LLCs are businesses organized under state law. They include sole proprietorships, partnerships, limited liability companies, corporations, trusts, estates, and unincorporated associations. Vermont has three types of LLCs: regular, professional, and foreign. Regular LLCs are those formed under Chapter 101 of Title 12 of the Vermont Statutes Annotated. Professional LLCs are those formed under Chapter 201 of Title 12 of the VSA. Foreign LLCs are those formed outside of Vermont.
Each year, every LLC must file certain information with the Secretary of State’s Office. This includes the name of the entity, the date it was established, the names of the members, the address where it is located, the principal place of business, the purpose for which it was formed, the amount of capital contributed by each member, and the number of shares held by each member.
Failure to file an annual return within 90 days of the end of each calendar quarter will cause penalties. Penalties range from $10 per day up to $500 per violation. For example, if you fail to file an annual return on July 31st, you’ll owe $50. If you don’t file an annual return on August 30th, you’ll owe $100. And if you don’t file an Annual Return by September 29th, you’ll owe a whopping $500.
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Annual Report
Most states require the annual report. Companies must provide detailed information about their financial performance, including sales, profits, assets, liabilities, and capital structure. In addition, it includes a balance sheet and income statement. A company may disclose additional information such as executive compensation, shareholder equity, and stock option grants.
State Business Tax
Most states require an LLC to file state business tax reports. These reports include gross receipts, net profit, total assets, etc. If you fail to do so, you could face fines and penalties.
The IRS considers passthrough companies to be individual taxpayers, which means that pass-through entities must file personal income taxes. However, if the entity pays any amount of tax it passes through to its members, each member will be subject to taxation.
LLCs are considered “passthrough” entities, which don’t pay corporate tax; however, if the LLC pays some tax, each partner will be subject to taxation individually.
State Employer Taxes
Withholding taxes include Social Security and Medicare. You must withhold federal income tax from wages paid to employees and state income tax from wages paid by employers. This includes both personal and corporate income taxes.
If you’re self-employed, filing Form 941 for quarterly payments is required. Filing Form 940 for yearly payments is optional.
Your LLC will have to pay withholding taxes if you have employees; however, it doesn’t have to file Forms 941 or 940.
You don’t have to withhold federal income tax from dividends, interest, rents, royalties, annuities, pensions, or capital gains.
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Registration in the Other States
If you want to do business in another state, it’s important to understand what registration requirements exist. You don’t necessarily need to register your company in each state you intend to operate in. However, many states require some form of registration. Registration lets the state know who owns the company, permitting them to transact business under its name.
Some states require you to obtain an agent certificate before conducting business. An agent certificate is required because the state wants to know who owns the business. If you are operating solely within one state, registering isn’t necessary. But if you plan to expand into another state, you must register your company there.
Many states offer online services where companies can file documents electronically without having to pay any fees. Check out StateBusinessForms.com for details about filing forms online in every state.
Other Potential Vermont LLC Fees or Requirements
Several types of fees are associated with forming a limited liability company (LLC). These fees vary depending on what type of entity you want to form, how much money you plan to invest, and where you live. Here are some examples of potential fees:
* Formation Fee – This fee covers the cost of preparing the documents needed to start your business. For example, it includes the costs of filing Articles of Organization, Annual Report, Operating Agreement, etc.
* Annual Reporting Fee – This fee covers ongoing reporting requirements such as federal tax returns, state franchise taxes, corporate income tax, sales tax, unemployment insurance, worker’s compensation, etc.
* Service Fee – This fee covers administrative support services like bookkeeping, payroll processing, human resources management, etc.
* Membership/Shareholder Dues – This fee covers membership dues per member and shareholder. In addition, there may be additional membership dues based on the number of memberships purchased.
* Transfer Agent Fee – This fee covers transfer agent services. A transfer agent is responsible for recording ownership changes in stock certificates, bonds, mortgages, deeds, etc.
* Secretary of State Fee – This fee covers registering your business name with the Secretary of State. You must pay a $20 filing fee plus a $15 registration fee. Registering your business name online will also have to pay a $10 transaction fee.
* Other Fees – Numerous other fees can apply to particular businesses. Contact us for more information about specific fees.
Changing the Registered Agent
If incorporated in California, you must designate a registered agent for your corporation. This person receives legal notice on behalf of your company. If you do not provide a registered agent, you cannot sue or file documents in court on behalf of your company without permission. We will send you a reminder email every 90 days to remind you to update your information.
Reserving a Name for Your LLC
The Vermont Secretary of State’s Office offers several ways to register a limited liability company (LLC). One way is to use the online form found here. This form requires filling out a few pieces of information about the LLC, including the company’s name, the date it was formed, and the entity type. After submitting the form, the applicant receives a confirmation email stating whether the application was successful. If the application is unsuccessful, the applicant gets an explanation detailing why the application failed.
If you cannot complete the online form, you can call the office at 877-878-4357. A representative will ask you to provide some basic information about the LLC, such as the date it was formed and its entity type. Once the representative has gathered this information, he or she will help you complete the registration process over the phone.
After registering a company, the secretary of state issues a certificate of good standing. To obtain a copy of the certificate, contact the office directly at 802-864-3200.
Frequently Asked Questions
How to Dissolve an LLC in Vermont
If at any point shortly you no longer want to continue doing business with your limited liability company, it is important to dissolve it formally. Otherwise, your continued operation could cause problems down the road. For example, if you operate a business out of your home, you might owe property taxes on the building itself. If you fail to close your business tax accounts, you risk incurring late fees, interest charges, and possibly even penalties. And if you don’t file the articles of dissolution within 60 days of dissolving your LLC, you risk that someone else may claim ownership of your business name.
To dissolve your LLC in Vermont, there are two basic steps:
1. Close your business tax accounts.
2. File the Articles of Dissociation.
In addition to those two steps, some additional requirements apply specifically to certain types of businesses. For example, if your LLC operates as a sole proprietorship, you must file the articles of dissolution with the Secretary of State within 30 days of closing your business tax account. However, if your LLC operates under the Limited Liability Company Act, you must file the Articles of Dissolution within 60 days of dissociating from the LLC.
Do I need an operating agreement if I’m the only owner?
If you’re the sole member of a limited liability company (LLC), it doesn’t mean that you don’t need an operating contract. Many people assume that because they are the only person involved in a venture, no one else needs to know how things work. This isn’t true. If someone wants to invest money into your company, they will want to understand what happens to the business’s assets if something goes wrong. They might even want to ensure you aren’t mismanaging the assets. An operating agreement sets forth the business’s rules, including how decisions are made, who gets paid, and whether anyone can take over the business if you die.
James Rourke is a business and legal writer. He has written extensively on subjects such as contract law, company law, and intellectual property. His work has been featured in publications such as The Times, The Guardian, and Forbes. When he’s not writing, James enjoys spending time with his family and playing golf.
