Vermont is consistently rated in the top states in the U.S. for quality of life, safety, health, and education. So learning how to start a business in Vermont is a good plan.
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More than 154,000 small businesses operate in Vermont, making up 99% of the state’s total business. It offers a wealth of resources for entrepreneurs looking to establish a new business, helping offset the state’s higher taxes. And, if you’re looking for a location where your business can grow, consider that 80 million people live within a five-hour drive of Vermont.
Vermont offers new companies numerous benefits. Tax credits, loans, grants, investment relationship referrals and cultivation, Small Business Innovation Research and Small Business Technology Transfer programs, Think Vermont Innovation Grant Program, and the Vermont Commercial Solar Incentives are just a few of the ways this state rolls out the welcome mat for new businesses. The Vermont Economic Development Authority and the state’s Think Vermont program are treasure troves of guidance and gateways to financing relationships.
Let’s get organized! Follow these steps to start a business in Vermont:
The business plan is a critical component of success. All of your funding sources will request a look at your plan, as this is where you lay out your business idea, how it will work, what it will cost, and its profit potential. You’ll also refer back to this plan as you face decisions for your startup. In short: this plan will keep you on track. Don’t skip this step and make the same common, costly mistakes other small businesses struggle with as they get started.
When writing your business plan:
Your business must be registered with Vermont and the IRS, which means you’ll need to pick a corporate structure. Your most common business entity options are corporation, limited liability company (LLC), or sole proprietorship.
A sole proprietorship model allows you to get up and running quickly under your name and social security number. It does not, however, offer your assets or finances any protection from liability. Further, investments and grants may be less available to you as those programs often prefer other business structures.
A corporation is more complex and operates as a separate entity from you, personally, so your assets are protected from liability. Corporations have officers, directors, and shareholders. The downside of this structure is double taxation. The corporation taxes profits and pays taxes on money the corporation pays you in the form of salary and profit share.
An LLC is sort of the best of both worlds. It offers liability protection to your assets but avoids the double taxation of a corporation. The Vermont Chamber of Commerce says, “Nowadays, LLCs are the option of choice for small business owners, as they are easy to manage and provide the benefits of a corporation while lacking their complex structure.”
You can file for an LLC online. The Vermont Secretary of State’s Office of Professional Regulation provides information on the permits, business licenses, or registrations you may need.
Calculating your costs is an important exercise to take before spending the first dime. Think about the details of your business operation. Every item in that picture — from people to products — needs to be accounted for. As you list costs, consider categorizing them into fixed, ongoing, and one-time.
Need some help? Vermont offers several resources that can assist in counting up your business’s costs, including the Vermont Small Business Development Center.
How do you choose the right name for your business? First, choose something not already in use because you can be sued for operating under someone else’s business name.
In addition to only being yours, the name should be memorable. Fuzzy McFee’s Frankfurters if you’re slinging unique hot dogs. Verily Vermont for a tourist shop. Get creative!
Once you land on a memorable name and are not in use, check to see if the website address and the social media presence are available. If the website is functional, register the domain name so no one else can swoop in and grab it.
Keep in mind that your business’s registered name isn’t necessarily the name it must operate under. You could use another name and register it as your DBA (doing business as).
Now that you have a name and structure make your business official by registering it. Next, obtain a federal employer identification number (EIN) from the IRS. Tada! You’re official.
Open a business bank account for your Vermont company. Don’t mix business funds with personal funds. It makes taxes difficult and can affect your assets’ liability protection by the LLC and corporation structures.) Citizens Bank, Union Bank, Vermont Federal Credit Union, and Keybank are all friendly to Vermont’s small businesses.
Don’t forget to check what permits, licenses, zoning requirements Vermont may require for your business and what small business insurance you may need.
Time to get some customers! Grassroots efforts are often the best, so don’t be shy. Get involved and network with the numerous entrepreneur-friendly business organizations in Vermont. Join the Chamber of Commerce and civic organizations. Volunteer to help with community events and nonprofits. Hold an event in your store so the community can take a peek and see what your business is all about. Also, register the business location with Google My Business so Vermonters can find you.
Remember the domain and social media presences you registered? It’s time to use them. Optimize your website for search engines, create a comprehensive social media strategy, and be faithful when executing it.
Don’t hesitate to get some help with advertising from local agencies if you don’t have time or this isn’t your bag.
Vermont is home to all sorts of industries, from ice cream to tech, giant corporations to mom-and-pops. Service industries drive Vermont’s economy via restaurants, drug stores, sporting goods stores, and healthcare services. Remember how we said beer was big in Vermont? Breweries are in the top 25 most concentrated industries in the state, along with ice cream and frozen dessert manufacturing and coffee and tea manufacturing. Vermonters are serious about making the stuff that makes life suitable!
While its taxes are high, Vermont has put in place tons of resources to help entrepreneurs get their businesses up and running. Assisting companies to start and grow, even under challenging circumstances, appears to be a priority. It’s also only a beautiful place to live and work, offering the amenities that help keep you and your workers safe, healthy, and happy.
The filing fee to start a new LLC in Vermont is $125.
Burlington was named the 12th best city in the United States for entrepreneurs.
The average Vermont income is $60,782 (slightly below the national average of $61,937).