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The Limited Liability Company (LLC) is a popular business entity choice structure for many businesses starting in Vermont.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Vermont without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting for the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration and management flexibility.

Forming an LLC in Vermont is fairly straightforward, but it’s nice to have some support in case you have questions or get stuck.  IncFile and Inc Authority provide LLC formation guidance for only the cost of the state fees!

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

To form a Limited Liability Company in Vermont, file the Articles of Organization with the Vermont Secretary of State.  The LLC filing fee is $125.

Approval for the LLC is typically around two weeks when filing by mail or 1 day when filing online.

 

HOW TO FILE THE ARTICLES OF ORGANIZATION AND FORM A VERMONT LLC

The steps for filing online or by mail are largely the same.  The screenshots show how to file online.

How to Form an LLC in Vermont

  • Click on “VT Secretary of State Online Services” on the left menu and then “Start or Register Your Business”.

Register Vermont LLC

 

Step 1: Create Business

Most people on this site will forming their first LLC and it will likely be located in the state.  If that is the case, select “I am Creating a New Domestic Business”.   If it originally formed the LLC in another state and wanting to do business in Vermont, select “I am Registering a Foreign Business”.

Then a new menu will appear for “Business Entity” where you would select “Limited Liability Company”.

From the next menu, select “Limited Liability Company”.

Create a New Domestic LLC Vermont

Step 2: Business Name

Enter the name you want for the LLC.  The name of the LLC also has to differ from other entity names registered with the Secretary of State.  You can also check on available LLC names in Vermont before going through the filing process to be sure the one you want is available.

The name of the LLC must also include a designator at the end of the business name.  A designator describes what type of business entity it is. Available designators include:

  • Limited Liability Company
  • Limited Company
  • L.L.C.
  • LLC
  • L.C.
  • LC
  • Ltc. Co.

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

You have the option of entering two alternate names in case the one you enter is rejected.

Before settling on a name, you may want to do a domain name search to try and match your business name and website address.

Register a Business Name Vermont LLC

 

Step 3: Business Description

This section is asking for information regarding the activities of the business.  To do that, there is a number called NAICS (North American Industry Grouping Code).  This code is a six-digit number that classifies and categorize the different businesses.  This information is used in reporting statistical data for each of the industries in the U.S.  Remember this number as you will need it when filing annual tax returns.  You can do a more indepth search for your NAICS number here.

If the activities of your business aren’t specifically listed, choose one that is close.

Vermont LLC NAICS Code

Step 4: Domestic Jurisdiction

“Vermont is automatically chosen as the domestic jurisdiction and can’t be changed.  

Step 5: Designated Office Information

Physical Address – In this section, enter the street address, city, state and zip code of the initial principal office.  This address can be the physical address of the LLC or it can be the address where the business records are stored.  You may not use a PO Box for the designated office.

Mailing Address – A mailing address is required and it can be the same as the Principal Address.  If the records of the LLC will be sent to a different address, enter that information in the Mailing Address Section.  If the address is the same as the principal office, click on the “Use this address as the Mailing Address also” box to copy the Principal Address address.

Any address is acceptable regardless of location or PO Box.

VT LLC Principal Office Address

Step 6: Business Email Address

Enter a preferred address where correspondence from the Secretary of State will be send regarding the LLC application.

 

Step 7: Fiscal Year End (Month)

Select the preferred ending month for the LLC’s fiscal year.  Single-Member LLCs and LLCs taxed as a partnership should choose December.

The default end month is December by the state.

Step 8: Registered Agent

To have an LLC in Vermont, a Registered Agent must be identified.  The Registered Agent can either be a resident of Vermont, a business entity or a Registered Agent service.  The agent must have a physical address in the state (PO Boxes are not allowed) and act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc on behalf of the LLC.

Even though the business owner can be the registered agent, their name and address become public record and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home.

If you are using a Registered Agent service, enter their name and select “Search”, otherwise select “Create Agent” to add a new record.

Vermont LLC Registered Agent

Step 9: Manager/Member Information

This section asks about the management choice of the LLC.

  • Member-Managed LLCs have an active involvement in the management and have authority to act on behalf of the LLC.
  • Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation.  This is generally used when there are passive members in the LLC and the members do not actively manage or operate in the affairs of the business.

Most LLCs are member-managed.

The next question asks if the LLC has members at the time of filing.  Select “Yes” or “No”.

VT LLC Member Manager Managed

The next section asking for the members/managers address is optional.  Some filers won’t want to include their names because those names become part of public record.  The downside of not include their names is it can make it more difficult to show ownership and do things like get licenses and open a bank account for the LLC.

Step 10: Other Provisions

This is an optional section and not used by most LLCs.  Here you would include additional rules for the operation of the LLC.

Step 11: Certify

An organizer will need to certify the information being submitted is correct.  An organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney or accountant, but any of the initial members can be listed as an organizer.

If you want the LLC to start immediately, choose “This statement will be effective as of the date of this filing”.  If you want the LLC to start later, choose “the effective date requested for this statement will be date” where you can enter a date less than 90 days in the future.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year and the business isn’t going to have any activity until the start of the year.  By delaying until the following year they will reduce the number of end-of-year filings.

Vermont LLC Certify Articles of Organization

Step 12: Review

Review that all the information is correct.  If there are no corrections, click “Proceed to Pay”.

Step 13: Pay and File

Pay and file the Articles of Organization.

Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare an Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed and more.

Most states do not require an LLC to have an operating agreement but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit
  • Member’s personal liability protection may be diminished
  • Members may not have a full understanding of their roles and responsibilities which could lead to costly disputes in the future

Related: Vermont operating agreement template

Obtain an EIN

The EIN or Employer Identification Number is a unique 9-digit number for a business. Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.

The EIN will be needed in order to open a bank account, register for business licenses and permits, file tax returns, pay payroll taxes and more.

Related: How to Apply for an EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Depending on the age of the LLC, a Vermont Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be a variety of business licenses and permits to register for before starting. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start. In some cases, even home-based businesses must have licensing in order to legally operate.
  • Professional License – Certain services such as barbershops, accountants, salons and others must be licensed.
  • Sales Tax Permit – In order to sell products and certain services, registration with the Vermont Department of Taxes will be necessary.

Related: What Business Licenses are Needed in Vermont?

File Annual Reports

LLCs are required to file an annual report with the Vermont Secretary of State.  The annual report updates ownership information and other details.

Related: How to File a Vermont LLC Annual Report