How to Form an Vermont Professional Limited Liability Company

A Vermont professional limited liability company (PLLC) is a business form similar to an LLC. The difference is that a PLLC’s members are professional licensed service providers. It provides a level of protection from liability for its members. PLLCs offer flexible management, are easier to set up than a professional corporation, and its members may receive tax benefits. We’ll walk you through setting one up and a few common questions we get asked.

Who can form a PLLC in Vermont?

In Vermont, licensed professionals form PLLCs. There’s no definitive list of specific professionals that may form a PLLC in Vermont. Professionals can include doctors, dentists, accountants, veterinarians, and lawyers, as well as a range of others who require a license to practice.

There are several benefits for professionals who form a professional limited liability company, including:

• An easy start-up process
• Separation of the PLLC entity from members’ personal assets
• Easy online taxes with Vermont’s myVTax web portal

How to form a Vermont PLLC?

There are nine steps on the path to forming a Vermont PLLC:

1. Choose a name

Your PLLC’s name should reflect the professional group it represents. There are a few rules to keep in mind when naming it:

• The name cannot be the same as another business. Nor may it be similar enough to another that it causes confusion. You may seek a waiver of this rule from the Vermont Secretary of State (SOS) if the other similarly named entity agrees.
• The words “professional limited liability company,” “professional limited company,” “PLLC,” or “PLC” must appear at the end of the company name. Abbreviations may contain periods if desired.
• A company shouldn’t use words that might confuse it with a government agency, such as “FBI” or “FDA.”
• Language that could offend, such as obscene or discriminatory language is prohibited, including negative references to age, gender, or race.
• Check whether your preferred business name is available using the state’s database. 

If you have a name you like but aren’t ready to incorporate, you can use our name reservation service to reserve it according to state law and give you more time to start your business. Next, you can check domain names to set your web pages. We can make things easier by helping you acquire a domain name. 

2. Select a Vermont registered agent

The state of Vermont requires that PLLCs designate and maintain a registered agent and office to receive legal documents and other notifications. The agent must:

• Be a resident of Vermont, or a company authorized to do business in Vermont
• Maintain an office with a street address (not a P.O. box) and a static phone line

Forward changes in the agent’s address or name to the SOS office.

Our expert staff can help locate a registered agent with its registered agent service.

3. Complete and file Vermont Articles of Organization

The Articles of Organization document is the route to the formation of a PLLC with the Vermont Secretary of State. The document must include:

• The PLLC’s name
• The registered agent’s name and physical office address
• An office address for the PLLC
• The end date of the company’s fiscal year
• Description of the PLLC’s purpose and structure
• List of members/owners

Articles of Organization can be submitted online, via mail, or hand-delivered.

4. Create a Vermont operating agreement

Although an operating agreement doesn’t have to be filed with the state in Vermont, it’s a valuable document to have on hand. It outlines the rules and policies to guide its membership and avoid confusion and conflict as it moves forward. It articulates the members’ responsibilities as well as those of the managers. The operating agreement describes the process for internal changes and how to dissolve the entity should the members feel it is necessary. 

5. Handle tax obligations

A professional LLC in Vermont pays taxes at the federal, state, and local levels. Before it can file taxes, the PLLC will need an Employer Identification Number (EIN). Acquire EINs from the Internal Revenue Service. This is something you can apply for yourself, or we can help with its EIN number service. The number identifies your business and aids in filing state and local taxes.

Federal Taxes

A Vermont PLLC can choose to file taxes in a number of different manners. The IRS has a great overview of what these are. The PLLC has some flexibility in choosing which IRS designation they want to apply for taxation purposes. It’s wise to consult with a business tax attorney or other tax professional to help iron out the wrinkles.

Vermont Taxes

The company needs to file a Business Entity Income Tax return (BI-471) with the Commissioner of Taxes. If a member receives income from the activities of the PLLC, they must also file a BI-471. The typical minimum tax for filing a BI-471 is $250. The form may be completed and filed online. Businesses are liable for other state taxes, including sales and use tax and meals and rooms tax. A tax professional or tax attorney will make identifying and filing state taxes easier and quicker.

Local Taxes

Local taxes vary; check with the county and municipality in which your PLLC is located.

7. Obtain business licenses and permits

It is the PLLC’s responsibility to obtain all licenses and permits applicable to it. There isn’t one place that identifies all licenses and permits needed because they may have federal, state, or local origins. We can sort it all out and provide you with a report on which licenses and permits you need. 

In Vermont, there isn’t a general business license. Individual towns and cities may require a license to operate or a permit for specific activities.

The U.S. Small Business Administration can provide information about federal and Vermont state licensing requirements.

8. Acquire insurance for your Vermont PLLC

There are three basic types of insurance most PLLCs will need:

• General business insurance: Covers losses or lawsuits that arise from the business’s management or errors
• Workers’ compensation insurance: Covers the cost of employee medical care and expenses. The accident or illness must be the result of the business and its operations.
• Professional malpractice insurance: Covers suits and other issues associated with the performance of members’ practices.

9. Open a business bank account

A bank account that has no direct association with individual members’ accounts is important. It is used to pay employees, cover expenses, and perform the PLLC’s core practices. More than one person in the PLLC can have access to the accounts, and the bank must retain individuals’ signatures on file. These persons can be members, employees, or other authorized individuals.