Form a Limited Liability Company in Vermont

How to Form a Vermont LLC in 10 Steps

An LLC or Limited Liability Company can be formed in Vermont in several simple steps. LLCs are common business structures. Profits that your LLC earns will pass through to members, and with an LLC, one or more individuals or members can own a portion of your company. Having an LLC reduces your exposure to liability from any and all company activities

Forming your Vermont Limited Liability Company is a fairly straightforward process. Still, you’ll need to follow these step-by-step guidelines: 

1. Choose Your Company Name.

The first step is to choose a new name for your company. At the very minimum, the name you choose must be available for use in the state of Vermont. 

You can conduct a name search on your own, or if you prefer, SunDoc can run your name search or reserve your name on your behalf also (for a small fee).

At the same time that you check for the availability of your company name, you should also check for a registered trademark on your chosen name. 

2. Understand the LLC Organizer Requirement.

Later in step 6, you’ll learn what the Articles of Organization are for. Basically, this is a one-page form; on it, you will need to name an LLC organizer. 

Anyone can be named your organizer; it doesn’t have to be a member or manager of your LLC. In the case that you prepare and file your Articles of Organization on your own, for example, you’ll be the default organizer. 

In some cases, an attorney who assists with the creation of your business may be your organizer. If you like, SunDoc can file your Articles on your behalf and be your organizer.

3. Designate a Registered Agent.

In step 3, your job is to choose a registered agent to go on your Articles of Organization form. Find out more about what the Articles of Organization form is in step 6. 

Registered agents can be people or firms. Learn more here: Registered Agent Service.

4. Decide Your Ownership and Management Structure.

The Articles of Organization form asks whether your Vermont LLC will be managed by one manager, multiple managers, or all the members. You must decide whether you want to be a member-managed or a manager-managed LLC.

5. Create an Operating Agreement.

Depending on your unique entity type, it’s possible you will have to create an operating agreement.

An operating agreement is a key document used by LLCs because it outlines the financial and functional decisions of the business, including rules, regulations and provisions. The purpose of the document is to govern the internal operations of the business in a way that suits the specific needs of the business owners. 

The Operating Agreement is the legal engine that drives your business, creating its governance, managing its working capital, and paying out its profits. Critical matters of money, voting, liability, and fiduciary constraints are at stake here. You may also wish to consult an attorney for advice. 

6. File the Articles of Organization.

One of the most important forms you’ll need to file is called the Articles of Organization. It provides overall details about your company, and once it’s processed and accepted by Vermont State, you’re all set — your company has been created!

When filing this document, it’s required that you have several pieces of information ready to go: Your registered agent’s name, your LLC organizer’s name, your management method of choice, and of course — your company name and company address. Sometimes, you’ll have to know member names too. 

Need help filing? SunDoc can with the filing of your Articles on your behalf. 

7. Obtain an EIN and Open a Business Bank Account.

After the State of Vermont has accepted your Articles, your new LLC has been born! It’s time to obtain an EIN from the IRS. EIN stands for Employer Identification Number. You have to have one of these if you have more than one member, and it’s required even if you don’t have employees as well. SunDoc can file for you or file with the IRS on your own.

Employer Identification Numbers or EINs are also necessary when opening a business bank account for your new Vermont LLC. Furthermore, now is a good time to set up your first company business account, especially if you’ve been using a personal account to pay for business expenses up until now. It’s important to keep all future receipts necessary for reimbursements. 

Finally, it could be advised to hire a business accountant at this time as well. They can help with paying your State of Vermont taxes, as well as any other financial-related issues you may have.

8. Pay Vermont State Taxes.

Every year, you will be required to pay state taxes in Vermont. Remember that you need to collect sales tax also (if you plan to sell goods within Vermont). More information on state taxes can be found on the State of Vermont’s tax web site.

9. Determine Necessary Licenses and Permits.

Most states require companies to have one or more business licenses or permits to operate at the city or county level. Use your state's business website to see which licenses and permits are required. 

Many LLCs assume they are exempt, but it’s always worth checking. If you don’t have the right licenses and permits, you risk paying heft fines.

10. File an Annual Report (Biennial Report or Initial List).

Usually you must file an Annual Report, Biennial Report, or other such document soon after forming an LLC in Vermont, and thereafter an updated report every year or two years depending on your state’s requirement. The Annual Report is a simple form that keeps the state up to date on your company information. And down the road when you make changes to your company, it will invariably be one of the forms you’ll need to file with the state.

It is very important to file within the required time. It can cost you as much as ten times the normal filing fee if you file late! If you prefer, SunDoc can file your Annual Report/Biennial Report and other routine filings for you, reliably and on time. All LLC forms, including the report form, can be found on the Vermont business web site.

Important Notice: It is beyond the scope of this article to discuss your potential insurance needs, or matters relating to employees. You should consult an attorney or accountant with any questions about legal or financial matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.

For additional learning, please visit our LLC FAQs.