When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Forming an LLC in Vermont follows the standard process used in most U.S. states. After an LLC is registered in the state, they are required to file annual reports each year.
To avoid a misstep in the filing process, follow these steps to start an LLC in Vermont, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Vermont step-by-step
1. Select a name for your Vermont LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the State of Vermont:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the Vermont Secretary of State.
- An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”, “L.L.C.”, “LC”, or “L.C.” The abbreviations “Ltd.” and “Co.” may be substituted for the words “Limited” and “Company”, respectively.
Check name availability
Confirm that your chosen LLC name is available in Vermont using the Secretary of State Business Search.
Reserve your LLC name with the Secretary of State
You should consider reserving your business name with the Vermont Secretary of State to disallow another business entity from using it before you can file Articles of Organization and legally form your LLC.
File an Application to Reserve a Specified Business Name with the Vermont Secretary of State online. The fee is $20, which can be paid online by credit card or by mailing in a check or money order to the Secretary of State.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Vermont requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Vermont OR if the individual or business is based out-of-state, they must have a business office in Vermont.
Our picks of the best registered agent services
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Starting a business requires a lot of state-mandated paperwork, which can be confusing for new business owners. Northwest offers business services that can help entrepreneurs find the right documentation, fill it out, and file it on time with the right government agency. In addition to helping you set up an LLC, Northwest has a host of additional services, like registered agent services, that new owner will find useful too.
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3. File Articles of Organization
An LLC is formed in Vermont through the filing of Articles of Organization with the Vermont Secretary of State.
You can file the articles online with the Secretary of State, Business Services Division or by postal mail. The filing fee is $125.
The Articles of Organization must provide the following information:
- LLC’s name, street address, and mailing address
- LLC type (regular, professional, or low-profit)
- LLC’s purpose
- The end of the LLC’s fiscal year (typically coincides with the end of the calendar year)
- Registered agent name, address, and email address
- Whether the LLC will be manager-managed or member-managed
- LLC principal members’ or managers’ names and addresses
- The name, address, and signature of an LLC organizer
Foreign LLC registration
An LLC formed in a state other than Vermont that intends to do business in the state must register with the Vermont Secretary of State.
Complete these steps to do business in Vermont as a foreign LLC:
- Comply with Vermont LLC naming restrictions and confirm that the LLC’s name is available using the Secretary of State Business Search.
- Appoint a Vermont registered agent.
- File an Application for Certificate of Authority with the Vermont Secretary of State online or by postal mail. The filing fee is $125.
- A Certificate of Good Standing or a Certificate of Legal Existence from the LLC’s home state dated from no more than 90 days prior must be included with the application.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Vermont, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Vermont LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
File Annual Reports
All LLCs doing business in Vermont, both foreign and domestic, must file an annual report with the Vermont Secretary of State. The report is due before the beginning of the 4th month following the end of an LLC’s fiscal year.
You can file the report online or by mail. The filing fee for a Vermont LLC is $35 and the filing fee for a foreign LLC is $140.
Register with the Vermont Department of Taxes
LLCs active in Vermont (including foreign LLCs) may be required to register with the Department of Taxes to satisfy state tax requirements. This includes LLCs that collect sales tax on retail goods and LLCs that have employees.
You can register with the Department of Taxes online with myVTax.
Obtain business licenses and permits
LLCs doing business in Vermont may be required to obtain one or more state or local business licenses, permits, or certifications depending on their type of business and location.
Check out the Department of Taxes Start a Business Guide for information on state business licensing requirements. For information on local licensing requirements, contact a city or county clerk in the area where your LLC is based.
Vermont LLC checklist
A Vermont LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the Vermont Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”, “L.L.C.”, “LC”, or “L.C.” The abbreviations “Ltd.” and “Co.” may be substituted for the words “Limited” and “Company”, respectively.
Formational documents and filing fees:
- Application to Reserve a Specified Business Name (optional but recommended) – $20 filing fee
- Articles of Organization – $125 filing fee
- Application for Certificate of Authority (foreign LLCs only) – $125 filing fee
- An LLC is created in Vermont through the filing of Articles of Organization with the Vermont Secretary of State.
Additional legal obligations:
- File Annual Reports – Required for all LLCs doing business in Vermont.
- Register with the Vermont Department of Taxes – Required for certain LLCs doing business in Vermont depending on their type of business.
- Obtain business licenses and/or permits – Required for certain LLCs doing business in Vermont depending on the type of business and area.