The formation of a Limited Liability Company seems like too much work for many people, largely due to things like formation timelines. The reality is that LLC formation is simpler and typically faster than the incorporation of a corporation. But how long does it actually take to get an LLC in Vermont? We’ll give you all the information you need to understand the environment in the state, the formation process, and formation timelines in our guide.
Discovering Vermont
Vermont has a long, proud history. It’s called the Green Mountain State, which is a reference to the Green Mountain Boys, which was a militia initially formed to protect Vermont from New York, then was later reformed to fight during the American Revolution, the Civil War and the Spanish American War.
It’s one of six states that were first discovered and settled by Europeans, called New England. It borders New Hampshire, New York, Massachusetts, and Canada.
Its geography includes mountains, hills, rivers, lakes, and fertile farmlands. It’s home to the Green Mountain range, which is one of the oldest ranges in the world, as well as the Connecticut River Valley, the Taconic Mountains, and it sits on the edge of Lake Champlain.
Forests make up around 78% of the state, and those forests supply around $1.5 billion in state revenue every year. But probably what you know Vermont for is its maple syrup, as it’s the largest producer of the sweet substance in the U.S. It also mines slate, granite and marble. It’s also a big dairy-producing state.
Economic Overview of Vermont
Vermont has one of the smallest economies in the country, with a Gross State Product (GSP) of $30.2 billion. It experienced a growth rate of 0.5% from 2017-2022. That growth rate ranks 41 in the nation.
The top-performing industries in the state by revenue are Hospitals, Life Insurance & Annuities, Tourism, Public Schools, and New Car Dealers. The biggest employers in Vermont are The University of Vermont Medical Center, the University of Vermont, Dartmouth Hitchcock Medical Center & Clinics, United States Postal Service and Rutland Medical Center. And the sectors that contribute the most to Vermont’s GDP are Real Estate & Rental & Leasing, Healthcare & Social Assistance, Manufacturing, Professional, Scientific & Technical Services, and Retail Trade.
Business Environment in Vermont
Usnews.com has ranked Vermont’s economy #20 in the nation. It ranked its business environment #18, employment #28, and growth at #15. In fact, job growth in the state is -1.3%, which is quite low compared to the national average of 0.2%.
It ranks #36 for long-term fiscal stability, and #48 for short-term fiscal stability. Interestingly, the state was rated #1 in transportation, although 19.3% of the state’s roads are in poor condition which is on par with the national average.
It was rated #31 for affordability and #8 for economic opportunity. This makes sense because the state’s cost of living index is 98.7 (the national figure is 100.0), the median household income is $72, 431 which is $2,714 higher than the national average of $69,717, and the poverty rate is 10.3% (national average is 12.8%).
And it was rated #2 for equality.
Furthermore, it’s home to some pretty big names in business, like Ben & Jerry’s famous and delicious ice cream, and Green Mountain Coffee Roasters.
State Specific Regulations and Incentives for Forming an LLC in Vermont
Vermont provides a handful of incentives to help out business owners in the state. Here are some of the incentives you could qualify for.
- Vermont Employment Growth Incentive (VEGI): This program provides cash grants to businesses that meet job creation and capital investment requirements. Businesses are required to create new jobs paying wages that are a minimum of 140-160% of Vermont’s minimum wage. The wage threshold percentage will be determined according to the Labor Market Area (LMA) in the location of the project. The award amount is dispersed in 5 installments after all of the project milestones are met.
- Vermont Opportunity Zone Program: This program was created to support businesses who locate or expand to a designated Opportunity Zone. Several tax incentives are provided for businesses that move into these Opportunity Zones.
- Research and Development Tax Credit: If a business incurs certain R&D expenses in Vermont can qualify for this credit. The expenses can be claimed up to 27% of the federal R&D tax credit.
- Investment Tax Credit: This credit was designed to prompt investment in energy, rehabilitation, and certain coal, gasification and advanced energy projects. If you qualify for the federal tax credit you could qualify for this one as well. The amount of the credit is 24% of the investment tax credit for Vermont property.
- Direct Loan Program: This program provides either $1.5 million or 40% of the costs of real estate construction or renovation, or the purchase of furniture, fixtures, machinery or equipment for a project. Business industries that qualify include research and development, information technology, manufacturing, warehousing, processing, and some energy-related projects.
- Small Business Loan Program: These loans are for small businesses and they have a maximum amount of $500,000. Loans can be used for either fixed assets of up to 40% of the project, or 50% of working capital. Business industries that qualify include warehousing, processing, manufacturing, travel and tourism, research and development, information technology, and some energy generation and efficiency projects, as well as retail and service.
- The Vermont Training Program (VTP): Businesses who wish to train new hires or upgrade existing employees’ skills can qualify for a training grant. The Vermont Training Program supplies reimbursable grants of as much as 50% of training costs. Businesses are required to offer wages to their employees that are at least equal to the livable wage in Vermont. Training can be conducted on-site or through another training vendor or provider.
Pros and Cons of Establishing an LLC in Vermont
Before you start a business in the state, it’s important to understand both the ups and downs of doing business in that state. In this section we’ll tell you about both so you can make an unbiased and fair decision.
Vermont was rated the #4 best state for business growth by Venture Smarter last year. The economy is experiencing massive improvements, which is a huge bonus for business owners because of the added assurance it provides.
Vermont has several different incentives for businesses. This can be a massive help with everything from financing to employee training expenses.
Here’s a look at the drawbacks.
Vermont has steep tax rates. Its corporate income tax rate is a graduated rate between 6.00-8.50%. The personal income tax rate ranges from 3.35-8.75%. And the sales tax ranges between 6-7%, depending on the local taxes.
It can be difficult to conduct business across state lines due to various state regulations.
Vermont is a state with difficult weather patterns. In winter months, it’s prone to low temperatures, snow and ice. And when we say “snow”, we don’t mean just a dusting. Vermont has a reputation for heavy snowfalls.
Procedure of Establishing an LLC in Vermont
Before formation time is even a consideration, you must first form your LLC. Here are the steps to forming an LLC in Vermont.
- Obtain an Articles of Organization Form: The first step you must complete to start a Limited Liability Company is to obtain an Articles of Organization form. This is your primary formation document and serves as an application to get your LLC. This form is available through the Secretary of State Business Services Division.
- Choose a Business Name: Business names have several legal requirements, so choosing one may not be as simple as jotting down the first one that comes to mind. Because you own an LLC, your business name must reflect that and include language like “LLC”, “Ltd.”, “L.L.C.” or “Co.”. You also can’t use a business name if another business is already using it, and it can’t be too similar to another business name. You can find out whether you can use a business name by running a search on the business name database on the Secretary of State’s website.
- Designate a Registered Agent: This is another legal requirement of LLCs. Your LLC must have a registered agent, which is a person who will accept service of process, legal notices and correspondence from government agencies at their address on behalf of your business. This can be an individual or a business, which means you can choose a family member, employee, or close friend. But many business owners choose to hire a professional registered agent service for added peace of mind.
- Choose Your Address: If your business has a physical address, this can be a simple choice. However, if it doesn’t then this becomes a complicated issue. Your business address is a matter of public record, so listing your personal or home address can create privacy and security issues. To avoid these issues you can find virtual addresses in your area, or you could request to use your registered agent’s address.
- Sign and File Your Articles of Organization: Make sure that all of the information is included in your Articles of Organization and that it’s all correct. Then it’s time for the form to be signed and filed. You can do this yourself, but again, this leads to your personal information being listed on the public record. You can also use an LLC formation service to sign and file your documents for you.
Necessary Documentation for Filing an LLC in Vermont
There are lots of documents which are required to file for an LLC. Here are some of the documents and applications you’ll need to gather upon filing.
- Articles of Organization: This is your application to get an LLC. It typically requests information from you such as your business name, address, a list of LLC members and the contact information of each member, and your registered agent. It may also request an explanation as to whether your LLC is member-managed or manager-managed, its business purpose, or duration.
- Operating Agreement: LLCs usually aren’t legally required to have operating agreements, but it’s a crucial internal business document that you’ll be glad you created. It functions as a contract between LLC members, and comprehensive instructions for how your business will operate. Some of the information included in the operating agreement includes the role, contribution and contact information for each LLC member, and information about the distribution of profits and losses. It also includes information for managers, such as member voting rights and meeting schedules to adhere to. And possibly most importantly, it includes a section about the process to add or remove members, which can be valuable if an LLC member dies.
- Name Reservation Application: After you make sure that your business name is viable, you must file an Application to Reserve a Specified Business Name. You submit this form to the Secretary of State and it reserves your business name for 120 days.
- Employer Identification Number (EIN): You’ll need an Employer Identification Number, also known as an EIN, to fill out tax forms, hire employees, or to open a business bank account. It’s also a major help to protect your privacy because you can typically use it in place of your Social Security Number on forms. You can get your EIN from the IRS website immediately, and it’s free.
- Initial Report: LLCs in Vermont must file an Annual Report, but the first one is called the initial report and it’s filed along with your Articles of Organization.
- Tax Registrations: LLCs are required to pay a Business Entity Tax. For this and if you plan to employ people, collect sales taxes, or sell products, you need to register with the Vermont Department of Taxes, which you can do online.
- Business Licenses: Vermont doesn’t have a state business license, but you may still need licenses and permits from county and local governments. This means you may need to obtain permits from county and local clerks. To find out more about business licenses, visit the Vermont Business Start-Up Guide online.
Legal Requirements for Starting an LLC in Vermont
LLCs must meet a few legal requirements in Vermont. However, LLCs aren’t highly regulated in the state, so there aren’t as many requirements as some other states.
Your LLC must have a registered agent. In addition to receiving service of process and official mail on behalf of your business, they must also have a physical address in the state. A P.O. box can’t be used. They must also be at least 18 years old. And while you can designate any individual who meets the requirements, it’s important to remember that this role is directly linked to the legal ongoing operations of your business. If your registered agent doesn’t perform its duties properly, it could lead to drastic legal and financial consequences for your company. Because of this, many businesses choose to hire a professional registered agent service.
LLCs must file an annual report each year in Vermont. They’re due 3 months before the fiscal year ends for your LLC. You can file your annual report online with the Vermont Secretary of State Corporations Division. The filing fee for domestic LLCs is $35, and for foreign LLCs it’s $140.
Time Frame for Establishing an LLC in Vermont
Now we’ll tell you everything you need to learn about formation timelines in Vermont.
How Long Does the Initial Paperwork Take in the State of Vermont?
Approval times to file online are 1 business day, and 2-3 weeks if you file by mail. This includes processing and transit times, and approval times describe the total turnaround time to receive an LLC.
Processing Times in the State of Vermont
Processing time for mail filing is 5-7 business days, and it’s 1 business day for online filing. Processing time is the amount of time it takes for the Secretary of State’s office to go over your documents and enter all of the information into their system.
Common Delays in the LLC Formation Process in Vermont
There are several setbacks that could occur, and each of them could delay your formation time.
- Filing Method: Different filing methods have different processing times. For instance, if you file online, it has a processing time of only 1 business day, while filing by mail has a processing time of 5-7 days. Obviously, filing by mail will lead to slower processing times.
- When You File: Timing is important if you want fast processing times. LLC filings aren’t processed on official government holidays, or on weekends. If you file on or before these dates then it can slow down your processing time. Also, the beginning and the end of the year the Secretary of State always receives a huge volume of LLC filings, which causes delays. If you can’t avoid filing at one of these times then you should be aware of the delays you could experience.
- Issues with Documentation: The Secretary of State stipulates that you must include all of the pertinent information and that it must be correct. You must also include the correct number of copies with your Articles of Organization, which is usually two- one for them to keep and one which will be sent back to you upon LLC formation approval. If you fail to meet any of these requirements then your LLC application could be rejected.
Expedited Processing for LLC Formation in Vermont
Expedited processing is one way to get an LLC quickly. Here’s all the information you need about expedited processing in Vermont.
What Are the Expedited Options Available?
Vermont doesn’t provide expedited service options. That goes for both online and mail filing.
Additional Costs for Expedited Services in Vermont
Typically when you pay the expedited service fee, it’s on top of the filing fee to file your Articles of Organization. This means expedited services require extra fees. But since Vermont doesn’t have them, you won’t pay the fee here.
Comparing LLC Formation Time Frame in Vermont with Other States
You can learn a lot about how fast or slow your state’s formation moves by taking a look at the times other states provide. Here’s all the information you need about formation times.
Brief Comparison with Key States
Vermont has processing times of 5-7 days for mail filing, and 1 day for online filing. It doesn’t offer expedited processing.
5-7 business days plus transit time may seem excruciatingly slow, but there are actually slower times in other states. For instance, expedited processing takes 5 days in Arizona and 7 in Maryland. Processing for online filing takes 14-16 days in Arizona and 13-15 days in Texas. In Maryland it takes 5-8 weeks to process mail filings, Texas takes 4-8 weeks, Washington takes 5-6 weeks, and New York takes an astounding 8 months for mail filings.
There are faster options, as well. Mail filings are processed in 1-2 days in Alabama, Massachusetts and South Dakota, or 1 day in Ohio and Kentucky. Expedited processing can be as fast as 4 hours in California, 2-4 hours in Louisiana, 2 hours in New York, and just 1 hour in Delaware, Michigan, Montana, Nevada, Pennsylvania, and West Virginia. And while one day processing for online filings is quite expedient, Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming all offer immediate processing for online filings.
As you can see, Vermont has processing times that are relatively swift. But if you want faster processing times then you should either choose a state with immediate online processing, the one-day processing on mail filings from Ohio and Kentucky, or choose one of the states with 1-hour lightning-fast expedited processing.
Why is Vermont a Favorable Place for Forming an LLC?
Vermont can be a good place to form an LLC because of the rapidly improving economy and the incentives and resources that are available to businesses, as well as the idyllic landscape in the state.
