Starting a small business in Vermont often means registering with several federal, state, and local agencies. Let’s review common Vermont business license registrations so your business starts off right.
Related: Guide to starting a business in Vermont
Setting Up the Business
Before you can apply for business licenses, you should first establish the business structure. This decision impacts your legal responsibilities, taxes, and how much personal liability you might face. Here’s a brief explanation of each type of entity:
Sole proprietorship: This is the simplest form of business structure, where one person owns and runs everything. There’s no separation between the owner and the business, meaning the owner is personally responsible for all debts and legal actions against the business. Taxes are straightforward as the owner reports business income on their personal tax return.
General partnership: Similar to a sole proprietorship, but with two or more people running the business. Partners share profits and losses, and like sole proprietors, they are personally responsible for the business’s debts and legal issues. Partnerships also don’t pay taxes as a separate entity; instead, each partner includes their share of profits or losses in their personal tax filings.
Corporation: A corporation is a more complex entity that is separate from its owners, providing personal liability protection. Owners, known as shareholders, are not personally responsible for the corporation’s debts or legal problems. Corporations can raise money by selling stock and are taxed separately from their owners. This entity requires more requirements, like having board meetings and record-keeping.
Limited Liability Company (LLC): An LLC blends elements of sole proprietorships, partnerships, and corporations. Owners (members) have limited personal liability for business debts and actions. Like sole proprietorships and partnerships, an LLC can pass income directly to owners to avoid double taxation, a common issue with corporations. This structure offers flexibility in management and less strict requirements than a corporation.
What Licenses Do Vermont Businesses Need?
With the business structure out of the way, we can begin looking at the different types of registrations businesses in Vermont may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.
General Business License
There is no general state of Vermont business license; however, many cities require businesses to be licensed. Rules for business registration vary depending on location and the business’s activities. Below are a few cities that have licensing requirements.
- Burlington: Business licenses and permits for businesses operating in the City of Burlington can be searched through the Start-up Burlington website.
- Rutland: Businesses operating as restaurants, bar delis, or hotels must obtain a business license from the Rutland City Clerk.
Trade Name Registration
While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a business name that is different from the full name of the owner(s) to register for an Assumed Name (also known as a Doing Business As or DBA) with the Vermont Secretary of State.
For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements.
Building & Zoning Permits
- Building Permits: In Vermont, a building permit is required for constructing, altering, relocating, or demolishing any structure. A building permit application typically requires detailed plans, specifications, and project descriptions, and the application is reviewed by the local building department or town officials to ensure compliance with the relevant codes and regulations.
- Zoning Permits: Zoning permits are necessary for any new construction, additions, or changes to the use of a property. Vermont has statewide zoning regulations, but each municipality can also have its own specific zoning bylaws and regulations. The zoning permit process involves submitting an application that outlines the proposed project and its compliance with the local zoning regulations. The application is reviewed by the zoning administrator or a development review board to ensure that the proposed project meets the requirements for the specific zoning district, such as setbacks, building height, lot coverage, and permitted uses.
- Signage Regulations: The state of Vermont regulates the size, placement, and illumination of business signs. These regulations aim to promote public safety, preserve scenic beauty, and maintain the character of the state’s communities. In general, business signs must comply with local zoning regulations, which typically specify the maximum size, height, and number of signs allowed. Additionally, there may be restrictions on the types of signs permitted, such as prohibitions on off-premise signs or flashing or moving signs.
Business Tax Account
Most businesses operating in Vermont will need to register for a Business Tax Account through the Vermont Department of Taxes. This account lets businesses register for a Vermont sales tax permit (also referred to as a sales tax license), meals and room tax, and employer withholding tax.
Certificate of Exemption
Businesses purchasing merchandise to resell will usually want to obtain a Vermont Certificate of Exemption (often referred to as a Resale Certificate) to avoid paying sales tax on merchandise being resold to customers.
Professional License
A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in Vermont include; barbers, athletic trainers, tattoo artists, and many more. Additional information, fees, and licensing requirements for professions are available from the Vermont Office of Professional Regulation.
In addition to professional licenses through the Office of Professional Regulation, businesses in various industries, such as food establishments, day cares, and salvage yards, require licensing.
Employer Identification Number (EIN)
Many businesses register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of an individual’s Social Security Number. Corporations, Limited Liability Companies, Partnerships, and Sole Proprietorships with employees will all need to register for one. Sole Proprietorships without employees can use the owner’s Social Security Number.
There is no cost for an EIN, and it only takes a few minutes to get.
Next Steps
These are some of the most common business licenses a new business in Vermont will need to register for. While it’s a good start, there are so many different licenses that may be needed, be sure to double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.
