How to Start an LLC in Vermont (Step-by-Step Guide)

Our picks for LLC formation services

	Most recommended Tailor Brands	$0 LLC Formation (just pay state fee) FREE business plan included (no credit card required) Business documents, taxes & BOI filing Up to $50 Amazon gift card included	Visit Tailor Brands
	Northwest Registered Agent	Same-day processing Free registered agent service for one year Free domain, website, email and phone Expert support from real people	Visit Northwest
	ZenBusiness	Starts at $0 plus state fees 100% accuracy guarantee and worry-free compliance Personalized dashboard Finance and marketing tools	Visit ZenBusiness
	LegalZoom	Starts at $0 plus state fees Attorney guidance at an affordable price Most tools, support, and guidance for your business Reputable company trusted by 4M+ business owners	Visit LegalZoom

FAQs

What are the benefits of forming an LLC in Vermont?

Forming an LLC in Vermont offers several benefits, including personal liability protection, which safeguards personal assets like your home or car from business debts and lawsuits. Additionally, LLCs provide flexibility in taxation, allowing owners to choose how they are taxed, which can lead to tax advantages. The structure also offers ease of management and fewer record-keeping requirements compared to corporations.

Can an LLC in Vermont be owned by a single person?

Yes, an LLC in Vermont can be owned by a single person, known as a single-member LLC. This structure allows the sole owner to enjoy the benefits of limited liability protection while maintaining complete control over the business decisions and operations. The single-member LLC is treated similarly to a sole proprietorship for tax purposes.

Do I need to publish a notice of LLC formation in Vermont?

No, Vermont does not require LLCs to publish a notice of formation in a newspaper or any other publication. This simplifies the process of starting an LLC in Vermont, as it removes a step that is required in some other states, saving time and money for the business owner.

What is a Professional LLC, and how is it different in Vermont?

A Professional LLC (PLLC or PLC) in Vermont is designed for businesses that provide professional services requiring a license, such as legal or accounting services. The main difference between a PLLC and a regular LLC is that a PLLC allows licensed professionals to take advantage of the LLC’s benefits. Members of a PLLC must typically be licensed in their profession.

Can my Vermont LLC have a DBA?

A DBA (Doing Business As) in Vermont allows a business to operate under a name different from its legal name. It is also called an assumed name. Registering a DBA in Vermont is a straightforward process, involving filing with the Vermont Secretary of State and paying a $50 filing fee.

What ongoing costs should an LLC owner consider?

In addition to these direct costs associated with setting up and maintaining an LLC, operational costs such as rent, utilities, taxes, and wages are important to plan for ahead of time. These expenses are recurrent and can vary.

Which site builders are best to launch a new website?

Domain.com and GoDaddy are top choices because they make it easy to build your website. Their site builders don’t require any design or coding knowledge and let you drag and drop elements to create a seamless website on your own.

SHARE THIS POST

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 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.

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:

1. An LLC’s name must be distinguishable from the names of existing business entities on file with the Vermont Secretary of State.
2. 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.

Need help coming up with a business name? Check out our free business name generator.

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.

3. File Articles of Organization

An LLC is formed in Vermont through the filing of Articles of Organization with the Vermont Secretary of State.

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

You can file the articles online with the Secretary of State, Business Services Division, or by postal mail. The filing fee is $125.

4. Create 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:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. 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 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.

Obtain business licenses and permits

In Vermont, when setting up an LLC, it’s noteworthy that the state does not require a general business license that applies to all businesses. This aspect simplifies the process for many entrepreneurs, as there’s no single overarching license to apply for at the state level.

Business tax license: One of the key licenses that many businesses will need is the business tax license. This is especially important for LLCs that will be selling goods or services subject to sales tax. The business tax license allows your LLC to collect sales and use tax on transactions legally. Applying for this license is a straightforward process that can be done online through the Vermont Department of Taxes’ website.

Occupational licenses: Depending on the nature of your Vermont business, you might find yourself needing additional permits or licenses. For instance, businesses in the food service or construction sectors often face specific licensing requirements. These occupational licenses are typically issued by independent bodies, at the state level, so you will need to find the ones that apply to you.

Check out the Department of Taxes Start a Business Guide for information on state business licensing requirements.

Local licenses: Additionally, the regulations can vary from one town or city to another within Vermont, potentially requiring local business licenses or adherence to specific regulations.

For information on local licensing requirements, contact a city or county clerk in the area where your LLC is based.

Understand state taxes

In Vermont, LLCs are treated as pass-through entities for the purpose of taxation. This setup means that the LLC is not directly subject to state income tax.

Instead, the profits and losses are passed through to the individual members, who then report this income on their personal tax returns.

Vermont tax rates: Members are taxed according to Vermont’s personal income tax rates, which are graduated and range from 3.35% to 8.75% based on the income level.

Self-employment taxes: Additionally, when it comes to self-employment and employer taxes, members of an LLC in Vermont must consider their obligations under federal and state tax laws. As self-employed individuals, LLC members are responsible for paying self-employment taxes, which cover Social Security and Medicare contributions. These taxes are based on the net earnings from self-employment, reflecting the individual’s share of the LLC’s profits.

LLCs with employees: For LLCs that have employees, there are employer tax responsibilities to consider as well. These include withholding income taxes on behalf of their employees, paying state unemployment insurance taxes, and contributing to workers’ compensation insurance, among other possible requirements.

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.

Understand BOI reporting

The Beneficial Ownership Information (BOI) Reporting Rules, initiated by the Corporate Transparency Act (CTA), came into effect at the start of 2024.

What it is: These regulations mandate that certain businesses, including corporations, limited liability companies (LLCs), and other similar entities that are formed or registered to conduct business in the United States, must submit details about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

Filing deadlines:

The rules set different deadlines for companies based on when they were established or registered.

• Entities in existence before the start of 2024 have until the end of the calendar year to submit their initial report.
• Those established or registered after the start of 2024 have 90 days after their formation notice to file.
• Businesses registering in 2025 have 30 days to submit their report.

The submission process is digital via FinCEN’s dedicated BOI reporting system.

Learn more about BOI Reporting.

Post LLC tasks

Set up business bank accounts

While a business bank account isn’t legally mandated, it is critical for LLCs to have one. An LLC needs a business bank account to ensure financial separation between personal and business finances, a crucial step in maintaining the limited liability protection that an LLC structure offers.

This separation simplifies accounting, tax filing, and the management of business expenses while also enhancing professionalism when dealing with clients or vendors.

Banking options: For LLC owners looking for suitable banking options, Found, Relay, and Mercury emerge as commendable choices. Each of these platforms caters to the unique needs of small businesses with features like online banking, low fees, and tools designed to streamline financial management, making them ideal for LLCs aiming to optimize their financial operations.

Obtain a Certificate of Good Standing

Vermont offers a specific document to businesses called the “Certificate of Good Standing or Status,” which verifies a business’s legal compliance within the state.

What it is: This certificate is a testament to a business’s adherence to the requirements set by the Vermont Secretary of State, ensuring that the business is up to date with its filings, retains the legal rights to its business name, and is authorized to operate under that name within Vermont.

How to get it: To obtain this certificate, businesses must go through the Vermont Secretary of State’s office. The process has been streamlined thanks to an online portal where requests can be made for a $25 fee.

Build a website       

No matter what type of business you are starting, a website is a crucial step in getting off the ground. Having one will allow potential customers and partners to find you easily and give you the chance to showcase your products or services.

While every LLC owner knows a website is necessary, you might not know where to start. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Costs to set up an LLC in Vermont

Starting and operating an LLC in Vermont involves various costs.

• Incorporation fees: Initially, the setup costs include a $125 filing fee for the Articles of Organization with the Vermont Secretary of State. To set up a business in the state, you must file these formation documents and pay the filing fee.
• Annual Report filing fee: LLCs are required to file an Annual Report with the state. You’ll file the report with the secretary of state, and pay a $35 filing fee.
• Registered agent services fees: Beyond these required costs, LLCs may also incur expenses that, while not mandatory, can be critical for smooth operation and legal protection. For instance, hiring a registered agent service, which starts at around $50 per year, can help manage legal notices and ensure timely filings.

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:

1. Comply with Vermont LLC naming restrictions and confirm that the LLC’s name is available using the Secretary of State Business Search.
2. Appoint a Vermont registered agent.
3. 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.