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A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC. Here are the steps you need to take to form an LLC in Vermont. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
Under Vermont law, an LLC name must contain the words "Limited Liability Company" or "Limited Company," or the abbreviations "LLC," "LC," "L.L.C.," or "L.C." The word "Limited" may be abbreviated as "Ltd." and the word "Company" may be abbreviated as "Co."
Your LLC's name must be distinguishable from the names of other business entities already on file with the Vermont Secretary of State. Names may be checked for availability at the Vermont Secretary of State business name database.
You may reserve a name for 120 days by filing an Application to Reserve a Specified Business Name with the Vermont Secretary of State. The application may be filed online or by postal mail. To file by postal mail with a traditional paper check, you must complete the online filing process and select this option at the end as a method of payment.
Using a Trade Name
You don't have to use your LLC's official legal name registered in your Articles of Organization when you do business out in the real world. Instead, you can use a trade name, also called a fictitious business name, "DBA" (short for doing business as), or assumed name. To do so in Vermont, you must register your assumed name with the Vermont Secretary of State. You may register online or by postal mail. To file by postal mail, you must complete the online filing process and select this option. For more on registering business names, see Nolo's article How to Register a Business Name.
Every Vermont LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC's behalf if it is sued. The registered agent may be a Vermont resident, or a corporation or LLC registered do business in Vermont. The registered agent must have a physical street address in Vermont.
A Vermont LLC is created by filing Articles of Organization with the Vermont Secretary of State. The filing fee is $125. The articles must include:
The articles can be filed online or by postal mail. To file by postal mail, you must complete the online filing process and select this option. Online registration is the preferred method and the turnaround time for creating your LLC is quicker. If you create your LLC online, you must provide an email address for your business to which you have regular access.
An LLC operating agreement is not required in Vermont, but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates. An operating agreement does not need to be filed with the Articles of Organization.
If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
All Vermont LLCs and Foreign LLCs authorized to do business in the state must file an annual report with the Vermont Secretary of State Corporations Division. The report is due within three months of the end of the LLC's fiscal year--for example, if your fiscal year matches the calendar year (ends in December), your annual report is due any time between January 1 and March 31. The report may be filed online or by postal mail. To file by postal mail, you must complete the online filing process and select this option. The filing fee is $35 for a Vermont LLC and $140 for a foreign LLC.
Should I form an LLC in Vermont?If you are just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the right business structure for you, see What is a Limited Liability Company (LLC)?
How do I know if my LLC name is available?It is important to make sure that your LLC's name is distinguishable from the names of other existing businesses on file with the Vermont Secretary of State. You can conduct a name search for free on their website to make sure your proposed name is available.
How much does it cost to form an LLC in Vermont?Filing on your own is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will often cost you hundreds, if not thousands, of dollars in the process. Nolo's Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $49.00. To learn more about the costs associated with forming and running an LLC, see How Much Does It Cost to Form an LLC?
Do I need an operating agreement for my Vermont LLC?Vermont does not require LLCs to have operating agreements, but it is highly advisable to have one. An operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law by default. For more information, see The LLC Operating Agreement.
Do I need a business license in Vermont?Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses. For local licenses, check with the clerk for the city where the LLC's primary place of business is located (or county if it is in an unincorporated area). For state license information, consult the State of Vermont Business Start-Up Guide. For more information, see Nolo's article How to Get a Small Business License in Vermont.
Are there Vermont business taxes I need to pay?In some cases, for example if you have employees or will be selling goods and collecting sales tax, you'll need to register with the Vermont Department of Taxes (DOT). Generally, your first step in registering for these taxes can be completed online (through the VTBizFile website) or by mail (using the proper DOT form). For more information on state LLC tax registration, check Nolo's article Vermont LLC Annual Filing Requirements.
Can a foreign LLC do business in Vermont?To do business in Vermont, all LLCs organized outside of the state must register with the Vermont Secretary of State. Foreign LLCs must appoint a registered agent for service of process. The agent may be a Vermont resident, or a corporation or LLC authorized to do business in Vermont.
To register, file an Application for Certificate of Authority with the Vermont Secretary of State. The application can be filed online or by postal mail. To file by postal mail, you must complete the online filing process and select this option. The filing fee is $125.
The completed application must be accompanied by a certificate of legal existence or good standing from the foreign LLC's home state, dated no more than 30 days prior to the filing of the certificate.
Can I form a single-member LLC in Vermont?For most formation purposes, a Vermont single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in Vermont are the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see Nolo's article, How Single-Member LLCs Pay Federal Income Tax.
Can I form a professional LLC in Vermont?If you provide a licensed professional service in Vermont and want to form an LLC, you will be required to form a professional limited liability company (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to obtain a Vermont state license before practicing, then you are a professional service. Under Vermont law, LLCs can be formed to provide professional services. However, only one specific type of service may be provided and all the owners of the LLC must be licensed or registered to perform the professional service for which the LLC was organized.
To learn more about forming a Vermont PLLC, see our article, How to Form a Professional LLC in Vermont.
How do I dissolve my LLC when I'm done?If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. Learn about the steps you will need to take.