. They can assist during the formation of your PLLC. A lawyer will explain complex requirements and help navigate the insurance, tax, and other steps mentioned in this article.
Does Vermont have a professional corporation (PC) entity?
Yes, Vermont has a professional corporation (PC) entity. A PC typically carries strong protections against individual liability and may bring tax benefits, depending on the business. Its professionally licensed members of medicine, dentistry, law and other professions are the owners of the PLLC.
Can professionals from different fields form a Vermont PLLC together?
No. PLLC members must practice within the same profession.
How will I be taxed as a Vermont PLLC?
Vermont PLLCs are typically pass-through entities. The IRS treats PLLC income like a partnership, which means that owners are responsible for their own income tax because revenue isn’t taxed at the corporate level. PLLCs also have the option to be taxed as a C or S corporation. Additionally, Vermont businesses may have to file state taxes on a BI-471 form, which usually carries a minimum fee of $250. Each municipality determines its local taxes.
Professional limited liability companies are an attractive option for professionals to organize and do business with patients, clients, and others. Contact us today for more information about business services that can help you open your doors faster and comply with Vermont regulations once you’re in business.