Friday, August 21, 2009

Virtual in Vermont

Although I am licensed in California and most of my clients are in California, I still keep my eye on business law trends across the country and the world. In it's September 2009 issue, Entrepreneur magazine reports on a recent change in Vermont state law that eliminates some of the time and expense associated with running a business and allows a Limited Liability Company (LLC) to operate virtually -- what is informally known as a Vermont Virtual Company, or VVC.

Of course, there are taxation issues: VVC owners may still be liable for a minimum partnership tax and personal income tax on money earned from Vermont sources. You should always consult a tax professional before you chose an entity for your business. Tax issues aside, VVCs can save business owners money. According to Entrepreneur, here is how:
  • Businesses created under the new law don't need a physical headquarters. Because many entrepreneurs work from wherever they can get wireless access to the internet, this change can save plenty of money.
  • The need for in-person board meetings is eliminated. Specifically, "an annual meeting may be conducted by means of any electronic or telecommunications mechanism." Allowing board members to meet via phone conference (or even text messaging) can save thousands of dollars in transportation and lodging costs annually.
  • And, expensive paper based filings are a thing of the past. All necessary paperwork can be filed and recorded electronically. Not only a cost saver, but it's GREEN.

Information about starting a virtual LLC in Vermont can be found at www.sec.state.vt.us/corps/dobiz/llc/llc_start.htm.

To form an LLC in Vermont, you'll need to file LLC articles of organization. The LLC articles of organization form can be downloaded from www.sec.state.vt.us/corps/forms/llcarts.htm

I would be interested to hear from people who operate under a virtual Vermont LLC. This sounds like it could be the wave of the future for new business entities. It will be interesting to see if other states follow suit. I shall keep you informed as I learn more about this most interesting subject. Again, if you have any additional information about this topic, please contact me at dalexander@outhousegeneralcounsel.com.

2 comments:

  1. I really don't see how this new corporate form is necessary. As long as any bylaws to any corporate form stated that the Board and Shareholders could meet by telephonic or electronic method, what is the "big deal"? I presume you still need a registered agent for SOP, and certain professions or businesses would still require a Brick and Morter.

    It certainly sounds cool. God knows I've had enough corporate clients who had a "virtual" corporation anyway.

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  2. I love the article and the information you're providing on this blog. Keep up the good work!

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