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Business Taxes

Business Entity Types

C CORPORATION

A “C“ corporation is a standard business corporation. Named “C” corporation because the laws governing it are in subsection C of the IRS code, this type of corporation provides the protection of limited liability for the shareholders. “C” corporation earnings are taxed at the corporate level, and dividend income to the shareholders is taxed at the personal income tax level.

C-Corporations file form CO-411 or CO-411U if they are part of a unitary group.  Vermont filing requirements generally coincide with federal filing requirements.

A “C” corporation must file its article of association with the Vermont Secretary of State and obtain a certification of authority to business in this state.

S CORPORATION
An “S” corporation is a small business corporation taxed under subsection S of the Internal Revenue Code. This type of corporation provides the protection of limited liability for the shareholders. The profit or loss of an “S” corporation normally passes to the shareholders in proportion to their shares in the corporation. The shareholders report the profit or loss on their individual tax returns. The “S” corporation generally does not pay incomes taxes at the corporate level. Also referred to as a Subchapter S corporation.

S-Corporations file form BI-471 with Vermont. Filing requirements generally coincide with federal filing requirements.

A “S” corporation must file its article of association with the Vermont Secretary of State and obtain a certification of authority to business in this state.

LIMITED LIABILITY COMPANY
The Limited Liability Company (LLC)contains certain elements of both a corporation and a partnership. An LLC provides the protection of limited liability to its members. A LLC is a pass-through entity. Its profit or loss is not taxed at the entity level but passes through to the members to be reported on their individual tax returns.

Under federal “check the box” regulations, LLCs may elect to be taxed as partnerships, C-Corporations, or S-Corporations. The election made at the federal level is binding for Vermont. Most LLCs are taxed as partnerships, and would file form BI-471 in Vermont. LLCs that choose to be taxed as C-Corporations would file form CO-411 . Filing requirements generally coincide with federal filing requirements.

Single member LLCs, those owned 100% by a single entity or individual, may elect to be disregarded for income tax purposes, with all activity being reported on the income tax return (individual or corporate) of its one owner. This election is made at the federal level, and treatement in Vermont will conform to this election. A single member LLC that is eligible and has elected to be treated as disregarded for federal tax purposes is not required to file an income tax return in Vermont. The owner of the LLC is required to file.

An LLC must file its article of association with the Vermont Secretary of State and obtain a certification of authority to business in this state.

PARTNERSHIP
A Partnership is a form business ownership by two or more owners who agree to invest resources for the business activity and to share in the profits or losses of the business. A partnership is generally treated as a pass-through entity with the partners reporting the business profit or loss on their personal income tax returns. General partners are held personally responsible for the partnership’s liabilities.

Partnerships file form BI-471 with Vermont. Filing requirements generally coincide with federal filing requirements.

If the Partnership operates under a trade name, the trade name must be registered with the Vermont Secretary of State.

Forms and Instructions are available here.

 

More Information:
- Business Types
- Federal Small Business / Self-Employment Info
- Interest Rates
- List of Major Vermont Taxes
- Local Option Taxes
- Regulations
- Streamlined Sales Tax
- Tax Charts
- Tax Credits
- Technical Bulletins
- Transient Vendors
- Voluntary Disclosure
- Withholding Information

Need Assistance?

Taxpayer Services
802.828.2551


Form Orders via E-mail: taxforms@state.vt.us

 

 
Vermont Department of Taxes, 133 State Street, Montpelier, Vermont 05633-1401