Vermont is one of the most friendly states for business. First of all, the state is a small one and the population is friendly toward new businesses.
Also, the Vermont government encourages business growth through different incentives and grants from the state to keep its economy growing and this guide on how to start an LLC in Vermont will help you start the right way.
The state has a few requirements for starting an LLC, but all of them are fairly easy if you follow them correctly.
The requirements are all in the form of an application which you must fill out and get approved before the state will issue your LLC Articles of Organization. We’ll explain each item below to help you get started right away.
Steps to Start LLC in Vermont
1. Find a Name for your LLC
The first step to starting an LLC in Vermont is to find a name for your business. The name must be unique and cannot be similar to the names of other companies in your state. It is also important you pick a name that fits your business’s purpose, mission, and vision.
A good way to find a name is to go through the state’s business name list, which includes several thousand names that can be searched and narrowed down based on similar words such as “entertainment,” “news,” or “marketing.” You can also search for names using a name search tool called the Vermont Business Entity Search which is provided by the Secretary of State’s Office.
Along with coming up with a good name, there are specific naming requirements you must meet.
The name cannot be deceptive, it must not imply a state or national origin or imply federal recognition, and it can’t include the words “Bank,” “Attorney,” or “Credit” except you follow certain procedures. You can also choose to have a name that tells what your business does. For example, a florist business could be named Bloom & Blossom Flowers LLC.
2. Decide on a Registered Agent to use
Your state requires that your LLC have a registered agent to assist in handling official documents sent by the state. The registered agent is an individual or business you authorize to act on behalf of your business in court matters, tax issues, and other government offices.
When you register with the Secretary of State’s office, they will provide you with a list of licensed agents near your home. If you want to hire a professional to serve as your registered agent, ask the Secretary of State’s office if they have any recommendations or suggestions.
3. File an Application for Articles of Organization
The next step to starting an LLC in Vermont is to file an application for articles of organization. The purpose of the Articles of Organization is to let the state know you are forming a limited liability company, which establishes your new business as a legal entity separate from you as its owner.
To get started on your application, go to the Secretary of State’s corporation and limited liability company webpage and download the application.
It includes all the information you need to complete it, such as the name of your LLC, general business type and location, and a fee you must pay for processing your application. Along with the application, you will need to read through the LLC laws and statutes of Vermont and understand them before you apply.
4. Get Your LLC Certificate of Organization
Once you have completed your application and paid the appropriate fees, you will get a notice letting you know the Secretary of State received it and that your LLC is now “active.” This means your business is now officially registered as a legal entity in the eyes of the state.
The next step is to receive your LLC certificate of organization from the Secretary of State’s office. The certificate is a document that proves your business was officially registered and gives you official corporate status.
5. Get an Employer Identification Number (EIN)
An employer identification number (EIN) is a number that the IRS assigns to every business. This number needs to be used on a business’s tax returns, including business and personal income tax returns, and can be used as your company’s identification number on other documents filed with the state. If your LLC was started in another state, you may already have an EIN. If not, you can either apply for one online or by mail at the IRS website.
The process for applying for an EIN is fairly simple, you need to fill out an application form at the IRS website, which asks for some basic information about your business, its LLC status, and your personal information. Once you fill out the form and pay the filing fee, the IRS will assign a number to your business entity.
6. Draft an Operating Agreement
Your business needs an operating agreement to outline what is allowed and what is not within your company. The members of your company should have a clear understanding of how things will be conducted and how decisions will be made. An operating agreement can also keep the business running smoothly without any confusion about how things are done.
An operating agreement outlines the following things: who is in charge, decision-making authority, ownership stakes, procedures for selling or buying out another member’s interest, and the rights and responsibilities regarding the partnership property.
The operating agreement is highly recommended to give you a clear understanding of how things will work. The most important thing about an operating agreement is to protect the rights of all members of the company and make it clear how things will be managed.
7. File Annual Reports
Once a year, you will need to file an LLC tax return with the IRS. Your LLC must follow regulations set by the IRS, which will determine which tax forms your business has to file. You will need to file your tax return for each year you run your company and must keep track of any information needed for the IRS so it can file it with them.
You start filing federal tax returns at the end of the calendar year, but most LLCs start filing their first tax return in January shortly after they form. If you need more detail on how this works, you can contact the IRS.
Forming a new LLC is not as complicated as you might think. With the steps outlined above, you should be able to easily create your own limited liability company and get its paperwork completed in no time. The state of Vermont makes it easy to start an LLC, and it’s a relatively simple process if you follow the right steps.
If you have any questions about forming a new LLC or need assistance in getting through the registration process, talk with a professional business consultant or attorney. They can help you to start your company, get all the forms completed correctly and make sure everything meets your needs as you start your new business.