Vermont Certificate of Authority / Penalty for skipping it
What Vermont charges an entity that operates without a certificate
An entity that does business in Vermont without a certificate is billed $50 for every day, capped at $10,000 for any year, and Vermont also claims the fees that would have been due and whatever other penalties the law permits. LLCs and corporations are treated alike on the figures.
The penalty added to the application fee
| Days without a certificate | Penalty | Penalty plus the LLC fee |
|---|---|---|
| 30 | $1,500 | $1,655 |
| 60 | $3,000 | $3,155 |
| 200 or more in a year | $10,000 | $10,155 |
Fees due for the period are owed on top of every row.
Where the ceiling bites
With the yearly limit at $10,000 and the daily amount at $50, the limit is reached on day 200. Beyond that the yearly figure stops growing, whatever the entity does for the rest of the year.
The ban on suing
For an LLC, it may not maintain a proceeding, or raise a counterclaim, crossclaim or affirmative defense, in any Vermont court until it holds a certificate of authority. And the same bar binds a successor to the company and anyone who took an assignment of a cause of action arising from that business.
What the statute leaves intact
Lack of a certificate leaves two things untouched. The lack of a certificate does not impair the validity of any contract or act of the company, and does not stop it defending an action or proceeding in Vermont. And a member or manager is not liable for the debts, obligations or liabilities of the company solely because it transacted business without a certificate.
Service of process
By transacting business without a certificate the company appoints the Secretary of State as its agent for service of process on claims arising from that business.
Corporations
A corporation faces the same daily amount and the same limit. Its chapter adds two things. One is a power for the Attorney General to bring suit in Superior Court, Civil Division, for collection and a restraining order. The other is a court's power to hold the corporation's own case until the need for a certificate is decided.
Registering afterward
Registering stops further accrual and leaves what has built up in place. The application fee is owed whenever the entity registers, and the uncertified period brings its own fees due under the statute.
The penalty against the fee
After thirty days an LLC has accrued $1,500, which already exceeds the $155 fee it should have paid. A corporation at thirty days has accrued the same $1,500 against $155.
A worked case
A New York LLC works in Vermont for sixty days without a certificate and owes $3,000. It then registers for $155, which brings the state's take to $3,155 plus the fees due for those days.
Nonprofits
The daily amount is written into the LLC and business corporation chapters. A nonprofit should ask us which rule applies to it before it works out what it owes.
Corporation totals
A corporation's application fee is also $155, so its totals match an LLC's: $1,655 after thirty days, $3,155 after sixty and $10,155 once the ceiling is reached, each before the fees due for the period.
Why the penalty can outweigh the fee
Because the penalty grows every day and the filing fee does not, a short delay costs more than the registration itself. Thirty days of operating costs $1,500; registering would have cost $155.
Whether the entity has crossed the line
That turns on the facts. A Vermont business lawyer can say whether, and from when, your entity has been transacting business. Once that is settled, the filing for your entity type is ours to prepare and submit.
Penalty questions
What is the daily figure?
$50.
Do the entity's contracts survive?
Yes. They stay valid.
Is a late annual report penalized the same way?
No. An LLC that misses the report loses its certificate and pays a reinstatement fee to be restored.
Does registering wipe out the amount owed?
No. It stops further days from accruing. The earlier period is still owed.
What is the yearly limit?
$10,000.
Does a nonprofit owe the same?
Ask us before you decide what a nonprofit owes.
Do corporations pay the same daily amount?
They do, with the same yearly limit.
Can the entity bring its own lawsuit?
Not in a Vermont court until it holds a certificate. Defending a suit is still allowed.
What it costs
Get your Vermont certificate
+ $155 state filing fee
$155 is Vermont's fee for an LLC. Each other type of entity has its own fee, listed on the fees page. $199 plus the state fee, including your first year of registered agent service; after that the agent service renews at $149 a year.
$199
Vermont Certificate of Authority
- An application written for your type of entity from your replies
- The home paper, requested so it is in date when we file
- A Vermont process agent, ours or yours
- The certificate of authority Vermont issues, forwarded to you
- Renewal: after the first year, the agent service renews at $149 a year
Sources
- Vermont Secretary of State, fees and statutes
- 11 V.S.A. 4112, application for certificate of authority
- 11A V.S.A. 15.03, application for certificate of authority
- Vermont Secretary of State, foreign registration
- 11 V.S.A. 4119, effect of failure to obtain certificate of authority
- 11A V.S.A. 15.02, consequences of transacting business without authority
Which Vermont certificate do you need?
Tell us what kind of entity you are and we write the filing that fits it.