How to start an LLC in Vermont
The Vermont Secretary of State is the department responsible for processing new business entity applications in the state. If you are starting an LLC in Vermont, or any other business structure for that matter, you will go through the Secretary of State. This guide is all about how to start a Vermont LLC from start to finish.
LLCs (limited liability companies) are popular business entity types for several reasons. For one, they are a bit easier to set up (and to maintain) compared to a C-corp or S-corp. But more importantly, an LLC provides some liability protection for its owners, in the case that the business is ever sued.
If you’re looking to start a Vermont limited liability company, you must file the Articles of Organization with the Vermont Secretary of State. But there’s more to it than just that – keep reading to learn everything about how to start an LLC in Vermont.
Consider utilizing an LLC formation service
For the easiest and fastest experience, it’s recommended to use an LLC formation service. A few great options are Northwest Registered Agent, ZenBusiness, and IncFile. These three companies provide excellent service, fair prices, and a fast and efficient formation process.
Using a service essentially helps walk you through all the necessary steps in forming your new business. A lot of the work is expedited by the modern online web portals that these companies use, which ask the right questions and highlight the most important details to fill in.
Expect to spend around $50 to $250 for an LLC formation service, depending on which features you want and how fast you want everything processed. This is in addition to the Vermont LLC filing fee ($125).
Using a service is not required, as you can also just do the work on your own. This will take a bit longer – the steps you’ll need to take are explained below.
Name your new company
You must select an available business name for your new company before you move on to the actual formation process. The name should be something that is relevant to your industry or something that is brandable. Ideally, you want a memorable name for your clients or customers.
Vermont also has a variety of business naming rules that must be followed. For instance, the company name must contain “limited liability company” or a similar version, like “L.L.C.” or “LLC”. And it cannot contain any restricted words or phrases.
Finally, it is very important to choose a name that is available. This means that your company name must be distinguishable from all other business names already registered in Vermont. To confirm this, you can search this database of Vermont business names.
Once you find a name that you like, you have two options – either continue with the registration process (step #3 below), or reserve the name for 120 days. Reserving the name gives you more time, but it’s not necessary if you are ready to move on with registering your LLC.
Using a Trade Name in Vermont
Vermont allows for the use of “assumed names”, otherwise known as trade names or “doing business as” names. You can register an assumed name online, and the application will usually be processed in around 1 business day.
An assumed name can be registered once you have formed your LLC with its official name. The assumed name is essentially a secondary name that you can legally do business under, in addition to your technical LLC name. This provides a lot of flexibility for branding and marketing your business, and also means you can expand past your original scope of business without having to form a second LLC.
Appoint a Registered Agent
Every LLC in Vermont must select a registered agent to represent their company. The main responsibility of this agent is to receive legal notices (including notice of lawsuits) on behalf of the business. As such, the Agent’s mailing address will be publicly posted on the business registration information, and it is this address that many important documents will be sent to.
The registered agent must have a physical mailing address in VT (no Post Office boxes are allowed). Any Vermont resident can be a registered agent – and this includes yourself. So, you can simply appoint yourself as a registered agent for your company, or use an employee or partner.
Companies registered in Vermont can also serve as registered agents for other firms. There are a variety of professional registered agent services in the state that you can hire to be your registered agent. These include Northwest Registered Agent, ZenBusiness, and IncFile. Using a service offers enhanced privacy for the owners, as well as a lower risk of any important documents being missed or overlooked.
Create an operating agreement
Note: This step is optional, but recommended.
Most LLCs should have an operating agreement drafted for their business – however, this step is technically optional, as Vermont does not require one.
The reason you should have an operating agreement is that this document establishes important information about how your business will be operated. It establishes key rights and responsibilities for LLC members/owners, and other important procedural guidance. A well-crafted operating agreement can help prevent a lot of future issues when it comes to how your business is run – and who owns it.
Operating agreement templates are available from services like ZenBusiness and IncFile. Templates make it easy to craft an operating agreement on your own. Or, you can use the services of an attorney or business law expert in your area.
File LLC Articles of Organization
The Vermont Articles of Organization must be filed with the Secretary of State in order to form a new LLC in Vermont. The Articles can be filed online, or through the mail. There is a $125 state filing fee, which is payable to the Secretary of State. The filing fee is non-refundable and goes directly to the state of Vermont to cover processing costs. If you use a service like ZenBusiness, you will still pay the $125 state fee, and ZenBusiness will forward the money to Vermont.
To file online
File online with the VT Secretary of State. Pay the $125 filing fee online.
To file by mail
Request a form and fill it out. Include a check or money order for $125 (payable to the Secretary of State), and mail it to:
Vermont Secretary of State
128 State Street
Montpelier, VT 05633
Now, simply wait for Vermont to process your documents. Processing is the quickest (1-4 business days) when applying online. Mailed documents take longer to process (often 7-10 business days).
Apply for an EIN
EIN stands for an employer identification number. It’s a federal tax ID that is issued by the Internal Revenue Service (IRS) and is used to identify your business. Almost all LLCs should obtain an EIN, as they are very important for several business activities. Namely, an EIN is required in order to hire employees – but also to open bank accounts and other important activities.
To apply for an EIN, simply fill out this application on the IRS website. There is no fee to apply, and most of the time, EINs are issued instantly. Once you receive the EIN, you can use it to open a business bank account (see below), hire employees, etc.
Apply for business licenses & permits
There are additional permits and/or licenses that you may need to apply for. The specifics vary depending on the type of business you are running, and where it’s located. And there will be different requirements from the federal government, state government, and even local city or county governments.
Federal requirements are mostly set out for highly regulated industries, like agriculture, finance, medicine, etc.
On the state level, you will likely need to register a Vermont Corporate Tax Account with the Vermont Department of Tax. If you have employees, you will need an employer tax account with the Vermont Department of Labor. The Vermont Agency of Agriculture, Food, and Markets may also have additional requirements for your business, depending on your planned business activities.
And there are local-level government requirements to satisfy. This includes county and city government – and it includes each area where you plan to operate. So, if you have multiple locations, you will want to plan ahead and get properly licensed in each area. Most counties require a general-purpose business license, and may also require specialty permits or licenses in some cases. Check with your local government for details.
Sometimes your employees will also need their own licenses or permits, such as food handling permits or medical care permits. In general, the more regulated the industry you are in, the more permits and licenses you will need. Be sure to do your research to make sure that you are meeting all the criteria to operate legally.
Keep your business in good standing
The steps above will form your LLC in Vermont – but there are various ongoing requirements in order to keep your business running smoothly. You will need to keep your business in good standing with local, state, and federal government. The requirements vary at each level of government and also depend on what type of business you are running.
Although the specifics vary, some of the most common requirements include:
Vermont LLC annual reports
Employer tax/payroll tax
Vermont sales tax
Federal business taxes
Federal income taxes
Local city/county taxes
Permit renewals – city, county, state, and federal
Business license renewals – city, county, state, and federal, as required
It’s a good idea to thoroughly research your compliance requirements now so that you can stay ahead of any upcoming due dates. Then, create reminders for yourself in your calendar so that you don’t miss any filings.
Also, using a service like Northwest Registered Agent or ZenBusiness can help with these ongoing requirements as well. Although these services specialize in the initial business formation process, they can also help with certain ongoing requirements (like annual reports), and can send reminders for other filings.
Open a business checking account
You will want to open a dedicated business bank account as soon as possible once your business is formed. Requirements will vary (call ahead for details), but at a minimum, most banks will require a small opening deposit (cash or check), an EIN (see above), and a business license.
Business owners should always keep their personal finances completely separate from business finances. And the best way to do this is to use a separate bank account for your business. Once you have the new account, use it exclusively for business purposes.
At this time, you should also research other financial services and tools for your business. This includes business insurance, business credit cards, etc.