Think about your LLC a year from now: raking in profits and taking Vermont by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Vermont.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Vermont startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Vermont
- Optional: LLC Name Reservation Fee
- $20 for an online or hard copy filing
- Required: Articles of Organization Fee
- $125 for an online or hard copy filing
Overall Vermont LLC Formation Costs
LLC Name Reservation Fee
Have a great business name in mind but worried someone will take it? Consider reserving it. This is an optional step in the process, and you should only take it if you’re not yet ready to start your LLC. It’s $20 and will hold your name for 120 days. However, if you’re prepared to start your business right away, skip the reservation and go straight to the Articles of Organization, which will automatically register your name.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Vermont LLC. The Articles of Organization officially establishes your LLC, making it eligible to do business in the state, so file it as soon as you can! It costs $125 for online or paper submissions, but since you can’t operate until it’s been processed, that’s a $125 well spent. Plus, you’ll only file the Articles of Organization upon startup so you won’t have to worry about paying the fee again.
Business and Professional Licenses
Finished your Articles of Organization? Congrats! There’s just one more small step before commencing business in Vermont. Some LLCs must obtain licenses from certain state agencies prior to doing business. Engineering companies, for example, must apply for licensure through the Board of Professional Engineering, and Accounting firms through the Board of Public Accountancy.
Beyond state agencies, cities and/or counties have their own separate licensing requirements. Check with the Vermont Office of Professional Regulation and your local government to see which (if any) license your LLC needs.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Vermont business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. With so many qualified options out there, a site like Avvo can help you find the right fit, offering information on Vermont business lawyers – including their rates, locations, specialties, and more – so you have everything you need to make a well-informed decision.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Vermont. If this describes your business, you’ll need to file an “Application for Certificate of Authority” rather than the Articles of Organization. All foreign business entities are required to foreign qualify in Vermont, or they could incur some pretty severe penalties. Avoid fines and legal action by applying for a Certificate of Authority online or requesting a paper form (the Secretary of State prefers online). It will set you back $125 but, like the Articles of Organization, it’s a one-time filing and fee.
LLC Annual Fees
Everything listed so far has been startup costs, payments you can make once and forget. But once your business is up and running, it will have maintenance fees as well, namely the Annual Report. Each year, within three months of the fiscal year’s end, your LLC must file an Annual Report online and pay a $35 fee.
This way, the Secretary of State can keep your file updated and accurate. Throughout the year, you should also make sure to notify the state about changes to your registered agent, registered office, and other information by filing the appropriate forms.
LLCs aren’t required to pay separate corporate income taxes at the federal or state level. Because they’re classified as “pass-through” entities, income and losses are simply reported by owners and/or members on their personal tax returns. And Vermont doesn’t impose a “franchise” or “privilege” tax on its LLCs either.
There are certain situations, however, in which an LLC would pay specific business-related taxes. If your LLC sells merchandise, it will owe a Sales Tax and Use Tax. If it maintains employees, it will owe a Withholding Tax and an Unemployment Tax. Register for any of these taxes through the Secretary of State’s Online Business Service Center.
Lastly, if you’ve structured your LLC to be taxed as a corporation, it will file separate corporate tax returns and pay the corporate income tax: 6.5-8%, depending on its net income.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Decide not to file the Articles of Organization or apply for a Certificate of Authority and your LLC will be restricted from doing business in Vermont. Miss an Annual Report and you will lose your good standing with the state, which means you won’t be able to foreign qualify in most other states, apply for business loans, renew certain licenses, and more. Then, if you don’t reconcile your good standing by submitting your missing forms and/or fees, the Secretary of State can terminate your business.
Taxes come with their own set of penalties. Let’s say you don’t pay your Sales Tax or Withholding Tax. They will incur a late fee amounting to 5% of the tax due per month, up to 25%. And if you intentionally attempt to avoid taxes, you will be charged with a penalty of 100% of the tax due.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Vermont.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Annual Reports and Sales Taxes – so your business doesn’t fall out of good standing.