If you own a business that was created in a state other than Vermont, you will need to qualify or register that business in Vermont if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Vermont) limited liability company (LLC) to do business in Vermont.
For Vermont purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Vermont. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Alabama is a foreign LLC in Mississippi.
According to Vermont’s LLC Act, you are required to register your foreign company with the state of Vermont if you are “doing business” or “transacting business” in Vermont. (Each of those latter terms is used in different places in the Act.) What does this mean? Well, like most states, Vermont’s LLC Act does not specifically define either phrase in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that other state.
For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, Vermont’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
If your LLC’s only activity in Vermont is one of the above listed items, you should not need to register with the state. For the actual legal description of each of the items, check Section 4113 of the Vermont Limited Liability Company Act.
To register your business in Vermont, you must file an Application for Certificate of Authority with the Vermont Secretary of State (SOS). (The full name of the actual form is a mouthful: APPLICATION FOR CERTIFICATE OF AUTHORITY of a non-Vermont Limited Liability Company (LLC/PLC/L3C) seeking to do business in the state of Vermont.) You can download a copy of the form from the SOS website.
To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. However, since every state is a little different, there may be items that Vermont asks for that you did not need to provide when you first organized your LLC. More specifically, for a Vermont Certificate of Authority, you need to provide:
You also must include a Certificate of Good Standing (or equivalent document) from the Secretary of State of the state where you created your LLC. You must submit the application in duplicate (either one original plus one copy, or two originals). You can file by mail or online. The basic filing fee is $125.
If the original name of your LLC is not available in Vermont because it is the same as or very similar to the name of a business already registered in Vermont, you will need to adopt an alternate name for use in Vermont.
If your LLC transacts business in Vermont without having obtained a Certificate of Authority, it cannot bring a lawsuit in the state (including technical elements of a lawsuit such as raising a counterclaim, cross-claim, or affirmative defense). However, not having a valid statement of authority does not invalidate your LLC’s contracts or prevent the LLC from defending a lawsuit in the state. Also, a member or manager of the LLC is not liable for the debts, obligations, or other liabilities of the company solely because the company transacted business in Vermont without a Certificate of Authority.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Vermont are similar. You will, however, have to use a different application form, Form Corp-1(F)Application For Certificate of Authority of a non-Vermont Corporation (profit, nonprofit, or cooperative) seeking to do business in the state of Vermont. See the Vermont Secretary of State website for forms, information, and filing instructions for registering a foreign corporation in Vermont.