How to Start Your Own LLC in Vermont

They also offer flexible management structures and multiple options for taxation, making them a versatile choice for Vermont business owners. Here's a step-by-step guide to forming an LLC in Vermont.

1. Name Your Vermont LLC

Choosing the right business name is a critical first step. A strong business name should be memorable, communicate the nature of your business, and distinguish your company from competitors. Start by clarifying your business concept and brainstorming names that fit your brand. You can also seek input from trusted friends, colleagues, or mentors. Online searches help identify domain availability and ensure there are no similar businesses in Vermont that might cause confusion. Business name generators can provide inspiration, but they should complement—not replace—your own creativity.

Vermont LLC Name Requirements

Your LLC name must include "Limited Liability Company", LLC, or L.L.C. It must also be distinguishable from all other registered Vermont businesses and cannot mislead the public by suggesting affiliation with a government agency. Certain restricted terms like "bank," "insurance," or "university" require state approval. Vermont also prohibits names that are obscene, offensive, or discriminatory based on protected characteristics such as race, gender, or religion.

Check the US Patent and Trademark Office to ensure the name is not federally trademarked if you plan to operate nationally.

Reserving a Name

Once you've selected a viable name, it's recommended to reserve it to ensure no one else registers it while you complete the formation process. You can reserve a name online through the Vermont Secretary of State's Corporations Division or via mail. The reservation fee is $20, and the name is secured for up to 120 days.

Doing Business As (DBA)

If you plan to operate under a different name for certain products or services, register an Assumed Business Name (DBA) with the Secretary of State. This allows you to legally open bank accounts under that name and expand product lines. The filing fee is $50, and the registration is valid for five years.

2. Appoint a Registered Agent

All Vermont LLCs must designate a registered agent. This person or company receives legal and official documents on behalf of the LLC. The registered agent ensures your business receives critical notices in a timely manner, such as tax correspondence or service of process.

In Vermont, a registered agent must:

• Be at least 18 years old
• Maintain a physical Vermont address (no P.O. boxes)
• Be available during normal business hours

Many business owners use professional registered agent services for convenience, which allows them to run the business without being tied to a single location.

3. Choose Your Management Structure

Vermont LLCs can be member-managed or manager-managed. In a member-managed LLC, all members are involved in daily operations. This structure is common for small LLCs where all owners actively participate. A manager-managed LLC is run by designated managers, who may or may not be members, allowing some owners to take a passive role. If your LLC doesn't specify a management structure, Vermont defaults it to member-managed.

Selecting the right structure impacts decision-making authority, voting, and profit distribution, so choose carefully based on your business's size and goals.

4. File Articles of Organization

The Articles of Organization officially form your LLC in Vermont. You can file online through the Secretary of State or submit a paper form. Online filings are processed quickly, often within a business day, while mail submissions can take 7–10 business days.

The Articles of Organization include:

• LLC name
• Registered agent information
• Member and manager details
• Principal business address
• Organizer information
• Management structure

The filing fee is $125. After submission, you will receive a confirmation and your LLC is officially recognized.

Contact Information:
Corporations Division, Vermont Secretary of State
128 State Street, Montpelier, VT 05633-1104
Phone: (802) 828-2386
Secretary of State Website

5. Draft an Operating Agreement

While not required in Vermont, an Operating Agreement is highly recommended. This internal document clarifies ownership percentages, profit allocations, management roles, and procedures for resolving disputes or handling member changes. It protects your personal liability and provides structure for decision-making.

Key elements include member rights and responsibilities, voting rules, meeting procedures, and protocols for member withdrawal, death, or disability. Legal review is recommended to ensure enforceability and clarity.

6. Obtain an Employer Identification Number (EIN)

An EIN identifies your LLC for federal tax purposes. It is required for multi-member LLCs or LLCs with employees. Applying is free through the IRS website. The responsible party listed must be an individual, not another business entity. This EIN is necessary for opening bank accounts, hiring employees, and filing taxes.

7. Obtain Business Licenses and Permits

Depending on your industry, federal, state, or local licenses may be required. Vermont does not require a general state-level business license, but specific professions and industries—such as construction, childcare, or food services—often require permits. Local municipalities may also require zoning, health, or signage permits.

Vermont businesses selling taxable goods or services must obtain a Sales Tax Permit from the Vermont Department of Taxes. Operating without the proper licenses can result in fines or closure, so consult an attorney or use services like MyCorporation to ensure compliance.

8. Determine Your Tax Status

By default, Vermont LLCs are pass-through entities for federal taxes. Profits and losses are reported on members' individual returns.

Single-member LLCs

Treated like a sole proprietorship; members report income on Schedule C and pay self-employment taxes.

Multi-member LLCs

Treated like a partnership; members report their share of profits or losses individually and pay self-employment taxes.

LLCs can elect corporate taxation if beneficial:

• C-Corporation: Pays corporate taxes on profits; dividends to members are taxed separately (double taxation), but not subject to self-employment tax.
• S-Corporation: Pass-through taxation, but owners must take reasonable salaries subject to payroll tax; remaining profits avoid self-employment taxes. This can provide significant savings for profitable businesses.

Additional Requirements for Vermont LLCs

Open a Business Bank Account

Keep personal and business finances separate to protect liability and simplify accounting. A bank will require your EIN and Articles of Organization.

Business Credit Card

Helps establish business credit and manage startup expenses.

Business Insurance

Essential for risk management. Types include general liability, professional liability, workers' compensation, property, equipment breakdown, commercial auto, and business owner's policies.

Maintain Records

Keep formation documents, operating agreements, contracts, and legal or financial records safely.

Annual Reporting

Vermont LLCs must file a yearly report to maintain good standing. The fee is $35, due within three months after the LLC's fiscal year-end.

Vermont LLC FAQs