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Are you looking to start a business in Vermont? There are many ways to structure your business. Many business owners choose to create limited liability companies (LLCs).
An LLC structure in Vermont provides many benefits, especially regarding the possible protection of personal assets from creditors. Other reasons include management considerations, the impact of regulatory compliance issues, and favorable tax options.
In this guide we’ll show you exactly how to start an LLC in Vermont, going through state essentials, best practices and tips.
There are six basic steps to establishing an LLC in Vermont:
Let’s dive in and understand each step:
Vermont state law requires businesses to be named such that they are “distinguishable in the records.” This law means business names must be significantly different from others filed with the Vermont Secretary of State. They cannot cause confusion.
Among the restrictions the state uses to determine if a name fails to be distinguishable in the records are the following:
Names are not distinguishable in the record if any of the following superficial alterations apply:
In addition to those guidelines, there are additional restrictions on selecting a name for your Vermont LLC related to vulgar language. Specifically, the name cannot include:
Other content restrictions relate to deceptive language, including those that use:
To reserve a name with the state of Vermont, you will need to register the business itself. However, the state also has an online tool that lets you search a database of existing names. By exploring this database, you can determine if your desired name is taken.
When you register your business online, you can submit your requested name at the same time.
Many businesses also establish a “doing business as” (DBA) name for their LLC. This is a helpful step that allows you to manage your business and have a recognizable name separate from your legal name. The DBA name is one that would be used in business listings, signage, and marketing materials.
In Vermont, as in many states, the DBA name is referred to as the assumed name.
The assumed name registration informs the public about your using the name and what kind of business you have, as well as providing you with very limited name protection.
Filing for an assumed name does not establish your business as a legal entity. It is merely an additional name for you to use for common, day-to-day business operations.
The information required for your assumed name registration in Vermont is simple. You’ll be asked to provide the assumed name being registered, the principal office address, the business owner’s name, and the business purpose.
You can file a DBA online or request a form be sent to you. You can also contact the Vermont Secretary of State’s Corporations Office at (802) 828-2386.
The cost to file an assumed name application in Vermont is $50. Once you’ve registered with the state of Vermont, your assumed business name registration lasts for five years. The renewal fee is $40.
If you want to change your assumed name, you will need to cancel the existing assumed name and file a new one. Canceling your assumed name costs $20. Other changes to the assumed name information cost $20.
Filing for your assumed name online takes less than one business day, and it takes 7–10 days for the state to process the application.
Registering your name as a trademark is an important way to protect it from being used by other entities. Filing for a trademark at the federal and state levels provides some security but not blanket protection.
Once you’ve filed your name in Vermont, you can start with the U.S. Patent and Trademark Office at the federal level. The office has an online Trademark Electronic Search System, which can help you research already approved trademarks. Some companies choose to work with a trademark attorney or other business that specializes in the trademarking process. These businesses can help with research, completing applications, and filing for a trademark, ensuring that your intellectual property is protected.
In addition to its name, your company can protect other pieces of intellectual property, including phrases, designs, words, and symbols that identify the business. Trademarking these items can protect your assets and help your business distinguish itself from others. Trademarks help protect companies against unfair competition and prevent customer confusion.
In Vermont, you can file for trademarks at the state level. In many cases, federal trademark law will preempt state law. However, many experts believe that filing a trademark with the state can help establish the date a business began using a mark more efficiently than other ways.
The state defines trademarks as words, designs, phrases, or symbols, alone or in combination, that identify and distinguish the goods of one party from those of another.
A service mark—often used indistinguishably from trademarks—is used to identify services that a company may provide. Vermont state law does not provide for the registration of service marks.
A trademark is not a business name.
Businesses can use the ™ symbol for trademarks and the ℠ for service marks in Vermont to indicate a right to the claim of that mark at either the state or federal level. However, the use of the symbol alone does not guarantee that the mark is protected by federal or state trademark laws.
The Vermont Secretary of State will not issue a trademark for certain types of material, including:
Like many states, Vermont requires LLCs to file articles of organization. This process details some of the detailed information about the company, its contact information, and its purpose.
As a new business, there are multiple fees you will need to pay. The state of Vermont outlines those fees for LLCs online.
The most common fees for LLCs in Vermont are:
Articles of organization must include the following information:
The articles can be filed online at the same site used to register the business. In addition, you can submit the articles online at:
Vermont Secretary of State
128 State St.
Montpelier, VT 05633
As with other documents, the state expects filing to take less than one business day and that the process is typically completed in 7–10 business days.
A registered agent is an important consideration for any Vermont LLC. Every LLC that registers with the Secretary of State is required by law to have a registered agent.
A registered agent is used to collect any documents served to the business in a legal filing.
In Vermont, to be a registered agent, you must have a street and mailing address within the state. A registered agent can be a person, business, or nonprofit organization (not the business itself) that is also registered with the Secretary of State.
Some people choose to act as their own registered agents. While this is a permissible allowance, it is not recommended. A registered agent must be available at all times during business hours, which would mean no time off, vacations, or work outside the office.
Most LLCs in Vermont instead choose to use a business that specializes in acting as a registered agent. By using a separate business, you gain several advantages over acting as your own registered agent.
Here are some of the greatest benefits of using an external registered agent.
When you act as a registered agent, your personal information is on file with the Vermont Secretary of State’s office. Your name and home address are accessible as part of the state’s public record. Using an independent registered agent ensures your personal information remains private and is not accessible by the general public.
If you declare yourself as your LLC’s registered agent, you will be served legal documents at your business address. Such a situation can be awkward and embarrassing. Imagine, for example, having customers or employees see you being served legal papers as part of a lawsuit.
Choosing an outside registered agent means you will not be served with any documents related to court filings. Instead, you can preserve your company’s reputation with those who matter the most to your business.
You should focus your energy and time on your business. That can mean business trips or appointments during the week with customers, business partners, financing companies, and others. You may want to take days off or vacations too.
Our registered agent services provide flexibility to concentrate on your business. You’ll also have peace of mind, knowing documents will be served discreetly without interfering with operations at your place of business. You should find a partner who will coordinate, file, and track documents on your behalf.
If your business operates in multiple states, you will need registered agent services in those locations. Using a partner for registered agent services ensures you’ll have consistent service for all your filing needs, no matter where you operate. Many of these companies offer additional services that help with the completion of various required reports, articles, licenses, and notices across multiple jurisdictions.
The services your registered agent partner provides can help you in multiple ways. The registered agent service can ensure annual reports are filed, licenses are renewed, and documents are filed with multiple state agencies in all 50 states.
Failing to file your LLC paperwork on time can be a costly issue for your company. You can face legal issues, late fees, fines, and penalties. A failure to file can mean your business is no longer recognized within a state.
Your registered agent can maintain the necessary complex schedules for your company. They will ensure you do not incur costly damages by filing required materials before deadlines. Your company’s registered agent can also maintain digital records of all the relevant materials for you.
Vermont does not require an LLC to file an operating agreement. However, having such a document is a wise thing to do.
Most states, including Vermont, do not require an operating agreement. However, there are important reasons to have one. It documents how a business will be run, how profits are distributed, and what happens if a member joins or leaves the LLC. An operating agreement can also detail how disputes are resolved and what happens if the business dissolves.
Here are some of the standard components of an operating agreement:
There are no state requirements for operating agreements for LLCs.
Every business that runs as an LLC in Vermont, has employees, or files tax returns should have an Employer Identification Number (EIN). The EIN is a requirement of the Internal Revenue Service and is used as part of tax filings and other business filings at the federal and state levels. It’s critical for any business that hires employees, wants to open a bank account, or has to file state taxes.
Your EIN for your business is analogous to the personal use of your Social Security number. The EIN acts as a unique identifier for much work done at the federal and state level. It’s a way for agencies and others to monitor, track, and document your company and what it does.
Applying for an EIN is easy. It can be done online via an IRS website or using fax or mail services, based on where you file your federal taxes.
In addition to registered agent services, we offer EIN number services. We can complete the application for your EIN and ensure it is used correctly on relevant federal and state forms for forming and operating your Vermont LLC.
Businesses in Vermont need to pay various taxes to the state. Here is a rundown of the relevant taxes required to operate in Vermont.
There are unique taxes that apply to Vermont LLCs. These requirements include state taxes and—in some cases—local taxes. Determining which local taxes you will pay depends on where your business is located. You should check with your municipality’s city or town government to learn details.
One of the features of the LLC business structure is that it acts as a tax pass-through. The requirement to pay income taxes flows through the LLC (which does itself pay income taxes) to the individual members.
However, in Vermont, your business will pay a business entity income tax. These requirements apply to LLCs that choose to be taxed as partnerships or S-corporations.
The business tax rate is based on income brackets. The rate starts at 6 percent and is determined by net income and gross receipts.
If your Vermont LLC sells goods or services within the state, you are required to collect and pay a sales and use tax. The sales tax rate is 6 percent.
You will need to register your business with the state Department of Taxation and make periodic payments on what’s sold. Once you’re registered, you will receive a sales tax license and need to file returns online with the taxation department. You may also contact the department at (802) 828-2505 or (802) 828-2865 to request paper forms be sent.
If you are self-employed, the tax rate in Vermont is 15.3 percent. Self-employed people must pay estimated taxes every quarter.
Vermont charges a progressive payroll tax, meaning the tax rate varies based on the salaries of employees. For 2022, the tax rates range from 3.35 percent to 8.75 percent.
Vermont has other taxes for businesses. Companies, for example, will pay an unemployment tax based on the company’s gross payroll, taxable wage base, and assigned tax rate. The state also imposes excise taxes on certain goods, such as alcohol, tobacco, and fuel.
Opening a business bank account is an important step. You should not mix personal and business finances. In fact, doing so can dilute the liability protection you gain from forming an LLC.
Having a separate business account also helps with preparation of financial statements, completion of taxes, and preparing forms for potential financing.
Income gained from your business can be deposited into your business bank account. And you can use the account to pay for bills incurred by the business.
Disbursements to members of your LLC should also be paid out of this account.
Once your LLC is established, you should be sure you know what fees you will need to pay on an annual basis. Many of these fees have different filing deadlines and amounts. It’s important to track them carefully to ensure you remain compliant with the state of Vermont’s guidelines.
Your financial structure is critical when you operate an LLC. You may want to consult a tax advisor, lawyer, and/or accountant to get the most out of your hard-earned finances. These business advisors can help you get the greatest tax benefits out of your business. You should also work to ensure the business is operating in a way that optimizes revenue and profits.
Depending on where you operate within the state of Vermont, you may be required to file for additional licenses or permits. These requirements may be needed for occupancy of business buildings, sale of certain items, or mandates by local boards of health. It is important to check with your local city or town and county governments to know which licenses and permits you need.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.