Start an LLC in Vermont

Are you about to open an LLC or Professional LLC in Vermont and would like to learn more about it? 

Although Vermont LLC filings are fairly straightforward, following the statutory procedure is crucial. That’s why we’ve gathered information about the main steps in starting a Vermont LLC, including the practical issues such as forms, fees, and legal requirements. Furthermore, in this article, you’ll find several online companies, which can ease the LLC formation process and provide a free registered agent LLC for one year.

Follow this guide, and you can register an LLC in Vermont quickly and easily. Let’s get started!

Select a Name for a Vermont LLC

The name of your LLC is the basis of its identity. A good name should reflect the characteristics of the venture, be creative as well as memorable. To succeed in registration, your LLC name, first and foremost, should be legal.

The criteria to guide you in choosing the right Vermont business name are set forth in 11 V.S.A. § 4005 and include such key items as:

  • The words “limited liability company” or the abbreviations, like “LLC,” “L.L.C.,” “LC,” and others;
  • No hint of a link between the business and the state;
  • Lack of obscene words and discriminations;
  • No other companies operating under the same or similar names.

Do you want to know more about LLC naming requirements? Then check out the Business Name Rules on the official website of the Secretary of State.

Business Name Availability

One of the most important elements of successful business registration is business name availability. To avoid additional expenses, don’t file documents before you’re sure your chosen name is available, and, indeed, refrain from ordering business cards or advertisements. It takes only a few minutes to do a Vermont name check, but it can actually save you a lot of effort and money in the future. Just use the Secretary of State’s free Express Search on the Secretary of State’s website.

If the desired company name is free, the next step will be filing the LLC documents with the state. However, if the search shows that the chosen name is already in use, then you will have to come up with a new business name or significantly change the existing one.

According to state legislation, the following changes are considered to be significant:

  • Rearranging keywords;
  • Adding or subtracting one or more keywords or numerals;
  • Substituting synonyms for keywords;
  • Change one or more keywords.

Nevertheless, you should be careful, because the following changes do not affect the uniqueness of the name of your future company:

  • Articles;
  • Entity designators, like LLC or L.L.C.;
  • Conjunctions;
  • Prepositions;
  • Capitalization;
  • Prefixes and suffixes;
  • Abbreviations and contractions;
  • Punctuation and special characters;
  • Spacing;
  • Numbers expressed as Roman Numerals, Arabic Numerals, or words.

Name Reservation

In case you have the perfect name but are not yet ready to file an LLC, you can order a 120-day reservation service for $20. That way, you may complete your preparations without worrying that someone will steal your chosen LLC name.

For filing a name reservation, you have to submit an Application to Reserve a Specified Business Name online through Vermont’s Online Business Service Center. In this case, the application will be processed immediately.

Another available option is to use hard copy documents. Download the required form through the Online Business Service Center or complete a Form request, then enter all necessary information. Send the completed application and a check for the mandatory fee to the address:

Vermont Secretary of State 
Corporations Division
128 State Street
Montpelier, Vermont 05633-1104

It usually takes about 7-10 business days to process the paper documents.

Appoint a Registered Agent in Vermont

To create an LLC, the owner has to appoint an agent for service of process, who provides state and legal communications. This agent acts as an intermediary and ensures that the state can always contact the business quickly. Therefore, the obligation to appoint a registered agent is so vital.

Both individuals and legal entities can be a Vermont LLC registered agent. However, they should be authorized to do business in Vermont and meet certain requirements.

Registered Agent Service

Professional service means reliability and a guarantee of high-quality services. When you hire an online company, like Harbor Compliance, you won’t have to worry about missing your next reporting deadline as well as penalties.

Individual as Registered Agent

If you are an 18-year-old resident of the state, have a physical address, and agree to be in the company office during regular business hours, then you can become a registered agent. 

The owners may also designate themselves, or an accountant, a lawyer, a relative, even a friend as a registered agent.

Receive an EIN

Employer Identification Number is a unique 9-digit code. It is for quick identification of the tax records of your business.

You need to obtain an EIN to conduct business in Vermont if you plan to:

  • Hire employees;
  • File and manage taxes;
  • Open a business bank account, etc.

To apply for an EIN, you can use an online service, mail, or fax. All of these methods are free but have different processing times.

Mail

If you prefer hard copies and are ready to wait about four weeks for an LLC EIN, you may print the Form SS-4 out and mail it to the address:

Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999 

Fax

The IRS accepts applications for an EIN for LLC by fax and processes them in about four business days. A completed Form SS-4 should be sent to:

(855) 641-6935

Online

Can’t wait? Then online registration is just what you need! You can use your EIN right away, but the registration process has to be completed between 7 a.m. and 10 p.m. EST., Monday through Friday. Additionally, you need a valid Social Security number to apply.

Create an LLC Operating Agreement

Operating Agreement refers to an internal document, which outlines the basic principles and operating procedures of an LLC, as well as its management structure.

The law does not require having an Operating Agreement when forming an LLC in Vermont, but it is still a good idea. With an LLC Operating Agreement, you will make your company more stable. It also avoids Vermont’s default laws, which are general and do not take into account the individual characteristics of a business venture.

The content of the Vermont Operating Agreement is determined entirely by the business owners. However, it usually includes such points as:

  • LLC’s name and principal address;
  • Name and address of the registered agent;
  • Information about the Articles of Organization;
  • Duration of the LLC;
  • Members and their contribution;
  • Management of the LLC;
  • The way profits and losses will be divided;
  • Indemnification and liability clauses;
  • Procedure for admitting new members, as well as outgoing members.

You can get an agreement in the following two ways:

  1. Prepare it on your own: Even if you open an LLC for the first time and have no legal background, it’s easy to draft an Operating Agreement. Make it yourself, based on your business needs, or use one of the templates available on the Internet. There are many variants of templates of Operating Agreement online, but, in most cases, they are universal and do not cover the specifics of particular businesses. Thus, templates provided by professional online companies are more advantageous. For example, MyCompanyWorks includes a custom Operating Agreement in all its service packages, which start at $79 + state fee;
  2. Hire a lawyer: If you have unlimited funds and want a personalized, high-quality, and detailed document, you should use the services of an attorney. The knowledge and experience of a specialist will allow you to cover the widest range of issues to protect the interests of the LLC in the best possible way.

There is no need to register the Operating Agreement. It is enough to approve it by obtaining the signatures of all LLC members, and then keep the document together with the rest of the business papers.

File the Vermont LLC Formation Documents

To open an LLC in Vermont, the first step is to file the Articles of Organization with the Secretary of State. This will enter your company into the state records and allow you to run a Vermont LLC officially.

Generally, Vermont LLC Articles of Organization contain the following basic information:

  • LLC name;
  • Management structure (will the LLC be managed by its members or managers?);
  • The name and address of each member or manager;
  • The name and address of registered agent;
  • A reason why the LLC was formed (this can be a general statement);
  • The effective date of the Articles of Organization;
  • An LLC’s duration, or time period over which the LLC will exist;
  • An indication of whether it is a low-profit LLC or professional LLC;
  • The person forming the LLC is required to sign the document.

To formally make an LLC, you can file the Articles of Organization online or use the paper documents, delivering them by mail or in person. The cost of the state fee is $125.

Hard Copy Filing

If you find it more convenient to work with paper documents, download the paper form from the Vermont’s Online Business Service Center. Print the completed paper out, enclose a check for the mandatory fee, and mail all materials to the address:

Vermont Secretary of State 
Corporations Division
128 State Street
Montpelier, Vermont 05633-1104

The estimated processing time for paper applications is about 7-10 business days.

Online

Do you want your LLC documents to be processed within one business day? Then your best option is to file online. First, register your account at Vermont’s Online Business Service Center or log into an existing one. Then select “I am Creating a New Domestic Business” and choose “Limited Liability Company” from the Business Type list that opens. Follow the instructions to complete the process.

Open a Bank Account for an LLC

After you launch a Vermont LLC, you have to keep the business assets and your personal funds separate from each other. Opening a commercial bank account is the best way to do this. It will protect LLC in Vermont, simplify bookkeeping, and provide a guarantee that the limited liability will remain in effect.

Banks usually ask for the following documents to open a Vermont business checking account:

  • A copy of the Vermont LLC Articles of Organization;
  • EIN;
  • The LLC Operating Agreement;
  • Banking resolution.

Meet Business Additional Legal Requirements in Vermont 

Business Licensing

Approval of the LLC documents by the Secretary of State makes your business completely legal, but there’s more. When running an LLC in Vermont, most LLCs should get some business licenses and permits to start operating legally.

There are dozens of different licenses and permits. They can be provided at the federal, state, city, or county level. Depending on your chosen industry and the location of your company’s registered office, they can vary in number, type, and cost.

Unlike some other states, Vermont does not have state business licenses, but local licenses may be required.

If you are not sure whether your business is subject to licensing, visit the Professional Regulation page to learn more.

LLC Taxes

State Taxes

In this state, companies do not file a separate LLC tax return by default and do not pay income tax on their own behalf. There is also no “franchise” or “privilege” taxes, so the LLC tax filing is fairly simple.

Federal Taxes

As a rule, LLCs are “pass-through” tax units. This means that business income and expenses are reported only on LLC tax forms such as personal 1040 tax returns and/or Schedule C of the owners. However, because of the ability to choose the tax treatment, an LLC can also be taxed as an S-Corp or C-Corp.

Additional Taxes

In addition to general business taxes in Vermont, you may have to pay some additional ones. The number and type of these LLC taxes will vary according to the nature and location of your business venture. For example, if you have employees, you may be required to pay Withholding Tax and Unemployment Tax. Besides, Sales Tax and Use Tax are also common and mandatory for LLCs engaged in selling goods or providing services.

To pay your taxes, you may either register online or use the Application for Business Tax Accounts.

LLC Annual Report

Another obligation of an LLC is reporting. Every state-registered company should file an annual report within three months after the end of the fiscal year. You can do that online or by mail. The cost to process a Vermont LLC annual report is $35.

Online

Online filing is a quick and affordable way to meet your annual reporting requirement. To complete the online filing process, all you have to do is enter the necessary information and pay the filing fee. It only takes a few minutes of your time.

Mail

For those who value hard copy documents, there is an option to submit your annual report by mail. Download the form to your computer, fill out and print it. Do not forget to include a $35 check for the mandatory fee. All materials should be mailed to:

Vermont Secretary of State
Corporations Division
128 State St.
Montpelier, VT 05633-1104

If you miss the deadline for the annual report, the company will lose a good reputation and may be subject to penalties, so it is important to fulfill the state’s requirements in a timely manner.

Summing Up

The process of launching an LLC in Vermont is fairly easy, but it still requires a lot of time, as well as energy. To keep your mind on things and take some of the responsibility off your hands, you can hire one of the business creation companies. They will not only take care of all the formalities associated with Vermont LLC registration but also will give you access to a wide range of useful business services. Moreover, some websites provide their features free of charge. For example, once you hire an online service, like ZenBusiness, you will get a free registered agent service and operating agreement template for one year.