Effective as of April 30, 2008, the Vermont Limited Liability Companies Act authorizes the formation of L3Cs. Here is an outline of the steps you need to follow in order to form an L3C in Vermont. The process is very similar to the one for forming an LLC. You should also read the general section on forming an L3C for information that is applicable in any state.
1. Choose a business name for the L3C and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- Vermont law requires an L3C name to contain the abbreviation "L3C" or "l3c." Additionally, your business name may not be the same as, or deceptively similar to, that of any other Vermont business entity or any foreign business entity registered in the state.
- You may want to reserve a name to protect it for 120 days prior to the organization of the company for a fee of $20.
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Prepare and file articles of domestic organization with the Secretary of State.
- The filing fee is $100. The Secretary of State's website has a simple, fill-in-the-blank form for drafting your articles of organization. It is assumed that you will operate your L3C in accordance with the provisions of Regs. Sec. 53.4944-3(a), so you do not have to track those provisions in the definition of your business purpose on the form. For general information on articles of organization, see the section on forming an L3C and the Articles of Organization section of this Guide.
- If you are converting an existing LLC to an L3C, you must file a simple, fill-in-the-blank form for drafting your articles of amendment. Be sure to include "L3C" in the new entity's name and specify that you are converting your LLC to an L3C in the section "Changes other than listed above." The articles of amendment filing fee is $25.
3. Negotiate and execute an operating agreement.
- Vermont does not require an operating agreement in order to form an L3C, but executing one is highly advisable. Please see the section on forming an L3C in this Guide for details. The operating agreement does not need to be filed with the state.
4. File an annual report with the Corporations division.
- A Vermont L3C needs to file an annual report with the Corporations Division within two and a half months of the end of the fiscal year. The report may be filed online. The filing fee is $35.
5. Obtain any required local licenses.
- See the general section on forming a LLC for details.
6. Determine what tax and other regulatory obligations the L3C has, and take care of any necessary registrations.
- Consult with an attorney to ensure that the L3C is fulfilling its tax obligations and the necessary tax and registration paperwork is properly filed. For general information on the tax treatment of L3Cs, see the L3C section of this guide.
7. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. You may want to do this early on by opening a bank account for your business.