How to Form an LLC in Vermont in 7 Steps

By Catherine Hodder, Esq. | Legally reviewed by FindLaw Staff | Last reviewed May 24, 2024

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A limited liability company (LLC) is a favored business entity among entrepreneurs. The LLC business structure protects personal assets like a corporation and provides tax treatment like a sole-proprietorship or partnership to avoid double taxation. Whether you use a professional service or start an LLC on your own, it's best to understand the LLC formation process and Vermont law.

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Table of Contents

7 Steps to Form an LLC in Vermont

1

Name Your LLC

Choosing the name of your LLC is a critical first step to starting your business. Your name is your brand identity. Be as creative as you want. However, your LLC business name must conform to specific Vermont requirements.

The name of a limited liability company must use one of the following designators:

  • Limited liability company
  • Limited company
  • L.L.C.
  • LLC
  • L.C.
  • LC

You can abbreviate the words "limited" and "company" to "Ltd." and "Co." However, if you are forming a professional LLC or a low-profit LLC, there are different designators:

  • A professional LLC must have "professional" with one of the above designators or the abbreviation "PLC."
  • A low-profit LLC must end with the designator "L3C."

Your LLC business name must differ from all other business names on record in Vermont. And you can't use a name with discriminatory, indecent, or obscene language.

Search the Vermont Name Database. The Division of Corporations has a name availability search page. If the name you want is already in use or reserved, you need to choose a different name for your business.

Reserve Your Name. If you settle on an available name but are not yet ready to file your registration, you can reserve the name with the Vermont Secretary of State. File the name reservation application online and pay a fee of $20. The reservation holds the name for 120 days with the option to renew.

Avoid Infringement on a Business Name. You will also want to do a quick internet search to ensure you are not infringing on a trademark or domain name. Check the name on the United States Patent and Trademark Office (USPTO) website for prior registration. If the name isn't in use, you may want to trademark it so others can't use it.

Protect Your LLC Business Name. Your name is also your unique brand. Two ways to stop others from adopting it are registering the name as a trademark and reserving the domain name.

  • Trademark – You can trademark the name with the USPTO. Once you receive your federal trademark, you can register your trademark in Vermont. If you don't want a federal trademark, you can register only in Vermont if you wish. The fee for a trademark in Vermont is $20 and you can register online with the Secretary of State.
  • Domain Name – Check the internet to verify your internet domain name is available. If available, register the domain name with an approved ICANN registrar.

2

Get a Registered Agent

Vermont requires an LLC to appoint a registered agent for service of process before formally filing with the state. A registered agent receives service of process and legal documents on behalf of the LLC. A Vermont registered agent is an individual or a company (domestic or foreign), but it must have a physical Vermont street address.

Often, business owners use a professional registered agent service company to act as the registered agent for their LLC. They enjoy the convenience and support of a registered agent handling legal documents and serving as a contact with the Secretary of State.

3

File Your Articles of Organization

If you want to file your organizational papers with the state, you must create a user account with the Vermont Secretary of State, Corporations Division. You can compose and register your LLC using their online system.

Your Vermont articles of organization documents must contain the following information:

  • The LLC company name with the limited liability designation or abbreviation
  • A special election, if any (i.e., professional, low-profit, blockchain-based)
  • The month that the LLC's fiscal year ends
  • The business description or purpose of the LLC
  • The LLC's address of the principal office (a physical address, not a P.O. Box)
  • The registered agent's name, physical address, and email
  • The structure of the LLC (whether manager-managed or member-managed)
  • Number of initial members
  • Names/addresses of the initial managers or initial members
  • Effective date
  • $125 filing fee

The LLC organizer signs the certification and files the articles of organization with the $125 filing fee.

To file by mail, send to the Vermont Secretary of State Corporations Division 128 State Street Montpelier, VT 05633-1104.

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4

Draft an Operating Agreement

An operating agreement governs an LLC. An operating agreement is similar to the bylaws of a corporation. Vermont does not require an operating agreement, but most LLCs will have one.

The LLC operating agreement is a private business contract among the members/business owners. You do not file it with the state. A bank may want to see one when giving a loan or line of credit.

The U.S. Small Business Administration suggests the following topics for your Vermont LLC operating agreement.

  • Percentage of members' ownership
  • Voting rights and responsibilities
  • Powers and duties of members and managers
  • Distribution of profits and loses
  • Holding meetings
  • Buyout and buy-sell rules (procedures for transferring interest or in the event of a death)

The members may manage an LLC, or they may hire an outside manager. You will indicate which you have chosen on your registration application.

5

Get an EIN

If you have employees or your LLC has more than one member, you must request an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is a taxpayer identification number for your business, similar to a Social Security number. It is easy to apply for the EIN on the IRS website.

6

Set Up Business and Tax Accounts

Once you set up your LLC, register for a business tax account with the Vermont Department of Taxes. This process also generates your Vermont tax identification number. Most businesses will need to do this. This tax account handles all Vermont tax activities for your business, including income tax, sales tax, use taxes, etc.

You will be subject to both state taxes and federal income taxes. There are two ways LLC can be taxed: the LLC can be a pass-through organization, in which case each member is taxed individually, or taxed as a corporation.

7

File Beneficial Ownership Information Report (BOIR)

Your new LLC must file a Beneficial Ownership Information Report (BOIR) with FinCEN. The BOIR is a new requirement under federal law. If you create your LLC in 2024, file within 90 days of the day your LLC received notice of its creation/registration, or 90 days from the day public notice of your company’s creation/registration is given, whichever is earlier. If you form your LLC after January 1, 2025, you must file within 30 days from the date you receive actual or public notice of the LLC’s creation. 

You can start your BOIR at www.fincen.gov/boi. Select “File BOIR.” and be prepared to provide information regarding your LLC, its beneficial owners, and its applicants. Your LLCs may have two applicants: the person who directly filed the document that created or registered your LLC and the person who directed the filing. Beneficial owners are people who have substantial control over the LLC and/or own a minimum of 25% of the ownership interests of an LLC.   

Note: On March 1, 2024, the U.S. District Court for the Northern District of Alabama ruled that the Corporate Transparency Act was unconstitutional. At this time, it is unclear if the federal BOIR requirement will be enforceable. Business owners of LLCs formed before January 1, 2024, may want to wait until closer to the January 1, 2025 filing deadline to check if they must file a BOIR for their business. For LLCs formed in 2024, business owners may want to check right before their 90-day deadline to see if the BOIR requirement is applicable.

Business and Tax Requirements in Vermont

When establishing a business in Vermont, you may be liable for state taxes, employment taxes, and sales and use taxes. Additionally, your LLC may need licenses and permits for your business operations.

State Business Tax

The benefit of an LLC is that the profits can go on the individual member's tax returns, so they pay state income tax on their income. There is no corporate tax on LLC profits (unless the LLC elects to be treated as a corporation for tax purposes). However, the LLC pays a business entity income tax of $250 annually. You can pay the tax on the Vermont tax portal.

State Employer Tax

If you have employees when you register for a business tax account with the Vermont Department of Taxes, you will get an employer account. The Department of Labor has information about your responsibilities as an employer. For example, you must:

Sales and Use Taxes

You may need a seller's permit in Vermont to collect sales tax if you sell products. When you register your business with Vermont, you can set up a seller's permit. Vermont sales tax is 6%.

Business Licenses and Permits

The licenses and permits necessary to operate your business depend on your type of business. Vermont has a license and permit directory to guide you to what your business needs. You apply for most permits on the city and county levels where your run your business. Check with your local governments to see what regulations apply to your business.

Registration in Other States

Your Vermont LLC allows you to operate in Vermont. Suppose you want to do business in another state. In that case, you register in the new state as a foreign LLC through the Secretary of State's office. You follow their requirements to register to do business as a foreign LLC. You may need to request your certificate of good standing issued by the Vermont Secretary of State, Division of Corporations.

Annual Requirements in Vermont

After you have formed your Vermont LLC, you must renew your business registration by filing an annual report. This report is due within the first three months of your LLC's fiscal year-end, recorded on the LLC's articles of organization. When you file the annual report online, you pay a $35 fee.

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Vermont LLC Formation FAQs

To establish an LLC in Vermont, you must pay a $125 filing fee for the articles of organization. Each year after that, you pay an annual report fee of $35.

The filing fee of $125 is the same for a regular LLC, professional limited liability company (PLC), low-profit limited liability company (L3C), and blockchain-based limited liability company (BBLLC).

To renew your LLC each year, you file an annual report and pay a fee of $35. There is also a business entity income tax of $250.

Vermont offers many LLC formation types. The filing and fee requirements are the same. However, there are a few differences:

  • Single-member LLC. A single-member LLC, or SMLLC, is an LLC owned by one person or "member." The SMLLC can be taxed as a sole proprietor.
  • Multi-member LLC. A multi-member LLC, or MMLLC, is owned by more than one person or "members." The MMLLC can be taxed as a partnership.
  • Professional LLC. Professionals licensed in the state of Vermont, such as doctors, lawyers, and accountants, can create a professional LLC, or in Vermont, a PLC. They can apply for a PLC if at least half of the members hold licenses with the appropriate regulatory board.
  • Low-Profit Limited LLC. A low-profit LLC, or L3C, is formed for a charitable or educational purpose. It is allowed to be profitable. However, the business objective is to promote charity or education, not turn a profit. A low-profit LLC must use the designation L3C in its business name.
  • Block-Chain Based LLC. Vermont introduced this new business entity, Block-Chain Based LLC, or BBLLC, for cryptocurrency-affiliated companies. In the formation documents, the LLC must elect the BBLLC status and organize for the "purpose of operating a business that utilizes blockchain technology for a material portion of its business activities."

The articles of organization is the legal document you file to set up an LLC in Vermont. The document proves your LLC was created under Vermont state law and is authorized to operate in Vermont. When opening a business bank account, credit card account, or applying for a business license, you may need a copy of your articles of organization.

You can use the Division of Corporation's online portal to request a copy. There is no state fee for a plain copy. If you want a certified copy of the LLC's articles of organization, the fee is $25.

A certificate of good standing proves your LLC complies with state law and that all reporting and tax obligations are current. There are several reasons why you may need a certificate of good standing, such as:

  • Register to do business in another state as a foreign LLC
  • Apply for a bank loan or financing
  • Attract investors
  • Sell the business

You can request the certificate of good standing from Vermont's Division of Corporations for a $25 fee.

To organize an LLC in Vermont, you need a:

  • Acceptable business name and designator for your LLC
  • Registered agent
  • Registered office (a physical address in Vermont)
  • Filing of articles of organization
  • Payment of the $125 filing fee

A Vermont limited liability company has many advantages for the small business owner:

  • Personal liability protection from the LLC business liabilities
  • Options for pass-through taxation to avoid double-taxation
  • Fewer reporting requirements than corporations
  • Low fees for startup and maintenance
  • Unique LLC entities such as the low-profit L3C and blockchain-based BBLLC

In Vermont, you must maintain your LLC in two ways:

  • File an annual report for your LLC and pay the $35 filing fee to the Secretary of State.
  • Pay the LLC business entity income tax of $250 to the Vermont Department of Taxes.

No. The articles of organization is the legal filing to set up your LLC. You file this document with the Vermont Secretary of State, Division of Corporation. It becomes a public document.

An operating agreement, however, is an internal business document. The operating agreement addresses the management structure, profit and loss distributions, and members' rights and duties. You do not file your operating agreement with the state.

Yes. Generally, if you want to do business under a name that is not your registered Vermont LLC name, you file a DBA or "doing business as" with the state or local government, such as a county clerk. However, in Vermont, you register an assumed business name with the Secretary of State using their online assumed business registration portal. You must do another name search in Vermont's business name database to ensure the assumed business name is available.

Depending on your type of business, you may need a business license or permit. You can check Vermont's licenses and permits directory to see what department regulates your business. Additionally, you should inquire with your city and county offices for permit and license requirements.

Yes. Vermont set up an online portal to register your LLC. However, you must set up a user account with the Secretary of State and complete the application. Some entrepreneurs are busy or don't want to set up an account. In that case, they can use an online LLC formation service company to handle the process.

The physical and mailing address is:

Vermont Secretary of State
Corporations Division
128 State Street
Montpelier, VT 05633-1104

Yes. Although you can serve as your own registered agent as long as you reside in Vermont or have a physical Vermont street address, some entrepreneurs prefer using a registered agent service because the registered agents:

  • Accept service of process at their address. Any lawsuits are not served at your business or in front of your customers.
  • Keep your address private. If you operate from home but don't want to advertise your home address, the agent's address appears on the public record.
  • Maintain the good standing of your LLC. Registered agents alert you to annual tax and filing deadlines so you don't jeopardize your liability protection and pay costly penalties.
  • Are available when you aren't. A registered agent must receive service of process during regular business hours. You might not operate your business during those hours.

A domestic limited liability company formed under Vermont state law operates as a domestic LLC. When the Vermont Secretary of State accepts your articles of organization and issues a certificate, you have a domestic LLC.

If you want your Vermont LLC to do business in another state, register as a foreign LLC. There are a few common steps when registering as a foreign LLC:

  • Search the business records in the new state to see if your business name is available
  • Complete the new state's form to apply as a foreign LLC
  • Attach the certificate of good standing for your Vermont LLC
  • Pay the registration fee
  • Open business and tax accounts in the new state (if required)
  • File annual reports and pay yearly fees in the new state (if required)

If you have an LLC in another state but want to do business in Vermont, you must get a certificate of authority from the Vermont Secretary of State. To get this certificate, you must register as a foreign business. The registration requirements are similar to forming an LLC in Vermont. You must have the following:

  • An acceptable business name for your LLC
  • A Vermont registered agent and office
  • A certificate of good standing (or its equivalent) of the foreign LLC

Vermont has an online registration for a foreign business. The fee for a foreign business registration is $125.

If you no longer want your Vermont LLC, you should close it properly by dissolving the LLC. In some states, you draft articles of dissolution. In Vermont, they are called articles of termination. Vermont has the articles of termination on its business filing website.

Here are the following steps to dissolve your LLC:

  • Close the LLC following the dissolution procedures in your LLC operating agreement (if any)
  • Close tax and business accounts
  • Complete the articles of termination on the "end your business" section of the Vermont business filing website
  • Pay the $20 termination fee

An anonymous LLC does not disclose the LLC members' names on the articles of organization which is a public record. Vermont does not allow anonymous LLC formation. At this time, you can only form an anonymous LLC in Delaware, Nevada, New Mexico, and Wyoming.

Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.

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