Forming An LLC In Vermont

Forming an LLC in Vermont is an excellent way to run a business or to purchase and hold assets. A Vermont LLC has the same liability protection as a corporation, which means your personal assets remain safe in case the business is sued. To make things better, LLCs require fewer formalities, which makes them easier to run.

That said, there are still formalities and necessities to complete and maintain before you can form an LLC. Staying true to procedures and requirements after the LLC is formed will ensure that your Vermont LLC runs smoothly. Following proper procedure also helps keep the liability protection intact.

Here are the steps involved in forming your VT LLC.

1. Choosing The Right Name For The Vermont LLC

The name that you intend to register for your VT LLC should be unique and distinguishable upon the records. That means that the name shouldn’t be the same as, or confusingly similar to, entities already registered with the VT Secretary of State.

A quick way to check availability is to go through the Business Search page on the Vermont Corporations Division website. This will give you a good idea of similar or same business names. Usually, it also helps to run another check with the USPTO website to ensure that the chosen name isn’t running foul of any trademarks.

Vermont SOS website has a very helpful section on Name Availability Rules that explains and illustrates the rules as necessary.

Vermont LLC Designators

Every LLC in Vermont must end its name with a proper designator. LLC is the most commonly used designator, but the following are acceptable as well:

  • LLC
  • L.L.C.
  • LC
  • L.C.
  • Limited Liability Company
  • Limited Liability Co.
  • Ltd. Liability Company
  • Ltd. Liability Co.

Name Reservation Requests (Optional)

It is possible to reserve a name for your LLC in VT without completely forming your LLC. This involves filing a form for Name Reservation with the VT Secretary of State. The filing fee is $20, and the application can be completed online.

2. Appoint A Registered Agent

Every VT LLC must maintain a registered agent in the state. This agent is responsible for receiving the service of process on behalf of the LLC. Service of process includes legal documents like lawsuits, summons, etc.

The registered agent must have a physical street address in Vermont where service of process can be delivered. PO Box addresses aren’t acceptable. Ideally, the agent should be available during normal business hours.

As long as the above conditions are met, any adult legal resident of the state can function as the registered agent. Similarly, a foreign or domestic business entity that’s allowed to do business in the state and maintains an office in VT can be the registered agent.

Commercial registered agents form a part of the latter group and are often the desired choice for most LLC organizers.

3. Filing Vermont Articles Of Organization

Filing VT Articles of Organization is the key to forming an LLC in Vermont. The LLC comes into existence as soon as its articles are approved by the VT SOS (provided a later date isn’t requested in the articles).

The state recommends filing the Articles of Organization online, though you can also do so via mail. Online filings use the Online Business Service Center where the BizFile system takes you through the process. You’ll have to create a free account to submit and manage your application.

Mail filings are possible, though the state doesn’t recommend using this option. There is no directly downloadable form available. However, you can submit a form request to get the form. After completing the form, you should mail it along with a copy, the filing fee, and a self-addressed and stamped envelope to:

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

For filings via mail, the required filing fee is paid through check or money order made payable to “VT SOS”.

The filing fee for Vermont Articles of Organization (Vermont LLC fees) is $125. 

Filings made through the online system usually get processed in one business day or less. Submissions through mail can take up to 7-10 business days for processing.

4. VT LLC Operating Agreement

The operating agreement is a very important internal document for your LLC. It isn’t required by law, but it is very useful for LLCs to have an agreement in place. Since this is an internal document, you don’t have to file the operating agreement with any government department or agency.

An operating agreement is often formed between the members of an LLC. However, single-member LLCs too should get an agreement.

As a key document, the Operating Agreement may lay down various policies and procedures of the business. For members, it can define their powers, roles, responsibilities, and position within the company. Dispute resolution mechanisms too can be a part of this agreement.

5. Getting A Federal Tax ID (EIN)

The IRS issues a 9-digit federal tax ID (EIN) to LLCs. You should apply for the EIN only after your LLC has been approved by the secretary of state. While the Employer Identification Number (EIN) is important for taxation, it also plays a role in the everyday functioning of your LLC. For example, getting a business bank account for the company might require an EIN.

Filing online is the easiest and quickest way to get your EIN. However, if you can’t file online, you’ll have to download and fill Form SS-4. You can submit the completed form via fax or postal mail. 

Usually, fax is the recommended filing method, as the processing time is a few business days. Filings via postal mail can take several weeks until the processing is complete.

Note, there is no filing fee for getting an EIN.

6. Vermont LLC Annual Report

All LLCs in Vermont must file an annual report with the Secretary of State. The report is an ongoing requirement and must be filed every year. For most Vermont LLCs, who have their fiscal year the same as the calendar year, this report is filed between January 1 and March 31. 

LLCs that have a fiscal year different than the calendar year must file the report within 90 days of the end of their fiscal year.

Annual Reports can be filed online. The filing fee is $35 for domestic LLCs and $140 for foreign LLCs.

7. Business License, Permits, And Taxation

The requirement for business licenses, permits, and taxation have to be tackled on the local, state, and federal level. Your VT LLC’s requirement for permits and licenses will generally depend on the city/county of operation. 

The industry of the LLC also plays an important role as local, state, or federal guidelines may require additional licenses or taxation. So, it’s best to contact the local government and regulatory government agency to get details on the licenses or permits required.

Federal taxation usually considers LLCs as pass through entities. That means the profit from your Vermont LLC can be reported as part of your personal returns filed with the IRS. However, this changes if you choose to have your VT LLC taxed as a corporation.

Therefore, it’s best to be careful about how you choose to structure your LLC for taxation. Often, hiring the services of professionals comes in handy to touch all bases related to licenses, permits, and taxation.