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Vermont LLC CostYou 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.

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.

Bare Minimum Cost to Start an LLC in Vermont

Optional: LLC Name Reservation Fee

    • $20 for an online or hard copy filing

Optional: LLC Formation Service

    • $39 for an LLC service like ZenBusiness and $79 for LegalZoom

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.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

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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.

The information required to file your Articles of Organization includes your LLC’s official business name, an indication that your business is an LLC, a professional LLC, or a low-profit LLC, a brief description of the nature of your business, your LLC’s physical street address and mailing address, the name and address of your registered agent, an indication that your LLC does or does not have members, the name and address of your LLC organizer, the date, and your name, title, and signature.

If you would rather get some help for this step, you’re in luck! There are plenty of reputable LLC formation services that will prepare and file your Articles of Organization on your behalf. You have plenty of options for this service, but we prefer ZenBusiness. They offer great low rates and well-rounded services, and with our exclusive discount code, you can get 20% off!

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.

What are some of the most commonly required business licenses for Vermont LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

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 a business 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 (which are often frequently used LegalZoom LLC alternatives) 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.

There are many different companies offering LLC formation services these days, and it can be tricky to tell which one is the right choice for your needs. We think ZenBusiness and IncFile are the two best LLC formation companies, and we wouldn’t hesitate to recommend either of them to our families and friends.

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, 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 top services guide.

Attorney Fees

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 $500-2,000.

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.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Vermont. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

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.

The information required to file your annual report includes the official business name of your LLC, your LLC’s principal office address and mailing address, the names and addresses of your LLC’s members and/or managers, and your name and title.

For more information on Vermont annual reports, check out our full article on the topic.

Taxes

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: 6-8.5%, 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 tax — so your business doesn’t fall out of good standing.

Key Steps for Starting a Vermont LLC

  • The first step to forming a Vermont LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
  • Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Vermont, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
  • The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $125 fee. Once the state processes this document, your LLC will be officially open for business!
  • That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Vermont LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
  • You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
  • Next, you’ll need to register for any relevant taxes with the Vermont Department of Taxes, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Vermont!

Key Steps for Maintaining a Vermont LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.

The Top 3 Vermont LLC Services

If you want to hire a reputable LLC formation service to handle the heavy lifting on your behalf, these are the three companies we trust and rely on the most.

  • ZenBusiness ($39) – ZenBusiness offers a well-rounded LLC formation package at a great low rate. Their standard LLC package includes a full year of registered agent service, an accounting assessment, and a customizable operating agreement. ZenBusiness also receives stellar customer feedback.
  • IncFile (FREE) – That’s not a typo! IncFile really does form LLCs for free. Even better, they include 12 months of registered agent service in their free package. IncFile has a ton of experience and more than 500,000 satisfied customers, so they’re always a reliable choice.
  • Northwest Registered Agent ($225) – Northwest offers a bit more of a premium service, but if you have the money, we think it’s worth it. Like ZenBusiness and IncFile, Northwest also includes a year of registered agent service with the purchase of any LLC formation package. They also offer the best customer support in this industry, with knowledgeable representatives who are familiar with the details of business formation processes in every state.

Frequently Asked Questions

Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Vermont.

What are the state business tax rates in Vermont?

If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 3.35% and 8.75%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Vermont’s 6-8.5% corporate income tax on your business revenue.

How quickly does Vermont process LLC formations?

The Secretary of State should be able to process your LLC’s online formation within one business day. If you choose to file on a paper form, you can expect to wait 7-10 business days while the state processes your filing.

How many small businesses are there in Vermont today?

The state of Vermont is home to nearly 80,000 small businesses. Entrepreneurs of all backgrounds and business types find that Vermont is a great place to own and operate a small business.

What are the top small business resources and websites in Vermont?

The Vermont chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Vermont LLCs. The U.S. Small Business Administration’s Vermont District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.

Should I form my LLC in Vermont, or choose a state like Delaware or Wyoming?

Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.

However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.