How to Start an LLC in Vermont

With nearly 77,000 small businesses, Vermont has the incentives, support systems, and infrastructure entrepreneurs need to be successful. Forming a limited liability company (LLC) here is a great way to protect your personal assets while enjoying a flexible, scalable business structure. In just a few steps, you can learn how to start an LLC in Vermont and gain all the benefits.

How to form a Vermont LLC in 6 steps

Forming a Vermont LLC doesn’t have to be complicated, but you’ll want to make sure you don’t miss any of the steps. Here’s how to officially establish your LLC, stay compliant with state requirements, and set your business up for success.

1. Choose your business name

Before you can fill out the paperwork, you need a name for your Vermont LLC. Your business name must meet specific rules set by the Vermont Secretary of State. Here’s what you need to know when selecting a name for your business.

• Your business name can’t be the same as any other existing Vermont business. You can do a Vermont LLC search on the Secretary of State website to check availability.
• The name of an LLC must end with “Limited Liability Company,” “LLC,” or “Ltd. Liability Co.,” or “Limited Company,” “LC,” or “Ltd. Co.”
• The business name of a professional limited liability company must end with the word “Professional” before one of the above abbreviations, such as “Professional Limited Liability Company” or the letters “PLC.”
  or the letters “PLC.”
• The name can’t suggest an association with government agencies.
• Names that include obscene, discriminatory, or misleading language are not allowed.

If you’re not ready to file your LLC immediately, you can reserve your chosen name for 120 days for a $20 fee. That gives you time to complete your application without having to worry someone else will take the name you want.

2. Appoint a registered agent

Vermont requires every LLC to name a registered agent on their articles of organization. This is someone who can accept legal documents and official mail on behalf of your business. A Vermont registered agent can be either of the following: 

• A Vermont resident with a physical address in the state.
• A registered business entity in Vermont authorized to act as an agent.

You can be your own registered agent, appoint a trusted individual, or use a professional registered agent service. Registered agent services receive and forward your mail promptly, so you can be confident you won’t miss anything important. Business owners have enough to manage—that’s why many choose to use a solution like LegalZoom’s registered agent service for peace of mind.

3. File the articles of organization 

To officially form your Vermont LLC, file the articles of organization with the Vermont Secretary of State. You can file online or mail in a paper form. The filing fee is $125, and you’ll need to provide the following information: 

• Your LLC’s full business name
• Type of LLC (choose from standard LLC, professional LLC, or low-profit LLC)
• The month your LLC’s fiscal year will end. This will default to December if you don’t choose an alternate.
• The NAICS Code, describing your business industry
• The physical, mailing (if different), and e-mail address of your business
• A brief description of your business
• The physical and mailing address of your business, if they’re different
• The name, physical address, and email address of your registered agent
• Whether the LLC will be member-managed or manager-managed
• The title, name, and addresses of initial members/managers
• The number of initial members
• The name and address of the LLC’s organizer (the person filing the articles of organization)

You can file the articles of organization online or mail the form to the Vermont Secretary of State in Montpelier. Online filings are processed faster, usually in less than one business day, while paper filings may take up to two weeks.

4. Create an operating agreement

An LLC operating agreement is an important legal document that outlines how your business will function. It’s more detailed than the articles of organization and includes important information. 

• Ownership structure: How much of the business each member owns.
• Roles and responsibilities: Who manages the business and how decisions are made.
• Profit distribution: How profits and losses will be shared.
• Voting rights: How voting on important business matters will be handled.
• Procedures for adding or removing members: What happens if a member leaves or new members join.
• Dissolution process: What happens if the LLC is dissolved.

While Vermont doesn’t require an LLC operating agreement, it’s a good idea to have one. For multiple-member LLCs, it can help you resolve disputes. Even if you’re a single-member LLC, the operating agreement clarifies your management structure and helps separate personal and business finances, which strengthens your personal liability protection. You can create one yourself, consult an attorney, or use LegalZoom to create an operating agreement.

5. Obtain an EIN and open a business bank account

An employer identification number (EIN) is a nine-digit number that identifies your business to the Internal Revenue Service (IRS) for federal tax purposes. You’ll need it if your LLC has more than one member, has employees, or if you want to open a business bank account. Even if you’re the sole owner, an EIN separates your personal and business taxes. You can apply for an EIN on the IRS website. If you want to be sure you don’t make any mistakes, use LegalZoom’s EIN filing service.

Once you have your EIN, opening a business bank account helps maintain a clear divide between your personal and business finances. A separate account helps you manage your finances and protect your personal assets in case of a lawsuit.

6. Register for state taxes and business licenses

After LLC formation, you need to register for any applicable state taxes through the Vermont Department of Taxes. Depending on your business activities, you may need to register for the following taxes.

• Sales tax: If you sell tangible personal property, which includes art, writing, and software, you’ll need to register to collect sales tax.
• Meals and rooms tax: Any business entity that sells meals or prepared foods, including in vending machines, serves alcohol, or rents rooms to the public is subject to this tax. 
• Employee withholding tax: If your LLC has employees, you’ll need to register for payroll taxes. You’ll also be required to withhold state income tax from employee wages and register for workers’ compensation insurance.
• Excise taxes: Vermont has additional taxes for cannabis products, cigarette and tobacco products, alcohol, and fuel.

You can register for all taxes through the myVTax portal. You’ll also need to check if your business requires specific licenses or permits.

• Professional licenses: Service providers, including accountants, architects, athletic trainers, chiropractors, dieticians, doctors, massage therapists, physical and occupational therapists, radiologists, and real estate professionals, will need to register as a professional limited liability company and get a state-issued license. 
• Business permits: Certain types of businesses need permits to operate. For example, restaurants need health permits, while those that serve alcohol need a liquor license.
• Environmental permits: If your business plans on doing construction, drawing groundwater, disposing of waste, or if your operations might affect the quality of the air, wastewater, or groundwater, you might need environmental permits. For example, breweries need a Wastewater System and Potable Water Supply Permit.
• Local licenses and permits: Your city or county might require business licenses or permits for certain operations. Check with your county clerk’s office to find out what you need.

What to do after forming your Vermont LLC

Once you’ve mastered how to start an LLC in Vermont, there are still a few more things to take care of.

• Register a domain name. Securing a domain name that matches your business name makes it easy for customers to find you online. It also prevents anyone else from claiming it. See if the domain name is available when you do your Vermont LLC search.
• Maintain compliance. You’ll need to file an annual report with the Vermont Secretary of State. You’ll file the annual report within three months of your LLC’s fiscal year’s end, which you outlined in your articles of organization, and pay a $35 filing fee. You’ll also need to stay on top of your tax obligations.
• Obtain a certificate of good standing. Though not required, a certificate of good standing verifies that your Vermont LLC is legally registered and compliant with state laws. You can get one from the Vermont Secretary of State for a $25 filing fee.
• Consider a foreign LLC. If you plan to expand your business outside Vermont, you can register your LLC in other states as a foreign LLC. Each state has its own process, but having a Vermont LLC gives you a solid starting point.
• Trademark your name. Trademarking protects your business name and logo at both the state and federal levels. To trademark your name in Vermont, file with the Vermont Secretary of State or apply for federal trademark protection through the U.S. Patent and Trademark Office.

The cost of forming an LLC in Vermont

The cost to form an LLC in Vermont is at least $125 to file your articles of organization. While this is the minimum, you might also choose other services that can make LLC formation easier. 

• Name reservation: $20 filing fee
• Formation cost: $125 for filing the articles of organization
• Registered agent service: $100–$300 per year
• Operating agreement: $99 and up
• Certificate of good standing: $25 filing fee
• Licenses and permits: Varies by location and industry

The total cost of Vermont LLC formation, therefore, ranges from $125 to about $570, plus the cost of any business licenses or permits. You’ll also need to pay $35 each year when you file your annual report.

Special considerations for Vermont LLCs

Forming an LLC in Vermont is similar to other states in many ways, but there are some special things you’ll need to know.

Vermont business entity taxes

Vermont does have a Business Entity Income Tax, but it only applies to S corporations, partnerships, and LLCs that choose to be taxed as either an S corp or partnership. If this applies to you, you’ll have to pay a minimum tax of $250.

LLCs that keep their default status are taxed as pass-through entities. This means you’ll report your business income on your personal tax returns and it will be taxed at the individual income tax rate, which varies by the amount of taxable income.

Vermont Benefit Corporations

Vermont is known for supporting businesses with social and environmental goals. One option to consider is becoming a B Corp (Benefit Corporation), which is a business structure that allows companies to pursue social and environmental objectives alongside profit.

While LLCs can’t become B Corporations directly, you can incorporate B Corp principles into your LLC’s operating agreement. As you grow, you’ll be well-prepared to manage your operations according to these standards and eventually incorporate as a B Corp.

How to start your Vermont LLC with LegalZoom

LegalZoom makes it easy to learn how to start an LLC in Vermont. We can handle all the paperwork, from filing the articles of organization to creating an operating agreement, plus act as your Vermont registered agent, file your annual report, and more. Our services help you stay compliant, saving you time and hassle so you can focus on growing your business. Start the LLC formation process today, and we’ll take care of the rest.

FAQs

How long does it take to form an LLC in Vermont?

If you file the articles of organization online, forming a limited liability company in Vermont usually takes about one to two business days. Paper filings can take up to two weeks. Once your articles of organization are approved, your LLC is officially recognized by the state.

What are the benefits of filing an LLC in Vermont?

Forming a limited liability company in Vermont protects your personal assets from business liabilities, meaning your personal property, like your home, is safe. Vermont offers a supportive environment for small businesses, with resources and incentives that make it a great state for entrepreneurs. The LLC structure also provides flexibility in how your business is managed and taxed.

What are the annual filing requirements for Vermont LLCs?

Vermont LLCs are required to file an annual report with the Secretary of State. This report helps keep your business in good standing with the state. The filing fee is $35, and the report is due each year by the anniversary of your LLC formation date.

How do I correct filing errors in Vermont?

If you make an error when filing your LLC or professional LLC articles of organization, you can submit a Certificate of Correction with the Vermont Secretary of State. This form allows you to update or fix mistakes without having to start over. It’s important to file corrections to your articles of organization quickly to avoid any complications with your LLC formation.

How do I dissolve a Vermont LLC?

To dissolve a Vermont limited liability company, you must file Articles of Dissolution with the Secretary of State. You can do this through LegalZoom’s dissolution service. This formally ends your business operations and stops future tax or reporting obligations. You’ll also need to settle any outstanding debts and distribute any remaining assets among LLC members.

Rudri Bhatt Patel contributed to this article.