How to File an LLC in Vermont

Starting a new business or legally registering your side hustle is one of the most important events in every entrepreneur’s life. LLC, or a limited liability company, is a popular business structure for small business owners because it offers considerable tax advantages and personal liability protection. 

Vermont is a small business-friendly state, and there are multiple types of business entities that you can form, such as an S Corp or a C Corp. However, out of all of them, a Vermont LLC offers the best advantages to small business owners. 

Key Takeaways:

• LLC is a popular business structure for small business owners because it offers considerable tax advantages and personal liability protection. 

• LLC members can determine their organization’s tax status. This means your LLC can be taxed as a sole proprietorship, an S Corp, a C Corp, or a partnership (if your LLC has multiple members).

• In most cases, the only things you’ll need to do to keep your business in good standing are filing an annual report and paying necessary state fees regularly.

In this article, we’ll give a step-by-step of the LLC filing process in the state of Vermont. 

What Is an LLC Formation?

LLC is an abbreviation for limited liability company. It’s a business structure that protects its owners — known as members — from personal liability. If anyone sues your LLC or has debts, your personal assets are protected because they can only seize your business assets. It works the other way around, too. If you are sued or have debts, your LLC assets are not at risk. 

Personal liability protection isn’t the only benefit of an LLC formation. Many small business owners decide to incorporate an LLC for tax purposes because this type of business entity offers a flexible tax structure. 

LLC members can determine their organization’s tax status. This means your LLC can be taxed as a sole proprietorship, an S Corp, a C Corp, or a partnership (if your LLC has multiple members). 

As a result, LLC members can report their LLC profits and losses on their personal tax returns using a Schedule C instead of filing a separate tax return for their business. This will help you avoid what is known as “double taxation,” when you are taxed on both your business revenue and personal income. 

An LLC is also easy to maintain — especially compared to other business structures. In most cases, the only things you’ll need to do to keep your business in good standing are filing an annual report and paying necessary state fees regularly. 

LLCs are formed under state statutes, and each state has different requirements you will need to fulfill to start an LLC successfully. In Vermont, you file your LLC with the Vermont Secretary of State. 

Anyone can start an LLC in Vermont, even domestic and international non-residents. You don’t actually have to live in Vermont to form an LLC in the state. 

When Should You Form an LLC? 

You don’t need to establish business activity to form an LLC in Vermont. Even though some entrepreneurs wait until their business is up and running before incorporating, starting your limited company as soon as possible is a good idea to protect your personal assets from potential liability. 

Step-By-Step Guide to Starting Your Vermont LLC

The process of LLC formation varies by state, and we created a step-by-step guide to help you start your Vermont business swiftly. In the following sections, you’ll learn about the next steps for incorporating your LLC in the state of Vermont: 

• How to choose a business name for your LLC

• What paperwork you need to complete

• Important process requirements 

• How much you can expect to spend on filing fees 

Step 1: Choose a Business Name for Your Vermont LLC

The first step to LLC formation in Vermont is choosing your business name. For the most part, you can name your LLC anything you want as long as your LLC name fulfills the following requirements: 

1. Your Vermont LLC name needs to be “distinguishable in the records.”[1] This means that it needs to be sufficiently distinctive from any other business name in the state. 

2. Your business name must include “limited liability company or “limited company” or an abbreviation such as LLC or L.L.C., or L.C. 

3. Your LLC name can’t include words that may indicate governmental affiliation, such as “FBI,” Treasury,” “State Department,” or similar. 

4. You can’t use vulgar language to name your LLC. The state of Vermont prohibits you from using discriminatory, indecent, or obscene language for business purposes. 

It’s vital to ensure name availability before filing for an LLC. You can do a name check on the Secretary of the State website. If other businesses in the state have the same or very similar name with Active, Terminated, Expiration Pending, Registered, Reserved, and Hold registration statuses, you can’t use this name for your LLC. 

When you find an available name you like, you can reserve it with the Vermont Secretary of State for up to 120 days with a $20 fee. 

Once you decide on your business name, consider securing your domain name. Virtually all businesses have websites, and it’s a good idea to make sure your domain name is available and reserve the right to use it. 

Your Vermont LLC name can be trademarked. Trademarking is a legal procedure that gives you an exclusive right to recognizable brand assets, including your business name. You need to form your LLC before you can trademark its name. 

Once you incorporate your LLC in the state of Vermont, you don’t have to keep using your official business name to do business. You can also have a doing business as name (DBA). For example, if your coffee shop’s business name is John’s Coffee LLC, you can still put up a sign that only says “John’s Coffee.” 

Step 2: Fill Out Vermont Articles of Organization

The Articles of Organization is a principal LLC formation document that legally establishes your LLC. Your Vermont Articles of Organization must provide the following information about your business: 

• LLC name, street address, and mailing address

• Whether it will be a regular, low-profit, or professional LLC

• A description of your LLC’s purpose

• The end of your LLC’s fiscal year

• Registered agent’s name and address

• Whether your LLC will be member-managed or manager-managed 

• LLC members’ and managers’ names and addresses

• Name, address, and signature of the LLC organizer 

You can file Articles of Organization with the Vermont Secretary of State online or by mail. If you file online, your filing will take less than one business day to process. If you mail your certificate, it will take 7-10 business days. The Secretary of the State office prefers online filing, but there are no extra state fees to file by mail.[2]

You will pay your LLC filing fee when you file your Articles of Organization. In the state of Vermont, the filing fee is $125. If you’re registering a foreign LLC (that is, if you already have an LLC in another state and want to expand your business into Vermont), the pricing of the state tax is still the same. 

Once the Secretary of the State reviews and approves your documents, your LLC will be established as a legal entity. 

In the future, you’ll need to do some things to keep your LLC in good standing with the state, such as periodically filing an annual report and keeping your other legal documents in order. 

Step 3: Hire a Vermont Registered Agent

Your Vermont LLC must designate a registered agent (RA) to comply with state law. Your registered agent is responsible for receiving service of process and other legal documents for your business. For example, if someone sues your business, they will serve your papers to your registered agent. 

You can be your own registered agent or hire a registered agent service. Appointing a professional service provider as your registered agent comes with multiple benefits. 

More Flexibility 

The law requires your Vermont registered agent to be present at their physical address during business hours. If you’re your own registered agent, you’ll have to be present at your designated address Monday through Friday, from 9 am to 5 pm. This requirement can significantly limit your lifestyle and ability to run your business. 

Privacy 

Your registered agent’s address becomes a part of the public record. If you work from home, this can be a cause for concern. Hiring a registered agent service means you can keep personal information private. 

Confidence 

You’re a busy business owner, and things can slip through the cracks. Hiring a professional RA service means you have peace of mind that all your documents will get where they need to be on time. 

Swyft Filings provides registered agent services in Vermont to help you fulfill your legal obligations and run your business smoothly. For $149/quarterly, Swyft offers a fast and reliable service with an online dashboard so you can access your business mail anytime. Get your registered agent today. 

Step 4: Create an LLC Operating Agreement

An LLC operating agreement is a legal document that outlines how your LLC will function.[3] Even though an operating agreement is not legally required to start an LLC in Vermont; it’s an important document to have in case you need to resolve any conflicts or disputes in your LLC. 

You can include the following information in your LLC operating agreement: 

• Rules for your LLC’s operations

• Members’ shares, rights, and responsibilities

• Rules for dividing profits and losses, admitting new members, holding meetings, and any other matters

• Liability clauses 

If you don’t create a written operating agreement for your business entity, state law will govern your LLC. This scenario gives you significantly less control over your business and leaves room for potential disagreements within your organization. 

You can create an operating agreement whether your LLC is a single-member LLC (to prepare for future growth), manager-managed, or member-managed. 

Step 5: File for an Employer Identification Number and Business Licenses

Your EIN — short for employer identification number — is a nine-digit number that the Internal Revenue Service uses to identify your Vermont business. It’s similar to a social security number but for your business. 

You must get an EIN to open a business bank account, establish state tax accounts, or set up employee payroll. To obtain it, apply for an EIN directly on the IRS website or by mail. 

You must also obtain all the necessary business licenses to comply with Vermont law. The types of business licenses you will need depend on your industry and the location of your business. 

For example, even though the state of Vermont doesn’t require you to obtain a general business license, some Vermont cities (for example, Burlington) require all businesses to have a general business license. 

Let Us Handle Your LLC Paperwork

Forming an LLC in Vermont can quickly turn complicated. It takes time and energy to fulfill all legal requirements and complete your LLC formation documents correctly. 

Yet, a simple inconsistency or a tiny mistake can prevent your Vermont LLC from being correctly formed and push your timeline back weeks, if not months. 

Swyft Filings can help you incorporate your LLC in as few as 10 minutes. You just need to follow three simple steps. 

Answer a Few Questions About Your Small Business  

Take 10 minutes to do a business name availability check and give Swyft Filings some details about your business services. Your answers will help us accurately prepare your formation documents and recommend any additional steps you should take to get your business up and running as soon as possible. 

Sit Back and Relax While Swyft Files Your Paperwork 

With some of the fastest turnaround times in the industry, we’ll file your LLC documents with the Vermont Secretary of State. While we’re at it, you can focus on being an entrepreneur and growing your business. 

Receive Your Approved Documents

Once you’ve formed your LLC, you’ll get all of your documents by mail. It’s simple and easy. 

Use Swyft Filings to form your Vermont LLC today. 

FAQs:

How much does it cost to set up an LLC in Vermont?

To form your LLC, you must cover the $125 fee for filing the Articles of Organization. You may also have to cover additional costs if your LLC formation documents are not filed properly. 

How is an LLC taxed in Vermont?

When you apply for your EIN, the IRS will inform you of your tax status. One of the benefits of forming an LLC is that you can choose your LLC’s tax structure. Typically, an LLC can be taxed as a sole proprietorship, an S Corp, a C Corp, or a partnership. Your LLC may be required to register with the Vermont Department of Taxes. 

What are the benefits of a Vermont LLC?

A limited liability company is a smart way to protect yourself from personal liability and run your business in compliance with Vermont law. 

How do you dissolve an LLC in Vermont?

To dissolve your Vermont LLC, you must file a Limited Liability Company – Termination form with the Secretary of State, Corporations Division (SOS). Vermont requires original signatures on your Termination form, so you must submit them by mail with a check payable to the Secretary of State and a self-addressed envelope. 

Bibliography:

1. Vermont Secretary of State. Business Name Rules & Availability. Accessed February 21, 2023. 

2. Vermont Secretary of State. Limited Liability Company. Accessed February 21, 2023. 

3. Vermont General Assembly. Chapter 025: Limited Liability Companies. Accessed February 21, 2023.