How To Set Up A Vermont LLC

If you are looking to start a business in Vermont, you may be wondering about the process of forming a Limited Liability Company (LLC). An LLC is a type of business structure that is created with the state of Vermont and is legally separate from its owners.

Our guide simplifies starting your Vermont LLC, walking you through each step, from choosing a unique name to filing the necessary paperwork, ensuring a smooth launch for your new business.

Related: Starting A Business In Vermont Checklist

Steps to Form a Vermont LLC

Step 1: Choose a Name for the LLC

The first step in forming a Vermont Limited Liability Company is to make sure the name you want is available.  

It’s important to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Vermont. The Vermont Secretary of State makes it easy to search and verify if your LLC name is available.  Here is more information on how to do a Vermont LLC name search.

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:

• Limited Liability Company
• Limited Liability Co.
• Ltd. Liability Company
• Ltd. Liability Co.
• LLC
• L.L.C.
• LC
• L.C.

A comma may be used after the business name and before the designator.  “Green Mountain Crafts LLC” and “Green Mountain Crafts, LLC” are both acceptable.

Step 2: Appoint a Vermont Registered Agent

Every LLC in Vermont must have a registered agent, simply someone with a Vermont street address who will be responsible for any legal correspondence, most often if the business is served papers in case of a lawsuit.

The basic requirements to be a registered agent in Vermont include:

• The agent must be a Vermont resident at least 18 years of age or a commercial registered agent service with a registered office in the state.
• The agent must have a physical address in the state (PO Boxes aren’t allowed).
• The agent must generally be available during normal business hours at the address provided to receive service of process.

Many LLC owners choose to act as their own registered agents, particularly if they reside in the state. However, some opt to hire a professional registered agent service. This choice is often preferred in two scenarios: when the LLC owner lives out of state or wants to keep their personal address off public records. Professional services offer the added benefits of ensuring compliance with state regulations and managing important legal correspondence, making them an attractive option for those seeking convenience and privacy in their business operations.

Related: How To Appoint A Vermont Registered Agent

Step 3: File the Vermont Articles of Organization

The paperwork to officially create an LLC in Vermont is called the Articles of Organization. You can file online through the Vermont Secretary of State’s website, or if you prefer to fill out and mail the application, download the Articles of Organization Form LLC-3(D) to submit the paperwork.

Related: How To Fill Out The Vermont LLC Articles Of Organization

When filling out the Articles of Organization, a few sections can be confusing. Let’s go over these sections to help you get your LLC started right.

Business Description: This section asks for information regarding the activities of the business.  To answer, there is a number called NAICS (North American Industrial Classification System).  The NAICS is a six-digit number that classifies and categorizes the different business industries.  This information is used to report statistical data for each industry in the U.S.  Remember this number, as you will need it when filing annual tax returns. 

Domestic Jurisdiction: Vermont is automatically chosen as the domestic jurisdiction and can’t be changed in this section.

Physical Address: In this section, enter the street address, city, state, and zip code of the initial principal office.  This address can be the LLC’s physical address or where the business records are stored.  You may not use a PO Box for the designated office.

Mailing Address: A mailing address is required and can be the same as the Principal Address.  If the LLC records should be sent to a different address, enter that information in the Mailing Address Section.  If the address is the same as the principal office, click on the “Use this address as the Mailing Address also” box to copy the Principal Address address.

Any address is acceptable regardless of location or PO Box.

Fiscal Year End (month): Select the preferred ending month for the LLC’s fiscal year.  Single-member LLCs and LLCs taxed as a partnership should choose December.

The default end month is December by the state.

Manager/Member Information – This section asks about the management choice of the LLC.

• Member-managed LLCs have active involvement in management and the authority to act on behalf of the LLC.
• The members hire manager-managed LLCs to run the LLC, similar to the CEO of a corporation. This is generally used when there are passive members in the LLC, and the LLC members do not actively manage or operate in the business’s affairs.

Most LLCs are member-managed.

What To Do After Forming A Vermont LLC

Once the LLC has been formed, there are a few additional steps to take. Below is a list of the most common tasks.

Prepare a Vermont LLC Operating Agreement

The LLC operating agreement is a document that governs the framework of an LLC. It covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Vermont Statute 11 V.S.A. § 4003 states that every Vermont LLC may adopt an operating agreement, but the Vermont Secretary of State doesn’t require it, but it is still worth considering. Without an operating agreement:

• The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
• Member’s personal liability protection may be diminished.
• Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Like an individual’s social security number, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

Related: How To Register For An EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

• A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
• Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
• Driver’s licenses of the members.
• Occasionally, the bank will request a Vermont Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, various business licenses and permits will likely be needed before starting the business. Some common registrations include:

• Business license: Some cities require businesses to obtain licensing before starting.
• Professional license: Certain services, such as barbershops, accountants, salons, and others, must be licensed.
• Sales tax permit: A Vermont sales tax permit from the Vermont Department of Taxes is necessary to sell products and certain services.

Related: How To Register A Business In Vermont

File the Vermont LLC Annual Report

LLCs are required to file a Vermont LLC Annual Report with the Vermont Secretary of State.  The annual report filing fee is $35 each year, and the due date is based on the LLC’s fiscal year. Most LLCs choose their fiscal year as the calendar year, meaning their tax period runs from January 1st to December 31st.  The annual report in Vermont is due within 3 months following the end of the fiscal year, so LLCs that use the fiscal year would have their reports due by March 31st.

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in Vermont or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN).

Vermont LLC FAQs