LLCs in Vermont are beneficial for entrepreneurs interested in a business structure that provides personal liability protection without the tax burden that comes with running a corporation. There are some unique rules to running an LLC in the state, ranging from naming requirements to filing your articles of organization and submitting an annual report for your business.

Limited Liability Company

Business owners structure their enterprises as a limited liability company (LLC), which is an unincorporated business entity, to take advantage of the liability benefits of a corporation and the tax benefits of a sole proprietorship.

There are some unique rules for naming and maintaining an LLC:

  • If you have a professional limited liability company, the name must end with Professional and either the LLC or PLC abbreviation.
  • If you have a low-profit limited liability company, the name must end with L3C.
  • The business registration must be renewed annually.
  • The name for your LLC must be unique and distinguishable per the rules of Vermont's secretary of state office.

Depending on the business type you select, you may have to register your company with the IRS. Some companies also need to establish a Vermont Corporate or Business Entity Tax Account, which is done through the Vermont Department of Tax. An attorney and/or accountant specializing in LLCs can help you set up your enterprise.

You can also set up, if needed, an Employer Tax Account through the Vermont Department of Labor.

How to Form an LLC in Vermont

Follow these steps to form an LLC in Vermont:

  • Name your LLC: Follow the rules outlined by the corporationsbusiness-services/business-nonprofit-services/start-a-vermont-business/business-name-reservation.aspx">Vermont secretary of state. You can't use restricted words, such as bank and attorney, unless you file additional paperwork and meet the requirements for naming your LLC using these words. Similarly, you can't use prohibited words, such as Secret Service and treasury, when naming your LLC.
  • Check a database of registered names online: Your business name must not infringe on other names registered with the Vermont secretary of state. If the name you want to use is available, you can reserve it for future use and can continue to set up your business (i.e., purchasing a domain name and registering an email address) knowing the LLC name you want to use is protected. Reserving a name gives you exclusive rights to register it officially within the next 120 days.
  • Draft and file the articles of organization for your LLC with the Vermont secretary of state: There is a $125 filing fee for the articles of organization. This document lists basic information, such as the LLC's name and address. You can file the articles of organization online or by mail.
  • Appoint a registered agent: This person will handle legal papers for the LLC. The registered agent can be you, another member of the LLC, a family member, or an outside professional who provides these services. The individual you select must be a state resident or registered to provide these services in Vermont.
  • Prepare your LLC's operating agreement: This document outlines the roles and responsibilities of all members in your LLC and how to proceed with certain business operations. The state doesn't require that you draft and file an operating agreement, but this document can streamline your business's operations in the future.
  • Check all other taxes and legal requirements that apply to your LLC: Your LLC may need to receive a federal tax identification number from the IRS, for example, or need to register for certain business licenses based on your location or industry. Any LLC with more than one member needs a federal tax identification number. This number can be retrieved instantly and for free online.
  • File your LLC's annual reports: Individuals who run an LLC registered in the state or an LLC authorized to operate in the state must file an annual report, which is due three months from the end of your LLC's fiscal year, with the Vermont secretary of state corporations division. You can file this report online or by mail. There is a $35 filing fee for Vermont LLCs. Any person can file an Application for Certificate of Authority with the Vermont secretary of state and pay a $125 filing fee to become a registered agent in the state.

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