The Vermont limited liability company (LLC) operating agreement is a legal document that outlines the rules about the management of the business and records the ownership of each partner within the LLC.
The LLC operating agreement, or business operating agreement, is a document that enables the company members to regulate their relationship in more detail and prevent potential misunderstandings and disputes.
Is an Operating Agreement Required in Vermont?
No, the operating agreement is not required when forming an LLC in Vermont. However, many parties still choose to draft the operating agreement since the document optimizes the company's business operations, which can affect the company’s profits in the long run.
4 Main Types of Operating Agreements
Here, you can find the four main types of operating agreements used in Vermont:
Variety of Operating Agreements
Single-member LLC operating agreement: Used for streamlining the operations of companies with only one member.
Multi-member LLC operating agreement: This type regulates the business operations and member relationships in companies with two or more members.
Member-managed LLC operating agreement: Here, the operating agreement defines managerial rights and duties in companies where managers want to personally run the company on a day-to-day basis.
Manager-managed LLC operating agreement: Used in situations where members delegate their decision-making powers to professional managers.
Laws and Legal Requirements for LLC Operating Agreements in Vermont
Title 11, Chapter 25 of the Vermont Statutes regulates the status of limited liability companies in Vermont.
“‘Operating agreement’ means an organization formed under this chapter or subject to this chapter following a merger, conversion, or domestication pursuant to subchapter 10 of this chapter.”
How to Form a Limited Liability Company (LLC) in Vermont
To form a limited liability company in Vermont, you should follow the steps below:
#1. Choose a Business Name For Your LLC
First, you should choose a business name for your company and check if it is distinguishable from other registered business names in Vermont using the Secretary of State website.
If your business name is not distinguishable from other business names, your registration application might be rejected.
#2. Choose the Type of LLC
Here, you have two options:
Types of LLCs
Domestic LLC: Companies that are both established and registered in Vermont.
Foreign LLC: Companies established outside Vermont but registered in Vermont due to business expansion or other reasons.
#3. Nominate an Agent
You should appoint a person who will receive official notifications and documents on behalf of the LLC. You can nominate someone from the company, hire a lawyer, or hire an agency that provides such a service.
The agent must fulfill one of the following criteria:
Be an individual with a registered address in Vermont.
Be an entity with the authority to operate in Vermont.
#4. File the Registration Documents
Depending on the type of limited liability company you are forming, the documents you must submit are different:
LLC Formation Documents
For domestic LLCs, you should submit the Articles of Organization. You can complete this process online or file your documents via mail.
For foreign LLCs, you can also submit your application online. The foreign LLCs should also submit the Certificate of Good Standing issued by the state where the company was initially established.
#5. Pay the Required Fee
During this step, you will be guided to pay the following fees:
Domestic and foreign filing fee: $125
Annual report fee: $35
Certificate of good standing: $25
If you are applying via mail, you should write a check, attach it to the application documents, and send it to the following address:
Vermont Secretary of State, Corporations Division, 128 State Street, Montpellier, VT 05633‐1104
#6. Create your LLC Operating Agreement
After registering your LLC, you should draft the operating agreement. Although not mandatory by law, this document will help you streamline your business operations and avoid unnecessary expenses.
The operating agreement doesn’t have to be registered with any governmental agency.
#7. Apply For an Employer Identification Number (EIN)
This number will enable you to:
What Employer Identification Number (EIN) Permits
Open a company bank account.
Complete certain transactions.