Vermont is a small state that is small business-friendly. More than 74,900 small businesses are registered in the state, 72% of which have no employees. Starting a limited liability company (LLC) is a great option to consider for your business entity. LLC business owners don’t risk personal assets with the liabilities of the company.
We’ve established this guide to help you set up an LLC in Vermont. Read on to learn about the steps involved.
Featured Partners
1
ZenBusiness
$0 + State Fees
Varies By State & Package
2
LegalZoom
$0 + State Fees
Varies By State & Package
3
Northwest Registered Agent
$39 + State Fees
Varies By State & Package
Before Establishing an LLC in Vermont
By preparing a few things before you file the paperwork to get an LLC, you can make sure the process goes smoothly and avoid spending money you don’t need to.
Check Name Availability
The Secretary of State will not register a business name that is too similar to another business name. This is to prevent consumer confusion in the market. You’ll want to search your potential business name with the Secretary of State using the Express Search feature. If another company pops up, you want to change your company name to make it more unique so that it passes the Secretary of State’s requirements.
You can reserve the name for up to 120 days with a $20 filing fee by logging into the online portal and going into the Online Business Service Center.
Find a Registered Agent
Every Vermont LLC needs to have a registered agent who can receive any legal documents. The registered agent must be a Vermont resident or a company authorized to do business in Vermont that has a physical address in the state. You must also designate an office for notification purposes.
Many LLCs use a member as the registered agent. However, if you don’t have someone who meets the requirements, you can hire a registered agent. These services typically cost anywhere from $50 to $300 each year.
Get Your Domain Name
If you plan on having a website to market your business, you will want to lock in the domain name as soon as possible. The domain name may be the business name or a phrase that easily describes what you do or offer. Secure the domain name by purchasing it from a domain broker. You can expect to pay anywhere from $0.99 to $49.99 per year for most domain names. Some premium names may be more expensive.
Register Your Vermont LLC
It takes less than a day to process your LLC through the Vermont Online Business Service Center. If you choose to mail the Articles of Organization, it can take up to ten business days to process your form. It costs $125 to file the Articles of Organization. Mail forms to:
Vermont Secretary of State
Corporations Division
128 State Street
Montpelier, VT 05633-1104
After You Form Your Vermont LLC
Once your paperwork is processed, you’ll want to put other necessary elements in place for your LLC.
Create an Operating Agreement
The operating agreement is a document that describes how the LLC should be run. It lists the members, their roles and their contributions. While this document is not legally required, it has legal authority if a conflict between members arises. It also provides the business with a sense of legitimacy and purpose.
Get an Employer Identification Number (EIN)
The EIN is required for most LLCs. The EIN is a nine-digit number similar to a Social Security number issued by the Internal Revenue Service (IRS). Most LLCs must have an EIN before they can open a bank account, set up payroll withholding or establish state tax accounts. You can obtain the EIN directly from the IRS for free by completing the online application.
Annual Report Filings
Your LLC must file an annual report each year. The report must be filed within three months of the end of your LLC’s fiscal year. The report is filed online in the Online Business Service Center and costs $35 to complete.
Correcting Filing Mistakes
Suppose you realize that you made an error on your Articles of Organization. In that case, you can submit Articles of Correction to the Secretary of State’s office. The articles should state the name of the document being corrected, the date it was filed, the name of your company, the incorrect statement and reason it is incorrect, and the corrected information. You should also attach a copy of the incorrect filing. It costs $25 to process the correction. There is no form available and you cannot submit a correction online.
Dissolving Your Vermont LLC
If you decide to close your business, there are certain things that you need to do to dissolve it properly. You’ll have to notify your business’s creditors, close any bank accounts and notify the IRS of the closure. You’ll need to file any final tax returns as indicated by the IRS. Additionally, you need to file the form, Articles of Termination, through the Online Business Service Center. There is a $20 fee to dissolve an LLC.
Frequently Asked Questions
What are the two types of LLCs?
An LLC can be a member-managed LLC or a manager-managed LLC.
Do I have to file taxes for my LLC if it has no income?
Most LLCs are taxed as sole proprietorships or partnerships, depending on whether they have one or multiple members. Sole proprietorships report business income on Schedule C of their personal returns, but you don’t need to file Schedule C if your LLC doesn’t have any business activity. If filing as a partnership, you don’t have to file a partnership return if your LLC doesn’t have income and you aren’t claiming any expenses. If the LLC elects to be treated as a corporation, it must file a tax return even if it did not have any business activity during the year.
Can I set up an LLC by myself, or should I hire someone?
You may be able to set up an LLC by yourself, especially if you’re a single-member LLC. Do your research and head to your state’s business formation website to determine the exact paperwork you need. However, before establishing any kind of business, it’s a good idea to get professional advice to make sure you’re making the best decision for your situation.
How do I pay myself from my LLC?
The way you pay yourself will depend on your LLC’s tax classification. Most members pay themselves through an owner’s draw, which is a transfer of income from the business’s cash reserves into your personal account. To prevent commingling assets, members should not use business accounts for personal purchases and expenses. If your LLC is taxed as a corporation, you may receive a salary from the business. Talk to an accountant for more guidance about taxes and paying yourself from your LLC.
Is it possible to set up an LLC for free?
While the cost to register an LLC varies by state, there is a fee to register in every state. So, while there are some companies that advertise “free” LLC formation, what this means is that the company will fill out the LLC paperwork for you for free. But again, you will still be responsible for the state’s filing fee.
