Here’s an overview of the key steps you’ll need to take to start your own business in Vermont.
The most common legal structures for a small business are a:
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.
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.
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:
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.
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.
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.
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.