Start Your Own Business in Vermont: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Vermont.



Here’s an overview of the key steps you’ll need to take to start your own business in Vermont.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are a:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of  liability protection you want and the best tax, financing, and financial benefits for you and your business.  Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Vermont Secretary of State (SOS). You can check for available names by doing a  business name search  on the SOS website. You can reserve an available name for 120 days by using the SOS  online filing system. You can renew the reservation up to two times.There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations).See  How to Form an LLC in Vermont  and  How to Form a Corporation in Vermont  for more information.

For Vermont sole proprietorships, you must register your business name with the SOS even if you are using your own legal name.For Vermont partnerships, you must register with the SOS if you use a business name that is different from the surnames of the partners. For either kind of register, use the  Trade Name (DBA) Registration.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Vermont, you don’t need to file any organizational documents with the state. For more information, see  How to Establish a Sole Proprietorship in Vermont.
  • Partnership:  To create a general partnership in Vermont, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Vermont.  To form a  limited liability partnership(often used by professionals), you must file a Statement of Qualification with the Vermont SOS. For more information, see  How to Form a Limited Liability Partnership in Vermont.
  • LLCs:  To create an LLC in Vermont, you must file  Articles of Organization  with the Vermont SOS. You will also need to appoint a  registered agent  in Vermont for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Vermont  and  How to Form a Professional LLC in Vermont  (for professionals).
  • Corporations:  To create a corporation in Vermont, you must file  Articles of Incorporation  with the Vermont SOS. You will also need to appoint a  registered agent  in Vermont for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Vermont.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Vermont, you must register with the Department of Taxes (DOT) to collect sales tax.If your businesses will have employees, you must register with the DOT for employer withholding taxes.You can register for both types of tax, as well as other business taxes, either  online  through the Secretary of State website or  on paper using Form BR-400,  Application for Business Tax Account.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Regulatory licenses and permits.These cover areas such as:

  • health and safety
  • the environment
  • building and construction; and
  • specific industries or services.

Check the  Licenses and Permits  section of the vermont.gov website for more details. You can apply for many state-issued licenses online through Vermont’s  eLicense System.For information about local licenses and permits, check the websites for any cities or counties where you will do business.

Professional and occupational licenses.  These cover people who work in various fields. A good first place to check for information is the  Professional Regulation  section of the SOS website. The section is maintained by the Office of Professional Regulation (OPR). Some professions, such as optometry, are regulated through a separate board. Others are regulated directly by the OPR.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Vermont taxes every kind of business. See  Vermont State Business Income Tax  for more information on state business taxes in Vermont.

Sole proprietorships.  Pay state taxes on business income as part of their personal state income tax returns (Form IN-111).

Partnerships.  Partners pay state taxes on partnership income on personal tax returns. In addition, Vermont partnerships also must file  Form BI-471  ,  Business Income Tax Return.As part of their state tax obligations, Vermont partnerships are required to pay the state’s  Business Entity Income Tax.

LLCs.  Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes (as a partnership or a corporation). A Vermont LLC classified as a partnership is also required to pay the state’s  Business Entity Income Tax. Furthermore, Vermont LLCs also are required to file an annual report. SeeVermont LLC Annual Filing Requirements  for more information.

Corporations.  Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Vermont  corporation taxes.And, finally, corporations must file an  annual report  with the Vermont SOS.

If you have employees, you must also deal with state  employer taxes.

And, apart from Vermont taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

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