Starting a Limited Liability Company (LLC) in Vermont offers several benefits to business owners, including legal protection for personal assets, flexibility in management and taxation, and credibility with clients and customers. Whether you’re launching a startup in Vermont or are based out of state, forming an LLC is an excellent choice for many entrepreneurs.
This step-by-step guide will walk you through the entire process of starting an LLC in Vermont in 2025, covering everything from choosing a name to understanding your ongoing responsibilities after formation.
Costs to File an LLC in Vermont
| Fee | Amount (USD) |
|---|---|
| Filing Articles of Organization | $125 |
| LLC Name Reservation (optional) | $20 |
| Registered Agent (optional) | Varies (typically $100-$300/year) |
| Annual Report Fee | $35 |
Here are the steps to forming an LLC
Forming an LLC in Vermont is a straightforward process that provides business owners with personal liability protection, tax flexibility, and an established business structure. By following these essential steps, you can quickly set up your LLC and start operating legally in Vermont. Here’s a breakdown of the process to help guide you.
1. Search Your LLC Name
Choosing a name for your LLC is one of the first steps in the process. Your LLC’s name must adhere to certain rules to be acceptable by Vermont’s state regulations. These rules ensure that your LLC’s name is not only unique but also accurately reflects the legal structure of your business.
LLC Naming Requirements:
- Your name must be distinguishable from the names of existing businesses on file with the Vermont Secretary of State.
- It must include one of the following words or abbreviations: “Limited Liability Company,” “LLC,” “L.L.C.,” “Limited Company,” “LC,” or “L.C.”
- Your LLC name cannot include words that could confuse your business with a government agency, such as “FBI,” “Treasury,” or “State Department.”
- If you plan to operate under a name different from your legal LLC name, you’ll need to file for a “Doing Business As” (DBA) name.
Before you start the filing process, it’s essential to check if your desired name is available. You can do this by performing a business name search on the Vermont Secretary of State’s website. The search is free and allows you to determine if another business already uses the name you want.
If you want to hold the name for a while before filing your LLC, you can reserve it for up to 120 days by submitting a Name Reservation Request and paying a $20 fee.
2. Choose a Registered Agent
A Registered Agent is a person or business entity that agrees to accept legal documents, government notices, and tax correspondence on behalf of your LLC. In Vermont, every LLC must have a Registered Agent.
Who Can Be a Registered Agent?
Your Registered Agent must meet specific requirements:
- The Registered Agent must have a physical address in Vermont (a P.O. Box is not acceptable).
- They must be available during regular business hours to receive and forward documents.
- The Registered Agent can be either an individual (like yourself or someone you know) or a professional service.
If you are forming an LLC in Vermont but are not a resident of the state, you will need to hire a Vermont-based Registered Agent. Many entrepreneurs choose to use professional Registered Agent services for convenience and privacy reasons.
Using a professional service, such as Northwest Registered Agent, allows you to keep your personal address private and ensures timely receipt of important legal documents. Furthermore, many services offer additional features like mail forwarding and online access to documents, which can make managing your LLC more efficient.
3. File Articles of Organization
Once you’ve chosen your LLC name and appointed a Registered Agent, it’s time to officially form your LLC by filing Articles of Organization with the Vermont Secretary of State. This is the document that officially creates your LLC and allows you to do business in the state.
Key Information Required in the Articles of Organization:
- LLC Name: The full name of your LLC, including the required designator (e.g., LLC, L.L.C., Limited Liability Company).
- Registered Agent Information: The name and physical address of your Registered Agent in Vermont.
- Management Structure: Indicate whether your LLC will be managed by its members (owners) or by one or more managers.
- Principal Address: The physical address of your LLC. This is where your business will be based.
- Duration of the LLC: Most LLCs are formed with an indefinite duration unless you specify a limited period.
You can file the Articles of Organization online or by mail. Filing online is typically faster, and your application will be processed in 1 business day. If you choose to file by mail, it may take about 5-7 business days to process, plus additional mail time.
The filing fee for the Articles of Organization is $125, payable by check or credit card if filing online. Upon approval, you will receive a certificate from the Vermont Secretary of State confirming that your LLC is legally registered.
4. Create an Operating Agreement
While Vermont does not require an LLC to have an Operating Agreement, it is highly recommended to have one in place. The Operating Agreement is an internal document that sets forth the ownership structure, member responsibilities, and management procedures of your LLC.
Even though it is not required by law, an Operating Agreement can help prevent disputes among members and clarify the operational aspects of your business. It also demonstrates to banks and potential investors that your LLC is organized and serious about its operations.
Key Elements of an Operating Agreement:
- Ownership Structure: The percentage of ownership each member holds in the LLC.
- Management Structure: Whether the LLC will be managed by members or by appointed managers.
- Profit and Loss Distribution: How profits and losses will be shared among members.
- Member Roles and Responsibilities: The specific duties of each member or manager, including decision-making authority.
- Dissolution Process: How the LLC can be dissolved if necessary and how remaining assets will be divided.
You can create the Operating Agreement yourself, but many entrepreneurs choose to consult a lawyer to ensure the document covers all necessary aspects. Once signed, the Operating Agreement should be kept with your LLC records.
5. Get an EIN for Your LLC
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is required for most LLCs. The EIN is used to identify your LLC for federal taxes, hire employees, open business bank accounts, and file tax returns.
How Can I Get an EIN?
The good news is that obtaining an EIN is free and easy. You can apply for an EIN directly through the IRS website. The process only takes a few minutes, and you will receive your EIN instantly upon completion of the application. If you prefer, you can also apply by mail or fax, but the online application is the fastest method.
Once you have your EIN, keep it in a safe place, as it will be required for various business activities, including filing taxes and opening a business bank account.
What Do I Do After My LLC Is Approved?
After your LLC is officially formed, there are several important steps to take to ensure your business remains compliant with state regulations.
Open a Business Bank Account
One of the key advantages of forming an LLC is the protection it provides to your personal assets. To maintain this protection, it’s essential to keep your personal finances separate from your business finances. A business bank account allows you to do this, and it also makes your LLC appear more professional to clients and vendors.
When opening a business account, you’ll need to provide several documents, including:
- A copy of your Articles of Organization.
- Your EIN.
- A copy of your Operating Agreement (if applicable).
- A valid photo ID.
Apply for Necessary Business Licenses and Permits
Depending on the nature of your business and your location, you may need to apply for business licenses and permits. Vermont has state-level requirements for certain industries, and local municipalities may have additional licensing requirements.
Check with the Vermont Department of Economic Development and your local town or city office to find out what licenses or permits you may need to operate legally.
Understand Vermont Taxes
As a Vermont LLC owner, you must comply with the state’s tax laws. Vermont has various taxes that could apply to your LLC, including:
- Income Tax: Vermont taxes LLCs as pass-through entities, meaning the business itself does not pay income taxes. Instead, the profits and losses are passed through to members, who report them on their personal tax returns.
- Sales and Use Tax: If you sell physical goods or certain types of services, you may be required to collect sales tax from your customers. You’ll need to register with the Vermont Department of Taxes.
- Employee Withholding Tax: If you have employees, you must withhold Vermont state income tax from their wages. You’ll also need to make payroll tax deposits.
File Your Annual Report
All LLCs in Vermont are required to file an annual report with the Secretary of State. The annual report helps the state maintain up-to-date information about your LLC.
The fee for filing the annual report is $45. It is due by the end of the month in which your LLC was formed. For example, if your LLC was formed in May, your annual report would be due by May 31 of the following year. If you fail to file your annual report, your LLC could be administratively dissolved.
Maintain Proper Records
While it’s not a legal requirement to file an annual report with Vermont’s Secretary of State, it’s essential to maintain proper business records for tax purposes, management decision-making, and in case of legal disputes. Keeping organized records will help you run your LLC smoothly and ensure compliance with both state and federal regulations.
Vermont State Agency Contact Information
For further information on starting an LLC or any questions regarding business formation in Vermont, you can contact the Vermont Secretary of State’s office:
Vermont Secretary of State – Corporations Division
128 State Street
Montpelier, VT 05633-1104
Phone: (802) 828-2386
Website: https://sos.vermont.gov
Conclusion
Starting an LLC in Vermont is a manageable process when you follow these steps and stay informed about your legal responsibilities. Whether you’re starting a small local business or launching a larger enterprise, an LLC provides essential protection and flexibility for entrepreneurs. By carefully choosing your business name, selecting a reliable Registered Agent, and ensuring compliance with tax and licensing requirements, you can set your business up for success.
FAQs
Can I form an LLC in Vermont if I don’t live there?
Yes, Vermont allows both residents and non-residents to form an LLC. If you don’t live in Vermont, you’ll need to appoint a Registered Agent who is based in the state to handle legal documents on your behalf.
How long does it take to form an LLC in Vermont?
The processing time for online filings is typically one business day. If you file by mail, it may take 5-7 business days, plus mail time. After your LLC is formed, you’ll receive a confirmation from the Secretary of State.
What is the annual report fee for a Vermont LLC?
The annual report fee is $45, and it must be filed every year to keep your LLC in good standing with the state.
Can I operate under a different name than my LLC’s legal name?
Yes, if you want to operate under a name that is different from your LLC’s legal name, you can register a “Doing Business As” (DBA) name with the Vermont Secretary of State.