The LLC’s business name must be different from all other business entity names registered or reserved with the State. Your new LLC’s name must end with the words “Limited Liability Company” or “Limited Company,” or the abbreviations “LLC,” “L.L.C.,” “LC,” or “LLC.” The word “Limited may be abbreviated as “Ltd.,” and the word “Company” can be abbreviated as “Co.” An available LLC name may be reserved for up to 120 days for $20, and that reservation can be renewed one time for an additional 120 days.
The filing time is 3 weeks and can be expedited within 10 business days.
State Filing Fees
The filing fee is $125, and can be expedited by paying an additional $50
Articles of Organization and Operating Agreement
The formation of a Vermont LLC means that you have to file articles of organization (along with the $75 filing fee) with the Corporations Division of the Vermont Secretary of State’s office. The articles—which must be signed by at least one of the LLC’s managers, members, or organizers—must include:
- The LLC’s name
- The LLC’s duration; if for a specified time period (“term”) or of perpetual duration (“at-will”)
- The street address of the LLC’s registered office
- The name of the LLC’s registered agent there
- Names and addresses of all organizers
- A statement that the company will be managed by one or more managers, if applicable
- If the company will be managed by managers, their names and addresses
- Whether the LLC members will be personally liable for the LLC’s debts and obligations
- The title of the manager(s), member(s), or organizer(s) who signed the articles
Your new LLC is considered officially “organized” once an original and a copy of the articles of organization are delivered to the Secretary of State and are found to comply with state requirements. The Secretary of State endorses both copies but retains the signed original and returns the copy to the LLC or its representative.
The Department of Commerce endorses both copies but retains the signed original and returns the copy to the LLC or its representative. The articles are effective as of when they are filed, or, if another date and time is specified, the articles are effective as of the delayed effective date and time.
Another very important document for your new LLC is its operating agreement. Having an operating agreement is not an official requirement, but it’s a critical internal document that explains how the LLC will actually run. The operating agreement should list the LLC’s members, how much each one has invested, how profits will be distributed, and how much relative weight each member has when voting. It can be
amended or repealed as specified in the agreement itself or by state law.
The operating agreement can also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn’t have to. Often, however, it does include operating constraints and allowances that are already contained in state law and regulations. It also may contain constraints on the members’ authority to amend or repeal the operating agreement or any of its provisions.
A Vermont LLC must have at least one member; all members must be individual persons (as opposed to business entities). Members may acquire an interest in the LLC with the consent of the majority of the members, by making a contribution to the LLC, or in some other manner laid out in the articles or organization or operating agreement.
Member contributions to the LLC may consist of cash, property, services rendered, or a binding obligation (such as a promissory note) to make these kinds of contributions in the future.
Members may resign from the LLC, but only in accordance with procedures specified in the articles of organization or operating agreement. A member is not allowed to resign before the completion of the minimum time set for membership specified in the articles of organization or the operating agreement. If a member resigns wrongfully, the LLC may pursue remedies for any damages suffered by the LLC as a result of the resignation.
Vermont LLCs are required to maintain an in-state registered agent—the person or office designated to receive official state legal and administrative correspondence. An LLC’s registered agent may be an individual who resides in Vermont or a business entity authorized to do business there. The registered office may be—but doesn’t have to be—the LLC’s place of business, or one of them.
Ongoing Filing and Compliance
All Vermont LLCs must submit an annual report to the secretary of state that includes:
- The LLC’s name and the state where it was originally formed
- The address of the registered office
- The name of the LLC’s registered element of state
- The address of the LLC’s principal office
- The names and addresses of the managers, if applicable
A Vermont LLC is dissolved when any one of the following events occurs:
- An event specified in the articles of organization or operating agreement as requiring dissolution
- When the time for expiration arrives that is specified in the articles of organization
- When a member leaves the LLC, unless the remaining members agree within 90 days to continue the business, or the company continues under a right laid out in the operating agreement
- Written consent to dissolve by the number or percentage of members specified in the operating agreement
- An event that makes it illegal for the LLC to continue
- A court order mandating dissolution
An LLC by its nature offers some specific advantages over a corporation’s organizational structure, including access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, it is considered a “pass-through” entity for tax purposes, meaning that LLC owners report business profits and losses on their individual tax returns.
Unless you choose to tax the LLC as a corporation, the IRS treats single-member LLCs as sole proprietorships for tax purposes. This means that the LLC itself does not pay taxes on its own behalf and does not have to file a tax return as such.
Additionally, the IRS treats multi-owned LLCs as partnerships for tax purposes. This means that LLC owners (not the LLC itself) each pay taxes on their share of the LLC’s profits on their personal income tax returns.
The LLC tax rate for Vermont is variable, based on net Vermont taxable income. Vermont’s personal income tax system is made up of five brackets with a top rate of 9.5 percent that takes effect at $357,700. Among states with individual income taxes, Vermont’s top rate ranks fourth highest nationally.