Vermont LLC Taxes
Vermont’s growing economy and abundance of natural beauty have made it a popular place to live and start a business in. But with more businesses choosing to operate in the state, many may find it challenging to understand the business taxes involved.
Regardless of the size of your business, if you operate a limited liability company (LLC) in Vermont, you will need to ensure you stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you will need to pay for your Vermont LLC.
Recommended: Schedule a free consultation with an accountant to stay on top of your taxes.
Business Entity Income Tax
All LLCs that operate in Vermont are subject to the state’s Business Entity Income Tax. This tax occurs yearly and requires the business to file a Business Entity Income Tax return with the Commissioner of Taxes.
The tax’s due date, the total cost, and whether you need to file additional forms will depend on your LLC’s tax structure, though there is a minimum payment of $250.
Filing can be done online or by mail. If you need more time to prepare, you can file an extension through the Commissioner of Taxes.
More information on this process, including a breakdown of due dates and tax rates, can be found on the Vermont Department of Taxes website.
Vermont LLC Taxes Owed
LLCs benefit from pass-through taxation, meaning the business’s profits pass through to the members’ individual tax returns. As a result, your LLC itself does not pay taxes to the federal government or to the State of Vermont. Instead, LLC owners must pay taxes on their portion of the income made from the LLC.
In Vermont, LLC owners can expect to pay the following taxes:
Federal Taxes
Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.
Federal Self-Employment Taxes
It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%.
Federal Income Taxes
Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.
Vermont State Taxes
Each state has its own laws dictating how individuals and businesses are taxed. Below are a collection of state taxes that are likely to affect your Vermont LLC.
Vermont Income Taxes
Vermont’s state income tax rate is 8.75%. This rate is a bit higher than average, making Vermont LLCs likely to pay more to the state on their profits than the majority of other US states.
Vermont Sales and Use Tax
In Vermont, the state sales tax rate is 6%. Some counties and cities may impose their own local sales tax rates on purchases and services, which average out to an additional 0.3%. Be sure to check and see if your area has a local sales tax rate to ensure you are complying with the local regulations.
File a Sales and Use Tax Return
You must register with the Vermont Department of Taxes if your business sells taxable goods or services. Registering for business taxes can be done online to speed up the process.
Visit the Vermont Department of Taxes website to register and learn more about business taxes.
Additional State Taxes
Vermont’s Department of Taxes oversees the collection of various taxes that businesses may have to pay depending on their location, industry, and number of employees.
These are a few taxes that business owners in Vermont may be responsible for paying:
- Bank Franchise Tax
- Malt Beverage and Vinous Beverage Tax
- Solid Waste Tax
- Meals and Room Tax
- Solar Energy Capacity Tax
To learn more, check out the Vermont Department of Taxes’ Business and Corporate Taxes page.
Vermont Local Taxes
The local laws and ordinances in one county or city in Vermont are likely to differ from others. Regardless of where you live in Vermont, we recommend you check with your local jurisdiction and ensure that your business obtains the proper local permits and follows any local regulations that may impact your business’s operation.
Vermont LLC Compliance
You must obey Vermont’s state and local laws to maintain your business's compliance and good standing. While LLCs technically do not file taxes with the state, Vermont businesses must still file an annual report each year with the state.
Vermont LLC Annual Report
All Vermont LLCs must file an annual report each year with the Vermont Secretary of State. Filing can be done online at the Secretary of State’s website and will cost you $35.
Annual reports are due within a three-month window of your LLC’s fiscal year closing. Most will close at the end of the calendar year, meaning the report will be due between January 1st and March 31. To keep it simple, you have three months to file your report after the fiscal year for your business ends.
If you miss this window for filing, your LLC will lose its good standing. You have another three months to file after the window closes to return your business to good standing. Further neglect to pay your business’ fees and filings will lead to the state “terminating” your LLC, making it so you cannot legally operate.
The only way to get your business back in order is to file an LLC Reinstatement with the Secretary of State. You will then have to pay the $35 for each missing annual report and a $25 penalty fee on those missing reports.
You can learn more about this process with our Vermont LLC Annual Report guide.
LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure that you handle your business taxes correctly.