How to Dissolve an LLC in Vermont: Termination and Taxes

To dissolve an LLC in Vermont, you need member approval, you need to wind up the business, and then you file Articles of Termination (Form LLC-6) with the Secretary of State for a $20 fee. The state filing is one step in a longer process that includes settling debts, distributing what’s left, and closing your tax accounts at both the state and federal level. Skip any of those pieces and you can stay on the hook for taxes and lawsuits after you think you’re done.

Get Member Approval

Vermont law requires unanimous member consent to voluntarily dissolve the LLC unless your operating agreement sets a different threshold.¹ If your agreement allows a majority or two-thirds vote, that lower threshold controls. Record the vote in writing before you take any other steps; the dissolution date you later put on Form LLC-6 should sit after this decision and after the business is actually wound up.

Wind Up the Business First

Dissolution doesn’t end the LLC on the spot. Under Vermont law, a dissolved LLC continues to exist for the sole purpose of winding up its affairs, which includes settling lawsuits, collecting debts owed to it, selling assets, and paying creditors.²

In practical terms, winding up means:

Stop taking on new business. You can finish existing contracts, but don’t enter new ones unrelated to the wind-up.
Liquidate assets. Sell equipment, inventory, and other property. If you sell business property, you may need to report gains or losses to the IRS on Form 4797.³
Pay what you owe. Settle outstanding debts, vendor invoices, and loans before any member takes a distribution.
Distribute what’s left. After creditors are paid, split remaining assets among members under the operating agreement, or in proportion to contributions if the agreement is silent.

The order is not optional. Vermont law requires creditors to be paid before members get distributions.² Pay yourselves first and the members who took money can be personally liable for the unpaid debts.

Consider Publishing a Notice to Creditors

Vermont lets a dissolving LLC publish a notice of dissolution in a newspaper of general circulation in the county where the LLC’s principal office is located. The notice has to describe what information a claim should contain, give a mailing address, and state that claims are barred unless the claimant files suit within five years of publication. A copy also goes to the Vermont Attorney General’s office.⁴

This step is optional and not required to file Form LLC-6. Without it, former members who received distributions remain potentially liable on claims for up to five years after dissolution.⁴ If the LLC dealt with customers or clients who could still bring a claim, publishing is worth the effort.

File Articles of Termination (Form LLC-6)

Once wind-up is finished, file Articles of Termination with the Vermont Secretary of State using Form LLC-6. The form asks for the LLC’s full legal name, the dissolution date (the date business activity was completed and assets distributed, which should fall before the filing date), and a service of process contact where legal papers tied to pre-dissolution business can be delivered after the LLC no longer exists.⁵

The filing fee is $20.⁶ Online filing through vtsosonline.com is the fastest route and usually clears within one business day. Paper filings go to the Corporations Division at 128 State Street, Montpelier, VT 05633-1104, with a 7 to 10 business day turnaround.⁷ If you mail it, include a check or money order payable to “VT SOS” and a self-addressed stamped envelope for your confirmation copy.⁵

Close Your Tax Accounts

Vermont Department of Taxes

Filing Form LLC-6 does not close your tax obligations. Close each business tax account separately with the Vermont Department of Taxes. The simplest way is logging into myVTax and selecting “Cease Account” for every tax type the business used, including withholding, sales and use, and meals and rooms. For paper, file Form B-2, Notice of Change.⁸

Vermont LLCs taxed as partnerships or S-corporations owe a $250 minimum business entity income tax per year, filed on Form BI-471.⁹ File a final return for the LLC’s last tax period and pay any balance. If the LLC had employees, file final withholding returns too. Unpaid state taxes can follow you personally and block future business registrations.

IRS

File the LLC’s final federal income tax return (Form 1065 for partnerships, Form 1120-S for S-corps) and check the “final return” box at the top. For partnerships, also check the “final K-1” box on each member’s Schedule K-1.¹⁰ If the LLC had employees, file final employment tax returns (Form 941 or 944) and final federal unemployment returns (Form 940).

After the returns are filed and taxes paid, you can ask the IRS to deactivate your Employer Identification Number. Send a letter with the LLC’s EIN, legal name, address, and reason for deactivating to the IRS in Kansas City, MO 64108 or Ogden, UT 84201. The IRS can’t actually cancel an EIN, but deactivating closes the account so no future filing obligations accrue.¹¹

Don’t Just Walk Away

An LLC that stays registered keeps owing annual report fees and state taxes, even on zero income. The Secretary of State will eventually administratively dissolve a noncompliant LLC, but administrative dissolution doesn’t erase tax debts or shield you from lawsuits over past business. Voluntary dissolution done properly is the only clean exit.

After Termination

Close any remaining business bank accounts, cancel state and local licenses and permits, and notify your registered agent that their services are no longer needed.

Hold onto your records. The IRS recommends keeping tax returns and supporting documents for at least three years from the date you filed the final return, with longer windows (six years for unreported income over 25% of gross income, seven for bad debt or worthless securities claims) for specific situations.¹² Formation documents, the operating agreement, and records of major transactions are worth keeping indefinitely in case a dispute or audit surfaces years later.

1
Vermont General Assembly. Vermont Code Title 11 – Events Causing Dissolution and Winding Up of Company Business
2
Justia Law. Vermont Code Title 11 – Chapter 25 Limited Liability Companies
3
Internal Revenue Service. About Form 4797, Sales of Business Property
4
Vermont General Assembly. Vermont Code Title 11 4108 – Other Claims Against Dissolved Limited Liability Company
5
Vermont Secretary of State. Form LLC-6 – Articles of Termination
6
Vermont General Assembly. Vermont Code Title 11 4012 – Fees
7
Vermont Secretary of State. End Business Registration
8
Vermont Department of Taxes. Business Center Frequently Asked Questions
9
Vermont Department of Taxes. Business Entity Income Tax
10
Internal Revenue Service. Closing a Business
11
Internal Revenue Service. If You No Longer Need Your EIN
12
Internal Revenue Service. How Long Should I Keep Records