It’s no surprise that Amazon opened its second headquarters in the state. With a little help from this guide, you’ll learn how to start a business in Virginia in six steps.
Benefits of Opening a Business in Virginia
Virginia scores high in many of the top economic indicators, including long-term job growth, productivity growth, and low corporate income tax rates, meaning your small business will have the capacity to grow.
Rankings aside, Virginia is a great place to live and work, with a nice balance between major cities and smaller communities. It’s close to Maryland and Washington, D.C. (great places to raise capital), and has over 8.5 million residents to market your business to.
Start an Entity in Virginia
ZenBusiness offers the following formation services to our customers:
- Virginia Limited Liability Company (LLC)
- Virginia Professional Corporation
- Virginia Corporation
- Virginia Nonprofit Corporation
How to Start a Business in Virginia Checklist
- Create a business plan
- Choose a business structure
- Determine your business costs
- Create a name for your Virginia business
- Register your Virginia business and open financial accounts
- Market your Virginia business
1: Create a business plan
Writing a business plan is a vital first step to getting your business off the ground. Take the time to put your business idea on paper, so you’ve got a strong foundation to work from. You’ll want to clarify ”SMART” goals, and address the issues your company will solve for customers.
Your plan is also an opportunity to research the competition and the market.
- Is this idea completely new to the area, or are you entering an already packed field?
- What businesses in the area already address the problems you’ve identified?
- How big is your target audience? Is it big enough to sustain steady cash flow?
- Will you primarily operate your business online? Or will you open a physical location?
Answering these questions will help guide you as you launch the company, curate a viable marketing strategy, and consider how to manage your time.
The process of drafting a business plan is also a chance to consider state-specific tax breaks and/or local grants. The Small Business Administration’s (SBA) Virginia office is a great resource for exploring tax breaks and grants.
2: Choose a business structure
As the founder of a small business, one of the first decisions you’ll make will be choosing a business structure. While there are lots of company types to choose from, limited liability companies (LLCs) and sole proprietorships are the most common structures for new businesses.
A sole proprietorship is the easiest to set up. But you’ll want to consider taxes and liability issues before selecting a sole proprietorship format. With a sole proprietorship, the business and the owner (you) are legally the same in many ways. That means you’ll file profits and losses on your personal tax return. Plus, your personal assets and property are at risk if your company is sued or ends up in debt.
On the other hand, opting to start an LLC can protect your personal assets if your business gets into legal trouble. The Articles of Organization filing fee is $100, paid to the Virginia State Corporation Commission.
While filing for an LLC can appear more complex, ZenBusiness can help to streamline the process.
3: Determine your business costs
As a hopeful business owner, you’re well aware that it costs money to make money. With that in mind, you’ll need to calculate your small business costs before doing business in the Mother of States. These include one-time costs, like filing your Virginia LLC with the state, and ongoing expenses, like paying employees.
You’ll also need to consider the cost of relevant business licenses and permits. The Virginia state government’s website provides valuable business resources on permits and licenses plus associated costs.
Variable costs are ongoing expenses that can fluctuate. For instance, taxes and operating expenses are always there, but they change each time you pay them. If you take out loans to fund your business, the monthly premiums are fixed costs. Tip: check out available government resources that assist small businesses, especially during COVID-19.
If you hire employees, you’ll also need to consider salary costs and the cost of renting or leasing a commercial or office space to work from. Shared Virginia coworking spaces and meeting spaces can save money. Keep in mind that rent gets pricier as you get closer to Washington, D.C., and Virginia’s larger cities.
4: Create a name for your Virginia business
In Virginia, like most states, the law prevents two businesses from sharing the same name. So, once you have a name you like, use Virginia’s business name search and look for existing trademarks through the U.S. Patent and Trademark Office to verify that it isn’t already taken.
Good business names sound professional, provide insights into the product or service, and are easy for people to track down on the internet and social media. Before you settle on yours, see if there’s a good domain name for your website available. Also check that no one else has taken the social media handles you’d like to use to grow your web footprint.
5: Register your Virginia business and open financial accounts
If you chose to start a Virginia LLC, it’s time to file the paperwork to make it legal. You’ll need to register with the Virginia State Corporation Commision by submitting the Articles of Organization of a Virginia Limited lIability Company. You’ll need your LLC’s name, registered agent’s name and address, the principal office address, and a dated signature by the organizer.
You will likely need to apply to the IRS for a federal employer identification number (EIN) to utilize when filing federal taxes. You’ll also need to register the business with the state for tax purposes.
Next comes business insurance, which is a must for most Virginia companies. In this state, companies with two or more employees need workers’ compensation insurance. It’s also smart to carry general liability insurance, too. Check with a Virginia business insurance partner to learn about the coverage you may need.
Last but definitely not least, open a business bank account. Separate bank accounts will help keep your LLC protections from collapsing under scrutiny or lawsuits.
6: Market your Virginia business
A thorough marketing strategy is a necessary piece of your business plan. Consider including a thorough competitor audit, and set up social media accounts and a website to start getting your target audience’s attention.
If you have a business with a brick-and-mortar location, consider setting up a Google My Business account and putting your address on other relevant online directories.
Make sure your website is SEO friendly so you can appear organically for relevant Google searches. Consider running Google ads to appear first for relevant searches like “home builder in Arlington” or “Virginia car dealership” that are tied to your niche and location.
No modern marketing strategy is complete without social media marketing. Consider posting regularly on platforms with millions of users, like TikTok, Instagram, Facebook, and LinkedIn. Running paid ads on these platforms is an efficient way to drive attention to your product or service, too.
Examples of Good Businesses to Start in Virginia
The largest industries in Virginia are tech, construction, and retail, but the state is ripe for an entrepreneur in any industry to find success. Here are some of the top businesses to start:
- Software-as-a-service (SaaS) startup
- Residential or commercial homebuilder
- Real estate investor
- Financial advisor
- Business consultant
With Virginia’s wealth, above-average economic indicators, and thriving nearby states, you’ve made a smart decision to start a business here. Close proximity to the nation’s capital, favorable corporate tax rates, and booming areas like Arlington and Richmond make it a potentially profitable place to do business.
Virginia Business FAQs
How much does it cost to start a business in Virginia?
Startup costs depend on many factors, such as industry and business size. A brick-and-mortar store with lots of equipment and a full staff of employees is going to have very different startup costs than a one-person home consulting business. At the bare minimum, you’ll need $100 to register Articles of Organization as an LLC in Virginia.
What is a good city to start a business in Virginia?
Richmond, Norfolk, Virginia Beach, and Chesapeake are all great cities to start a business in Virginia. They all have large populations, easy access to resources, and strong business environments.
How much does it cost to open an LLC in Virginia?
In Virginia, the filing fee to register an LLC is $100. Processing typically takes 3 to 12 business days, with expedited service available for an additional fee. It also costs $10 to reserve or renew a business entity name.
What is the cheapest city to open a business in Virginia?
Roanoke, Hampton, and Virginia Beach are some of the most affordable places to live in Virginia. As a bonus, each has a population larger than 100,000.
What business and tax regulations are compulsory for an LLC business in Virginia?
Regulations on business and tax in Virginia vary by business structure. Corporations and most LLCs are required to have a federal tax ID number from the IRS. You’ll also need to register online to file and pay Virginia taxes. More details on paying and withholding taxes can be found on the Virginia Department of Taxation website.