Wondering how to form an LLC in Vermont but not sure you have the time or expertise? Don’t worry; even first-time entrepreneurs can start a business by following our guide.
In this article, we will discuss the steps to set up an LLC in Vermont. Sounds interesting? Let’s dive in!
Pick a Name for Your Business
Choosing a business name is the first and most important step in forming your Vermont business. As a rule of thumb, you should choose an LLC name that your potential customers will find easy to search, remember, and pronounce.
The name must also comply with Vermont’s naming rules and guidelines, including the following:
- The chosen Vermont LLC name must be unique and distinguishable.
- The chosen LLC name should include the phrase: “limited liability company” or one of its acronyms: “L.L.C.” or “LLC.”
- Restricted names (such as University, Ban, Attorney, etc.) may need extra paperwork and a licensed expert, such as a doctor or lawyer, to be part of your Vermont LLC.
- The chosen LLC name should not include words that will confuse your business entity with any government agency (such as Treasury, FBI, State Department, etc.)
We recommend checking the Business Naming Rules guidelines for more information about the LLC naming rules in Vermont.
You should also do a Vermont business name search to ensure that your chosen name is available in Vermont and not taken by another LLC. Then, check if your Vermont LLC name is available as a web domain. If so, buy it immediately to prevent other business owners from acquiring it.
Get a Registered Agent
Vermont state laws require all LLCs to appoint a registered agent.
A Vermont registered agent is an individual or service provider authorized to receive and forward legal correspondence and other official documents on behalf of your Vermont LLC. You can appoint yourself or any members of your LLC to this role or hire a third-party registered agent service provider.
Be sure to appoint a registered agent who is a permanent Vermont resident with a physical street address (not a P.O. box address) in this state. They must also be available to accept, sign, and forward correspondence documents during regular business hours in Vermont.
If you opt for a third-party registered agent service provider, we recommend choosing one of the following:
Vermont Registered Agent
If you want your Vermont LLC to leverage the services of a registered agent provider that charges less than $50 per year, then we have an ideal recommendation. Vermont Registered Agent is the most affordable recommendation in our list of the best registered agent providers in Vermont.
At only $49 per year, you will get all the basic registered agent services, including online document storage, annual report reminders, pre-filled state forms, and email notifications.
You can find the Vermont Registered Agent office in Shelburne.
Popular for offering a vast range of premium legal services, LegalZoom’s registered agent service is an excellent option for entrepreneurs who own larger businesses. While their annual registered agent fee is relatively higher ($299 per year), they provide lucrative features and tools in return.
Their perks include $1M in identity theft protection and access to their impressive Compliance Calendar, which will assist you in easily keeping track of all your critical state deadlines. You will be thrilled to discover that LegalZoom offers to change your existing registered agent for free, making the transition seamless.
If you hire LegalZoom’s LLC formation package, you will get the first year of registered agent services at a discounted fee of $249.
Northwest excels at offering all the necessary tools and resources you require to comply with the legal requirements of forming and operating an LLC in Vermont, including a premium customer support team.
Their registered agent package includes electronic mail forwarding. So, you will easily keep track of your legal and state documents digitally, which is more convenient when traveling. They also have an incredibly intuitive and easy-to-use website.
Northwest has relatively affordable pricing. One year of registered agent services with Northwest costs only $125. Better still, you can get a discounted fee of $100 if you use their registered agent services in 5+ states.
File an Article of Organization
After picking a name and hiring a registered agent for your Vermint LLC, the next step should be registering your business with the Vermont Secretary of State.
The simplest way to register your business is to file an Article of Organization online with the Vermont Online Business Formation System. You will be required to create an account with the name of your Vermont LLC and an active email address and pay a filing fee of $125.
Another option for registering your Vermont business is to file an Article of Organization by mail. If you opt for this, you must submit a request form via the Vermont Business Service Division. After receiving this form, fill it out accurately and completely. Once filled, the Vermont state recommends submitting your application electronically because mailing can take 7-10 working days for approval.
Some of the information you will need to provide in your Article of Organization are:
- The physical address and name of your Vermont LLC.
- The name and street address of the chosen registered agent
- The purpose of your Vermont LLC
- The effective date of your Vermont LLC
- The physical addresses, names, and signatures of your LLC members.
Make sure you have all of this to hand before getting started.
Draft an Operating Agreement
An Operating Agreement is a legal document that defines how your Vermont LLC will operate. While Vermont state laws do not legally require you to create an Operating Agreement to form an LLC, we recommend drafting one.
More than anything, drafting an Operating Agreement for your Vermont LLC will help resolve any disputes or conflicts in your business.
You can include the following details in your Vermont LLC Operating Agreement:
- The liability clauses
- Responsibilities, rights, and shares of each member
- The rules for operating your Vermont LLC
- Rules for dividing losses and profits
- Rules for holding meetings, admitting new members, and any other matters.
If in doubt, turn to your solicitor for help drafting this document.
Obtain Business Licenses and Permits
Forming an LLC in Vermont doesn’t authorize you to conduct business activities like a license would. If additional licensing or permit is required, operating a business without one can violate your standing and put your LLC at risk.
The exact permit and license required can vary depending on several factors. However, it is essential to check with the Vermont Department of Business Licenses and explore all the areas that need insurance coverage.
The one license that almost all LLCs in Vermont must obtain is the sales tax license, also known as a seller’s permit. This license acts as a registration to pay taxes and allows your LLC to collect taxes on behalf of the state. There is no fee for this permit, and once you obtain it, you won’t need to renew it.
Get an EIN
The next step in forming your LLC in Vermont is to acquire an Employer Identification Number. Not every business in Vermont needs an EIN, however. Only LLCs taxed as separate entities and have employees are legally obliged to get an EIN.
Even if your LLC does not legally require an EIN, acquiring one comes with various benefits. For example, it makes it easier to manage taxation, file necessary taxes, and open a business bank and credit account.
You can acquire an EIN for your Vermont LLC completely free of charge on the Internal Revenue Service website. The application process is straightforward and takes only minutes to complete.
Open Business Bank Accounts
You will want to open a dedicated business bank account as soon as you form your Vermont LLC. Entrepreneurs must always keep their personal finances entirely separate from LLC finances.
The requirements for opening a business bank account in Vermont will vary (call the financial institution in advance for details). However, at a minimum, most financial institutions will need your EIN, a business license, and a small opening deposit.
If you are undecided on the best Vermont bank to open a business bank and credit account, consider one of the following banks:
Buy Vermont Business Insurance
If you have or plan to hire an employee at your Vermont LLC, you will need to purchase a workers’ compensation insurance policy. These policies protect employees against on-the-job injuries, illnesses, or even death.
While the workers’ compensation policy is the insurance required by most LLCs in Vermont, some business owners will need additional policies to protect their LLCs and their assets. For example, most small businesses in Vermont will need general business insurance to protect them against lawsuits, especially those surrounding property damage and personal injuries.
Certain professionals, such as accountants, may need professional liability insurance to address claims of business errors or malpractices.
Get a competitive quote for your Vermont insurance needs by consulting a comparison site like Insureon.
Purchase an LLC Formation Package to Speed Up the Process
The above steps can be time-consuming and daunting. So, if you need assistance forming your LLC in Vermont, you can hire a professional LLC formation company to do all the work for you.
The good news is that dozens of companies offer basic LLC formation services completely free of charge.
For example, LegalZoom has a free Basic LLC formation plan that features all the basic tools and resources required to form an LLC in Vermont. However, if you want more perks, such as expedited processing, you can purchase LegalZoom’s Pro plan at $249 per year or the Premium LLC formation plan at $299 per year.
If you want an incredibly affordable package, check out the Northwest’s offer. Their LLC formation package costs only $125 per year.
FAQs About Forming an LLC in Vermont
How Long Will It Take to Form My Vermont LLC?
You can expect your LLC in Vermont to be ready within 24 hours when you file the Article of Organization online. Filing of an Article of Organization by mail will take 7-10 working days.
How Much Does It Cost to Set Up an LLC in Vermont?
The cost of setting up an LLC in Vermont is $125, which is the fee for filing an Article or Organization with the Vermont Secretary of State. You will also be required to pay $35 per year to file the State’s Annual Report.
Can I Act as my Own Registered Agent in Vermont?
Yes, The state of Vermont allows entrepreneurs to appoint themselves as their own registered agents. However, you must fulfill the following state requirements:
- You must be a resident of Vermont and have a physical street address (not a P.O. box).
- You must be at least 18 years old.
- You must be available to receive and forward legal and state compliance documents during regular Vermont working hours.
Can I Form a Single-Member LLC in Vermont?
Yes. Vermont state laws allow entrepreneurs to form single-member LLCs. You only need to follow the steps outlined in this article. You will also be required to follow all the requirements and guidelines for forming an LLC in Vermont.
That completes our guide on how to form an LLC in Vermont! We hope we have all the information you need to start your Vermont LLC. Fortunately, the formation process is straightforward.
However, if you find the steps time-consuming and daunting or need assistance to streamline and speed up the process, consider hiring a professional LLC formation company.