Starting a Vermont LLC
A Vermont Limited Liability Company (LLC) is a legal structure used to protect your personal assets (home, car, bank account) in the event your business is sued.
An LLC can be used to operate a business, or an LLC can be used to hold assets (such as real estate, vehicles, boats, or aircraft).
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1. Vermont LLC Name
Before filing your Vermont Articles of Organization, you’ll need to search the state’s database to make sure your desired Vermont LLC name is available for use.
Under Vermont law, your desired LLC name must be unique and “distinguishable in the records” of the Secretary of State.
Vermont LLC Name Search:
LLC Designator: By Vermont law – 11 V.S.A. Ch.21, Section 4005 – your LLC name must end with a proper designator. One of the following designators must be used:
- LLC (most popular)
- Ltd. Liability Co.
- Ltd. Liability Company
- Limited Liability Co.
- Limited Liability Company
2. Vermont Registered Agent
You are required to list a Vermont Registered Agent in your Vermont LLC’s Articles of Organization.
A Vermont Registered Agent is a person or a company who agrees to receive legal or court mail in the event your business gets sued. This type of mail is more specifically known as Service or Process and can include items such as complaints, summons, and/or subpoenas. Your Vermont LLC’s Registered Agent will also receive annual report reminders and other notices from the Secretary of State, on behalf of your LLC (and then forward them to you).
Your Vermont Registered Agent must have a physical street address in the state where legal documents can be “served”. They must also be available during normal business hours (9am to 5pm, Monday – Friday). PO Boxes are not allowed to be used for the Registered Agent’s address.
Who can be your LLC’s Registered Agent in Vermont?
You have 3 options on who can be your Vermont LLC’s Registered Agent:
1. You can be your own Registered Agent
2. A friend or family member can be your LLC’s Registered Agent
3. You can hire a Commercial Registered Agent
(in case you/friend/family member don’t have a street address in Vermont, or prefer privacy)
If your Registered Agent is going to be an individual (you, a friend, or family member), they must be available during normal business hours, have a street address in Vermont, be a resident of Vermont, and be at least 18 years of age.
Commercial Registered Agent: If you need to hire a Vermont Commercial Registered Agent, we recommend Northwest Registered Agent ($125 per year).
Northwest has been in the business for over 20 years and they have great customer support. Any mail that is sent to your LLC will be scanned by them and uploaded to your online account.
3. Vermont Articles of Organization
You must file the Vermont Articles of Organization (Form LLC-1 D) to officially form your Limited Liability Company in Vermont.
Method of Filing: While technically the Vermont Articles of Organization can be filed online or by mail, the state prefers online filings. They also incentivize people to file online since the mail filing takes 5-7 business days (plus mail time) for approval, while the online filing takes 1 business day for approval. Furthermore, since 2019, they removed the direct download link to the paper Articles of Organization. Instead, if you want to download the paper form, you must request it from the Secretary of State’s office.
Vermont LLC Approval times:
- If you file by mail, your LLC will be approved in 5-7 business days (plus mail time).
- If you file online, your LLC will be approved in 1 business day.
Note: Filing times may take longer due to the current global situation and government delays. Please see how long does it take to get an LLC in Vermont.
Vermont LLC filing fee: $125 (one-time fee)
Check out LLC Cost in Vermont to learn about all the fees you’ll pay.
File Vermont LLC online (recommended method): VT Secretary of State: Client Login
File Vermont LLC by mail: You must submit a form request to get the form.
- Pay by check or money order. Make payable to “VT SOS”.
- Mail Articles of Organization (one original + one copy) and the $125 filing fee to: Vermont Secretary of State, Corporations Division, 128 State Street, Montpelier, VT 05633-1104. You also must include a self-addressed stamped envelope.
Vermont LLC approval: The Secretary of State will send you back (either by email or regular mail) a stamped and approved copy of your LLC’s Articles of Organization.
4. Vermont LLC Operating Agreement
A Vermont LLC Operating Agreement is your Vermont LLC’s “Controlling Document”. It lays out the rules and management structure of your LLC, as well as spells out the obligations and duties of the LLC’s owners (called Members).
The Operating Agreement is where you will also list who the LLC Members are and how much of the LLC they own. An LLC Operating Agreement can be used for LLCs with 1 Member or LLCs with multiple Members.
Even if you are the sole Member of your Vermont LLC, it’s still good practice to have an Operating Agreement in place. If you end up in court, an Operating Agreement can serve as proof you are running your LLC as a separate legal entity. This will help keep your personal assets protected.
Having an Operating Agreement is even more important especially if you’re a part of a Multi-Member LLC. Not only will the ownership percentages be clearly defined, but it will help keep the peace among members by explicitly outlining their rights, roles and obligations in the management and operation of the LLC.
You don’t have to send the Vermont Secretary of State, the IRS, or any other agency for that matter, a copy of the Operating Agreement. The LLC’s Operating Agreement is an “internal document”. Just keep a copy or two with your business records and give one to each member if you have a Multi-member LLC.
5. Federal Tax ID Number (EIN)
A Vermont EIN Number is to your LLC as a Social Security Number is to a person. It helps the IRS identify your business for tax and filing purposes.
An EIN Number is also called a Federal Tax ID Number, Employer Identification Number (EIN), Federal Employer ID Number (FEIN), or Federal Tax Number. They are all the same thing.
Having a Federal Tax ID Number for your LLC allows you to open a separate bank account under the LLC name, apply for certain licenses and permits, and handle employee payroll taxes (if applicable)
Important: You should get a Federal Tax ID Number only after your LLC is approved by the Vermont Secretary of State.
The IRS provides Federal Tax ID Numbers free of charge. You can get one for your LLC through one of the following methods:
1. Apply online: approved immediately (recommended method)
2. Mail Form SS-4: approved in 4 weeks
3. Fax Form SS-4: approved in 4 business days
Form SS-4: Download from the IRS here. Only needed if filing by mail or fax.
Mailing Address: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax number: 855-641-6935
For Non US Residents/Persons without an SSN: Foreigners and persons without a US Social Security Number can still get a Federal Tax ID Number. They just can’t use the IRS’s online application.
Instead, you’ll need to mail or fax Form SS-4. Where it asks for your SSN or ITIN on line 7b, just write “Foreign” instead. We recommend faxing Form SS-4 (instead of mailing) as the approval time is faster.
For an LLC owned by an existing company: You can’t get a Federal Tax ID number online if your LLC is owned by another company (an error message will appear on the last step of the online application). You’ll have to file Form SS-4 by mail or fax as well.
6. Vermont LLC Annual Report
All LLCs in Vermont (regardless of income or activity) must regularly file a Vermont LLC Annual Report. This is an ongoing requirement and it is due every year.
The Annual Report fee for Vermont LLCs is $35. Again, all LLCs in Vermont are required to file an Annual Report.
Due date: The Annual Report for most Vermont LLCs* is due between January 1st and March 31st every year.
By “most Vermont LLCs”, we mean those that have a fiscal year end of December. There are a small percentage of LLCs in Vermont that run on a different fiscal year. If that’s the case for your LLC, then your Annual Report is due within 90 days of the close of your fiscal year. For more details on Annual Report due dates, please see our expanded lesson.
How to file your Vermont Annual Report: Online via the Secretary of State’s website. You’ll be able to submit the filing electronically and make payment with a credit or debit card.
Penalty for late filings: The Vermont Secretary of State will revoke your LLC’s good standing status and mark your LLC “Terminated” if you fail to file your Annual Report on time. In addition, there is a $25 late fee (on top of the $35 filing fee) for each late report.
7. Business Licenses and/or Permits
After you start your LLC, you should check whether you need to apply for a Vermont Business License or other permits.
Like most states, Vermont does not have a state-level general business license. Instead, the business licenses and/or permits your Vermont LLC may need will depend on its location and the kind of industry it is engaged in.
You’ll need to contact the relevant regulatory government agency, as well as your local county, city or town officials to learn more about your Vermont LLC’s business license/permit needs.
Need to save time?: If you’d rather not make the phone calls and do the research to determine your LLC’s business licenses and permit requirements, we recommend using IncFile.
8. Vermont State Taxes
Every small business has a unique Vermont LLC Taxes situation, but we can provide an overview of the requirements.
Federal: Vermont LLCs are taxed by the IRS as Sole Proprietorships or Partnerships, depending on the number of LLC Members. This means any profits/losses from your LLC will flow through to your personal tax return.
State income tax: Vermont imposes a state income tax categorized by bracket: Vermont Department of Taxes: Rates and Charts
Sales tax: Vermont has a 6% sales tax. Also, municipalities have the option to impose an additional 1% local tax on sales (except for sale or rental of motor vehicles), meals and rooms, and alcoholic beverages: Vermont Department of Taxes: Sales and Use Tax
Local taxes: You may have to file a local tax return depending on where your LLC is located.
Recommendation: Calculating your federal, state, and local taxes can be difficult, as well as harmful to your LLC if not filed correctly. For this reason, we recommend talking to a few accountants after your Vermont LLC is formed. Check out our how to find an accountant guide in addition to using Thumbtack and/or Yelp.
9. Vermont LLC Bank Account
You can open a separate bank account for your LLC after the Vermont Secretary of State approves your LLC and after you obtain a Federal Tax ID Number from the IRS.
Having a separate bank account not only makes managing your LLC’s finances easier, it will also help maintain your personal liability protection (by keeping your LLC’s assets separate from your personal assets).
Requirements: To open an LLC bank account, you’ll need a stamped and approved copy of your Articles of Organization, your Federal Tax ID Number, and 2 valid IDs (driver’s license, social security card, passport, etc.).
Recommendation: Call the bank where you plan on opening an account as they may require additional documents (like a copy of your Operating Agreement, for example).
- Widen your choices. Call a few banks before picking the one you’re most comfortable with.
- Some banks charge maintenance fees; others don’t. To be better-informed, make a few calls and ask banks about their monthly pricing. We recommend asking for their “‘simplest form of business checking” account.
- Also, don’t be confused if some banks ask for your “LLC’s DBA Name”. This is most likely the teller making a mistake (they are not all super savvy when it comes to LLCs). Most LLCs will be operating under their own name and do not have (and do not need) a DBA.
Debit card: The bank will give you a debit card when you open the account.
Credit card: You can also get a business credit card to earn points, miles, and other rewards.
10. Business Phone
Instead of using your home telephone number or your cell phone, you can purchase an affordable “virtual business number” specifically for your Vermont LLC. You can set this virtual business phone up to forward to your cell phone, go through voice prompts, or configure it any way you’d like.
We recommend using Phone.com as they have the cheapest plans and their customer service is excellent.
They offer local phone numbers as well as 1-800 toll-free numbers. You can easily set up call forwarding, pre-recorded prompts, and get voicemail messages forwarded to your email.
Getting a separate business phone number for your Vermont LLC is also a good idea in order to keep your actual number private from those pesky “public record” websites.
Vermont State Agencies
Vermont Secretary of State (Business Services Division)
Hours: 7:45am to 4:30pm, Monday – Friday
Vermont Secretary of State: Business Services Division