How to start an LLC in Vermont
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 1:17 p.m. UTC May 23, 2024
Editorial Note: Blueprint may earn a commission from affiliate partner links featured here on our site. This commission does not influence our editors' opinions or evaluations. Please view our full advertiser disclosure policy.
Szepy, Getty Images
A limited liability company, or LLC, is a popular business entity that can provide tax advantages and legal protection for its members. If you’ve considered forming an LLC in Vermont, you’re in good company. As of October 2023, there are more than 40,000 active domestic LLCs in the state.
In this guide, we walk you through these nine steps to start an LLC in Vermont:
- Choose a business name.
- Designate a registered agent.
- Form your LLC.
- Obtain a state ID and unemployment insurance number.
- Create an operating agreement.
- Obtain an employer identification number (EIN).
- Obtain applicable business licenses and permits.
- Open a business bank account.
- File annual reports.
Featured LLC service offers
ZenBusiness
Free version available
Yes
Lowest published package price
$199
Live chat
Yes: Human
LegalZoom
Free version available
Yes
Lowest published package price
$249
Live chat
Yes
Northwest Registered Agent
Free version available
No
Lowest published package price
$39
Live chat
Yes
9 steps to start an LLC in Vermont
1. Choose a business name
Your business name sets the tone for your operation, signaling to potential customers what your company does and who it serves. That means it should be clear, unique and memorable. Your LLC name also has to adhere to some rules. Review Vermont’s business naming rules for guidance on how to select a name that will be accepted by the state. In addition, read our business naming guide to learn how to select a name that is marketable and not protected against national infringement.
Once you’ve selected a name, ensure it is available in your state by running it through the Vermont business search database. Bryan Mills, chief of staff at the Office of the Vermont Secretary of State, said, “LLC names must be ‘distinguishable on the record,’ meaning it can’t be the same as an existing LLC name registered with the state. We recommend using the ‘contains’ search option [and typing] a limited amount of the name to pull the most results.”
If you find your name is already in use, you must either select another one or distinguish the one you’ve chosen so it is unique. Refer back to Vermont’s business naming guidelines to learn how to distinguish the name appropriately.
Once you’ve landed on a business name, you can reserve it for 120 days by requesting an LLC name reservation form. The filing fee to reserve your LLC name is $20.
Caution: Don’t buy signage or create a website until the Vermont Secretary of State office sends you the official business registration certificate. Your chosen name could still get rejected if the office determines it’s too similar to an existing company name.
2. Designate a registered agent
A registered agent receives official correspondence sent to your business, such as a letter from a lawyer or the IRS, and ensures that you (or another appropriate LLC member) receives it. Mills said, “All businesses registered with this office must appoint a registered agent. This role acts as the in-state contact for the business.”
You can appoint an individual or business you trust to fulfill the role. To learn more about what this role entails and the qualifications a registered agent must have, read our registered agent guide.
Once businesses fully understand the rigid requirements to fulfill this role, many opt to hire a registered agent service provider instead of appointing an internal person. If you find it is best for your business to outsource this role, read our best registered agent services list to choose the best provider for your business needs.
3. Form your LLC
Now, it’s finally time to form your LLC. To do so, you must file an LLC articles of organization form with the state. But, first, you must register for an online business service center account. To do so, select “start or register your business,” then “create new account” once you get to the login screen. You can then fill out and submit the articles of organization form from this account. After you fill in all the required fields, you must pay a $125 fee before submission.
To learn more about how to prepare your business registration form, read our LLC articles of organization guide.
New LLC reporting requirement alert
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has implemented a new reporting requirement for all non-exempt LLCs starting on January 1, 2024.
The requirement is called the Beneficial Ownership Information (BOI) report and it is estimated to only take about 20 minutes to complete.
Here’s what you need to know:
- LLCs formed before January 1, 2024 have until January 1, 2025 to file.
- LLCs formed between January 1, 2024 and January 1, 2025 have 90 days to file from the confirmed date of the businesses’ registration.
- New LLCs formed after January 1, 2025 will have 30 days to file from the confirmed date of formation.
For all details, FAQs and to file, visit FinCEN’s BOI website.
4. Obtain a state tax ID and unemployment insurance number
Once you’ve completed your LLC articles of organization application, you will be prompted to register your LLC for applicable state tax accounts and an unemployment insurance number. Taxes that may apply to your LLC include:
- Sales and use tax: applicable if your LLC makes purchases or sales of tangible personal property.
- Meals and room tax: applicable if your LLC sells meals or rents out rooms.
- Alcohol beverage tax: applicable to your LLC if it sells alcoholic beverages.
- Local option tax: applicable to your LLC if it operates in or delivers products to a Vermont municipality that has a 1% local option tax.
- Miscellaneous taxes: applicable to businesses that engage in certain activities, such as selling tobacco or processing solid waste.
A Vermont unemployment insurance (UI) account allows you to pay into the unemployment insurance trust fund so that your employees can receive unemployment should they lose their jobs at your company through no fault of their own. The wizard will prompt you to sign up for this account immediately following its prompting for you to register for applicable tax accounts. If you have employees or plan to hire any, it is highly recommended you follow the prompts to sign up for this account.
However, if you’re not ready to register for these accounts, you can log in to your business services account later and select “business tax registration” under “online services” to complete the process.
5. Create an operating agreement
An operating agreement is a critical business document. It outlines how the company will function and what rules members must follow, eliminating (or reducing) future misunderstandings that could lead to the LLC’s dissolution. It also serves to protect members’ limited liability protection in court and override state LLC operating rules that may contradict the LLC’s best interest. An operating agreement is also often requested by banks and investors when the LLC is seeking funding or to open a business bank account (a step that also helps to protect members’ limited liability protection).
To learn how to create an effective operating agreement, read our LLC operating agreement guide.
6. Obtain an EIN
The IRS assigns business federal tax identification numbers, known as employer identification numbers (EINs). These identify your business much like a Social Security number identifies a person. They are useful for completing business tasks such as opening a bank account, applying for LLC funding, hiring employees and obtaining business licenses.
You can get yours for free on the IRS website between 7 a.m. and 10 p.m. EST Monday through Friday. The online form is quick to complete and free. You will automatically receive your EIN on the confirmation page once you complete the form.
To learn more about how to prepare this form, read our EIN guide.
7. Obtain applicable business licenses and permits
In Vermont, some LLCs may need a business license to operate. Businesses that belong to regulated industries, banks, insurance companies and farmers and agricultural product businesses are likely to need business licenses in Vermont. To learn more about how to find out the types of licenses or permits your business may need and apply for them, read our business licensing guide and contact your local regional development corporation.
8. Open a business bank account
Your Vermont LLC should have its own business checking account. Keeping business and personal funds in separate accounts helps to maintain the legal distinction between the company and its members, thereby enhancing your members’ limited liability protection. In addition, using checks with your LLC name on them can make you look more professional. You may also be able to get a line of credit or credit card from the bank that houses your checking account, if necessary.
To open a business bank account, visit a nearby branch and bring your LLC’s EIN number, your ID and the LLC’s operating agreement and formation paperwork. If you’ve applied for business licenses, also bring along your licensing paperwork. Remember that different initial deposit fees apply at different banks. So, if you find one is too excessive for your budget, visit another bank to compare fee amounts and find the best deal for your business.
To learn more about business bank accounts, how to select the right one and fees you should prepare for, read our best business checking accounts list.
9. File annual reports
To keep your LLC active and in good standing, you must file an annual report between January 1 and April 1. Mills said, “This report is not financial. It is a review of the information currently on file with this office and an opportunity to update the business address and the business principal information.”
You must submit your reports online by logging into the same online business services portal you used to form your LLC (see step three). However, if you’re not making any changes, you can file your report in one click without logging in to the system. In either case, you’ll have to pay a $35 processing fee.
Pro tip: Mills said, “We cannot stress enough the importance of working with a legal and tax professional [to form and manage your business]. Ultimately, knowing what is required to operate a business in Vermont is the responsibility of the business owner. By working with their legal and tax professionals, businesses can limit the exposure to liability and ensure that they are complying with state laws and regulations.”
Featured LLC service offers
ZenBusiness
Free version available
Yes
Lowest published package price
$199
Live chat
Yes: Human
LegalZoom
Free version available
Yes
Lowest published package price
$249
Live chat
Yes
Northwest Registered Agent
Free version available
No
Lowest published package price
$39
Live chat
Yes
Find the best LLC services for Vermont: Best LLC services of 2023
Our top recommended LLC service for Vermont
Frequently asked questions (FAQs)
No, you can’t set up an LLC in Vermont for free. You must pay $125 to submit your articles of organization. However, some LLC services, like IncFile and ZenBusiness, offer free assistance with the filing process. Other costs you may incur as you start your Vermont LLC include fees to reserve a business name, obtain business licenses, open a bank account and file your annual report.
LLCs are pass-through entities. This means that taxes on LLC profits pass through the entity and to its members, who then pay taxes on their share of the profits on their personal income tax returns. However, depending on the nature of your business, your LLC may have to pay some taxes directly, such as sales tax and a tax for the privilege of selling alcoholic beverages. Learn more about what taxes may apply to your LLC and how to pay them in our state tax ID guide.
Yes, you are required to name and maintain a registered agent in Vermont. To learn more about what this role entails, read our registered agent guide. Due to the strict requirements of fulfilling the role, many businesses outsource their registered agent duties. To find a registered agent to represent your LLC, check out our picks for the best registered agent services.
You must file an annual report to keep your LLC in good standing with the state. It is due between January 1 and April 1 of each year and comes with a $35 filing fee. Your report must be filed online using your Vermont online business services center account.
To dissolve your LLC, first consult your operating agreement and follow its instructions to end your operations. Then, visit the Vermont online business service center, click “end your business,” log into your account and follow the prompts to complete the articles of termination. You’ll have to pay $20 to file the form with the state. In addition, close all Vermont tax accounts associated with your business. To do so, first pay all taxes due. Then, access your myVTax account and select “close account.” Follow the prompts to complete this step.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
-
Small business statistics in 2024
Business formation Mehdi Punjwani
-
What types of small businesses thrive in each state?
Business formation Mehdi Punjwani
-
Best cities to start a business in 2024
Business formation Mehdi Punjwani
-
Why incorporate in Delaware? Pros and cons in 2024
Business formation Teresa Bitler
-
How to start a corporation in 8 easy steps
Business formation Sarah Li Cain
-
LLP vs. LLC: Which is best for your business?
Business formation Robert Bruce
-
Member-managed vs. manager-managed LLC: Differences, pros and cons
Business formation Cat McAlpine
-
How to start a small business at home in 2024
Business formation Blair Travers
-
Best New Jersey registered agents in 2024
Business formation Jessica Elliott
-
Free business plan template (with examples)
Business formation Alan Bradley
-
LLC vs. S-corp: Which is best for your business?
Business formation Jessica Elliott
-
DBA vs. LLC: What’s the difference?
Business formation Gina Ponce
-
30 top small business ideas for 2024
Business formation Alison Kilian
-
LLC vs. Corporation: Which is best for your business?
Business formation Brynne Conroy
-
What is a sole proprietorship? Definition, pros and cons
Business formation Mehdi Punjwani