In Vermont, registering an LLC protects your personal assets from business debts and liabilities. This means that your home, car, and other personal belongings are safe if your business is sued or can’t pay its debts. You are also not responsible for the actions of your LLC partners unless you personally guarantee a debt or sign a contract agreeing to be held liable.
An operating agreement sets forth the rules and regulations governing the LLC, including how the company will be managed, how profits and losses will be distributed, and what happens if a member leaves the LLC. Creating an operating agreement can help prevent future disputes among members and makes it clear to everyone involved what the expectations and roles are.
Is an LLC Operating Agreement Required in Vermont?
No, an LLC operating agreement is not required in Vermont. However, it is highly recommended that you create one. This way, you have official documents from the start that outline how the LLC will be run, what everyone’s roles are, and how profits and losses will be distributed. This can help prevent future disagreements among members.
Vermont Operating Agreement Laws
You can read the in-depth Vermont Operating Agreement Laws in 11 V.S.A. § 4003, but we’ve outlined the most notable laws below.
By law, the operating agreement can outline any rules the members want as long as they don’t go against public policy or conflict with state statutes. This gives LLCs a lot of flexibility when it comes to management and decision-making.
An operating agreement can protect the LLC from having to indemnify a manager or member for liability in cases of wrongdoing by the manager or member. This includes if there was a breach of the duty of loyalty when a manager or member receives a financial benefit that they were not entitled to, a breach of duty, intentional crime or infliction, or of harm.
How Much Does it Cost to Form an LLC in Vermont?
The cost to form an LLC in Vermont is $125. This fee is paid to the Vermont Secretary of State when filing the articles of organization. LLCs are also required to file an Annual Report, which costs $35 for a domestic LLC and $140 for a foreign LLC. There is also a $5 fee for each Certificate of Good Standing requested or if needed.
How to Form an LLC in Vermont?
Forming an LLC in Vermont is done by filing the right paperwork and paying the appropriate fees.
Eight Steps to Form an LLC in Vermont
Step 1 – Choose a business name for your LLC
There are a few requirements for a business name for an LLC in Vermont:
- Your LLC’s name must include the phrase ‘Limited Liability Company’, ‘L.L.C.’, or ‘LLC’.
- Your LLC’s name can’t be too similar to another business name already on file with the state of Vermont.
- You can use a fictitious name (also called a DBA) for your LLC as long as it’s registered with the state.
Step 2 – File articles of organization with the Vermont Secretary of State
To form an LLC in Vermont, you must file articles of organization with the Vermont Secretary of State. The filing fee is $125. You can file online, by mail, or in person.
Step 3 – Appoint a registered agent for your LLC.
Every LLC must have a registered agent in Vermont. A registered agent is someone who agrees to receive legal documents on behalf of the LLC. The registered agent can be an individual or a business, but they must have a physical address in Vermont.
Step 4 – Create an operating agreement for your LLC
Although it’s not required it is highly beneficial to create an LLC operating agreement. You can use our template below to make the process quicker and easier.
Step 5 – Get an employer identification number (EIN) from the IRS
An EIN is a nine-digit number that the IRS assigns to businesses. LLCs with more than one member must get an EIN. You can apply for an EIN online, by mail, or by fax.
Step 6 – Comply with Vermont’s business licenses and permit requirements
You may need to obtain a business license or permit to operate your LLC in Vermont. Check with your city or county clerk’s office to see if you need a local business license.
Step 7 – Open a business bank account
It’s a good idea to open a separate bank account for your LLC. This will make it easier to track expenses and income for your business.
Step 8 – Keep your LLC in good standing
To keep your LLC in good standing, you must file an Annual Report with the Vermont Secretary of State. The filing fee is $35. You will also need to pay a $5 fee for each Certificate of Good Standing requested.
Vermont LLC Operating Agreement Template
Take a look at this template to get started:
LLC Operating Agreeement