The low-profit limited liability company (L3C), is a business structure under Vermont law that allows for the creation of an entity that would be a hybrid of a nonprofit and for-profit entity. In particular, the L3C is a type of limited liability company (LLC) designed to attract private investments and philanthropic capital in ventures designed to provide a social benefit.
Unlike a standard LLC, the L3C has an explicit charitable intent as its primary mission; but unlike a charity, the L3C is free to distribute the profits, after taxes, to owners or investors. As such, it has become a vehicle of choice for social entrepreneurs. The basic purpose of the L3C is to signal to foundations and donor directed funds that entities formed under this provision intend to conduct their activities in a way that would qualify as program related investments, or PRI’s, for the purposes of the IRS.
Low-Profit LLC Law
STOP: Before you get started we recommend that you consult with an attorney, accountant, or business advisor about which business structure is best for you.
Registering a Low-Profit LLC
To create a domestic (Vermont) L3C, you will need to file the following document. The form is simple and asks basic questions about your new company such as its name, address, registered agent, and business purpose:
To register a foreign (non-Vermont) L3C, with the intent of doing business in Vermont, you will need to file the following form:
Once registered, you must renew your L3C registration each year. For renewal information, please see “Manage Your Registration.”
DO NOT invest in websites, banners, advertisements, or other marketing materials until you receive a certificate confirming your ownership of the requested name.
The state of Vermont operates under a “deceptively similar” standard. Under this standard, if the requested name is so similar to an already registered name, such that it would confuse the public as to whom they are dealing with, it will be rejected.
All registrations with the Office of the Secretary of State are subject to name availability rules. Please search our online database for your desired business name to avoid any obvious conflicts:
Coming soon: All registration, management, and closing functions will occur via our Online Business Service Center.