If you want to start and run a Vermont limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Vermont LLCs.
The State of Vermont requires you to file an annual report for your LLC. You must complete the report online at the SOS website. However, at the end of the online process you'll have the option to pay by mailing in a check. To complete the annual report you mainly just need to confirm or update basic information about your registered agent, mailing and principal office addresses, and name of principal personnel.
The annual report is due within the first two-and-a-half months following the end of your LLC's fiscal year as recorded with the SOS. For example, if your fiscal year matches the calendar year (ends in December), your annual report is due any time between January 1 and March 15. The current filing fee is $35.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do. Vermont, however, impose a business entity tax (BET) on LLCs. Generally the minimum BET of $250 is due. The tax is payable to the Department of Taxes (DOT) using Form BI-471.
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Vermont, like most other states, has a corporation income tax. In Vermont, the corporate tax generally is based on a small set of marginal rates applied to net income along with certain minimum taxes. Use Form CD-411 to pay the tax. For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOT website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Vermont employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOT. Begin by registering your business with the DOT using Form BR-400 (formerly Form S-1). Once you've registered, you'll need to file withholding taxes on a periodic basis (typically monthly or quarterly) using Form WH431. The form can be filed online through the VTBizFile website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through Vermont's Department of Labor (DOL). You can register for these taxes online or by using DOL Form C-1 (Status Report). Then, each quarter, use DOL Form C-101 to report on wages and pay the UI taxes (you can file online). For more information , check the DOL website.
If your LLC will sell goods to customers in Vermont, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Taxation and then make periodic sales tax payments for goods sold. You can register online at the VTBizFile website or mail in Form BR-400. After you've registered you'll be sent a sales tax license. Then, on a periodic basis, you must file a sales and use tax returns online with the DOT. (You can also call the DOT to request a paper return.) For more information, check the DOT website.
If you will be doing business in states other than Vermont, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Vermont, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.