Form a S-Corp in Vermont
Everything you need to know about forming a S-Corp in Vermont. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Business Name
Select a unique corporate name that includes 'Corporation,' 'Incorporated,' 'Company,' or an abbreviation thereof. Search the Vermont Secretary of State's business name database to confirm availability before filing.
30 minutes
Appoint a Registered Agent
Designate a registered agent with a physical street address in Vermont who will receive legal documents and official government correspondence on behalf of the corporation. The agent can be an individual Vermont resident or a registered commercial agent service.
1-2 hours
File Articles of Incorporation
Prepare and file the Articles of Incorporation with the Vermont Secretary of State's office online via the Vermont Corporations Division portal or by mail, paying the $125 filing fee. The articles must include the corporation's name, registered agent, principal office address, and the number of authorized shares.
1-2 hours
Create Corporate Bylaws
Draft corporate bylaws that govern the internal operations of the corporation, including procedures for shareholder meetings, director responsibilities, officer roles, and voting rights. Although not filed with the state, bylaws are legally important and should be adopted at the organizational meeting.
2-4 hours
What's Next After Filing
Once your S-Corp is officially formed, you'll want to complete these important steps:
- •Hold Organizational Meeting and Issue Stock — Conduct an initial organizational meeting of the board of directors to adopt bylaws, appoint corporate officers, and authorize the issuance of stock to initial shareholders. Document all decisions in corporate minutes, which must be maintained in the corporate records book.
- •Elect S-Corporation Status with the IRS — File IRS Form 2553 (Election by a Small Business Corporation) to elect federal S-Corporation tax treatment. The form must be filed no later than 2 months and 15 days after the beginning of the tax year the election is to take effect, and all shareholders must consent to the election.
- •Obtain EIN, Licenses, and Open Bank Account — Obtain a federal Employer Identification Number (EIN) from the IRS, register for Vermont state taxes including meals and rooms tax or sales tax if applicable through the Vermont Department of Taxes, secure any required local or industry-specific business licenses, and open a dedicated corporate bank account.
Advantages
- ✓Pass-through taxation avoids federal double taxation, with corporate income and losses flowing directly to shareholders' personal tax returns
- ✓Shareholders who are active employees can reduce self-employment tax liability by splitting income between reasonable salary and distributions
- ✓Vermont offers no separate franchise tax on S-Corporations, reducing the overall state tax burden compared to some other states
- ✓Provides strong personal liability protection for shareholders, protecting personal assets from corporate debts and legal judgments
- ✓Enhanced credibility and perpetual existence compared to sole proprietorships and general partnerships, which can be beneficial for attracting investors and clients
Considerations
- •Strict IRS eligibility requirements limit S-Corps to 100 shareholders, one class of stock, and restrict shareholders to U.S. citizens or resident aliens, limiting growth and investment flexibility
- •More complex and costly to form and maintain than a sole proprietorship or partnership, requiring corporate formalities such as annual reports, meeting minutes, and bylaws
- •Shareholders who are employees must receive a reasonable salary subject to payroll taxes before taking distributions, adding administrative payroll compliance burdens
Annual Obligations
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