If you’re interested in making more money, having more job autonomy, or creating a legacy for your children and grandchildren, you might consider starting a business in Vermont. However, even with a good idea and ample resources to get started, you’ll need to secure a few requirements before you can begin. Vermont is home to a diverse array of major cities, including Burlington, Montpelier, and Rutland, where entrepreneurs can establish their businesses and engage with other business owners to learn and exchange resources. The state is welcoming to new and experienced entrepreneurs alike, with 77,683 small businesses in the state accounting for 99 percent of all Vermont businesses. Together, those businesses employ 158,098 people or 59.4 percent of the total Vermont workforce.
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Steps to Obtaining a Tax ID (EIN) Number and Registering a Vermont Business
- Forming a Business in Vermont
- Federal Tax ID (EIN) Number Obtainment
- Vermont State Tax ID Number
- Localized Licenses and Permits in Vermont
There are many different types of business structures to choose from, these are some of the most common:
- Sole proprietorships and partnerships. Sole proprietorships and partnerships are nearly the same, with the exception being that partnerships involve multiple people. Each of these business types is relatively easy to create and manage long-term, making them a frequent choice of new entrepreneurs and small business owners. Owners pay taxes as individuals on any money made in the business, but are exposed to much more liability; in a sole proprietorship or partnership, you’ll take on debts personally, and may be held liable for decisions you made in the business.
- Limited liability companies (LLCs). LLCs are slightly more complicated, since they’re created as separate legal entities. Because of this, in Vermont, LLCs are required to renew their registration with an annual report. LLCs are capable of taking on their own debt, and can be held liable for issues that arise in the course of business. For tax purposes, LLCs are considered pass-through entities. This means they don’t pay taxes on the income they generate; instead, owners pay taxes as individuals on any money they make as revenue or profits.
- Corporations. Corporations are the most complex business type. They’re harder to create, more complex to manage, and they’re subject to more rules, regulations, and general scrutiny. This is because corporations have the unique ability to raise funds by issuing shares, which makes them a must for companies with long-term plans for growth and expansion. Corporations provide their owners with significant liability protection. However, they must pay taxes on eligible income (in addition to owners paying taxes on money they make from the business). In Vermont, the corporate tax rate is 6 percent for income below $10,000, 7 percent for income between $10,000 and $25,000, and 8.5 percent for income above $25,000. There’s also a minimum required tax for businesses who don’t meet these thresholds, depending on your total gross receipts.
Before you start building your business, you’ll likely need to obtain a federal tax ID number. This 9-digit unique number will be assigned to your business upon registering with the federal government. You may also hear it referred to as an employer identification number, or EIN. It’s a requirement if you’re going to hire employees or if your business has multiple members. You’ll also need one to apply for most business bank accounts or business loans. An EIN is also necessary for most applications, like paperwork for licenses and permits.
Obtaining your federal tax ID number will also allow you to register with the state government of Vermont and get your Vermont state tax ID number. You can use your federal tax ID number on most applications in place of your personal SSN number, so it also provides you with some degree of additional security (even if you otherwise wouldn’t need one).
Getting a federal tax ID number can be easy. Use our federal tax ID number obtainment services to make things simpler for yourself. All you’ll have to do is answer a few questions about your business. When you’re done, you’ll receive your tax ID via email in an hour or less.Apply for a Vermont Tax ID Number
Many Vermont businesses will also need a Vermont state tax ID number. This is a unique identifying number like your federal tax ID, but it functions at the state level. You’ll need one if you’re hiring employees in the state of Vermont, if you’re selling taxable goods and services in Vermont, or if you’re going to owe excise taxes on regulated goods like alcohol, gasoline, or tobacco. Your Vermont state tax ID number may also be required for various state- and local-level applications, including applications for licenses and permits.
You’ll need a federal tax ID number before you can get a Vermont state tax ID number. When you have it, make use of our Vermont state tax ID number obtainment services. You’ll just need to answer a few questions about you and your business, and you’ll receive your state tax ID in 4 to 6 weeks.
There isn’t one, generalized license you’ll need for a business in Vermont, nor is there a state-level agency responsible for regulating all licenses and permits in the state. Things get quite complex because license and permit requirements vary significantly between different industries and types of businesses. For example, healthcare and construction businesses have heavy requirements for licensure. These also vary by individual city and county. Therefore, it’s best to consult with your local Chamber of Commerce to determine which licenses and permits you may need.
Getting a business off the ground takes a lot of work, but you can make things easy on yourself by relying on our federal tax ID number and Vermont state tax ID number obtainment services. Get your tax IDs sooner with our simple online applications.