Starting a new business in the Commonwealth of Virginia comes with a lot of decisions. First, you’ll need to decide what type of company to form. In Virginia, corporations are very popular, thanks to the legal and financial protections this business type offers.
If you’ve decided to start a corporation in Virginia, we know it can be confusing to navigate the setup alone. That’s why we’ve created this guide to walk you through the entire formation process, from start to finish.
We’ll help get your Virginia corporation set up quickly, so you can focus on what really matters — running your new business.
How do I form a Corporation in Virginia?
Steps to form your Virginia Corporation
- Name Your Corporation
- Appoint Directors
- Choose an Virginia Registered Agent
- File the Virginia Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit your Corporation’s first report
Your corporation won’t be able to operate until you file your Articles of Incorporation with the Virginia State Corporation Commission, Office of the Clerk. But before you can register your new business, you’ll have to make a few key decisions. We’ll walk you through the 10 steps you’ll need to take to form your corporation and remain compliant with Virginia law below:
Step 1: Name Your Virginia Corporation
Before you move forward, you’ll need to decide on a name for your Virginia corporation. While this process can be fun, you’ll need to ensure your new corporation name complies with Virginia law. In Virginia, all corporations must have distinct names and must not contain words that imply specific business activities unless the company meets certain legal requirements, such as “Bank” or “Credit Union,” as they can mislead customers.
We suggest making a list of names and running them through the Virginia State Corporation Commission Name Check Availability search. Run each name on your list through this database until you find an available name that you like.
From there, you’ll need to choose a corporation designator to identify your business type easily. In Virginia, acceptable corporation designators include:
- “Corp.” or “Corporation”
- “Inc.” or “Incorporated”
- “Ltd.” or “Limited”
- “Co.” or “Company”
Add one of those designators to the end of your corporation’s name. For instance, “Scott’s Steaks” might become “Scott’s Steaks, Inc.” or “Scott’s Steaks, Limited.”
Once you have an official name, you can reserve it online. To do this, you’ll fill out the Application for Reservation or for Renewal of Reservation of a Business Entity Name. You can file this online through the Clerk’s Information System (CIS) or via mail. The filing fee is $10.
If mailing your form and payment, send both to:
State Corporation Commission
P.O. Box 1197
Richmond, VA 23218-1197
Now that you have your official name reserved, there are a few other decisions you might want to make. Consider checking on trademarks, specifically if your desired name would infringe on any. You can check via the U.S. Patent and Trademark Office (USPTO) database to see whether or not your name might be infringing on someone else’s trademark at the federal level. There are also state-level trademarks, which apply only within the borders of a state. To see if there are any such trademarks on your company name, email the Division of Securities and Retail Franchising of the Virginia State Corporation Commission at SRF_TM/SM@scc.virginia.gov or call them at (800) 552-7945.
Another thing to think about is an assumed name, or fictitious name. This is used when a company sells products or services under any name other than their official name. If you plan to do so, you’ll need to submit a Certificate of Assumed or Fictitious Name through the commonwealth.
Step 2: Appoint Directors
The next step requires you to appoint directors to your corporation. You’ll need to select at least one director to your board to stay compliant with Virginia law. Your director(s) will serve your corporation, acting in the best interests of the business at all times. They’ll also represent the shareholders’ best interests.
In addition to your director(s), you need to designate an incorporator for your company to sign and file your Articles of Incorporation. You can serve as your corporation’s incorporator, or you could assign a director or shareholder to serve.
Step 3: Choose an Virginia Registered Agent
In Virginia, every corporation must select a registered agent to represent their company. This agent has an important role — accepting important legal paperwork from the Clerk of the Commission for your corporation. The agent will then pass along important documents and communications to your company.
A registered agent can be an individual or a business entity authorized to do business in Virginia. If it’s an individual, the person must be 18 years of age or older and live in the state. They must also be a part of the management of the business (e.g., an officer or director of your corporation) or a member of the Virginia State Bar. In addition, they must consent to serving as the registered agent.
If your registered agent is a business entity, that company must have an operating office in Virginia. The business entity must also agree to serving as agent. Your corporation can’t be its own registered agent, though.
Your agent also needs to be available during typical weekday business hours to receive legal paperwork (such as a notice of a lawsuit) in person.
Although you’re allowed to serve as your own registered agent in Virginia, there are a couple of reasons you might not want to. These are:
- Revealing personal information. If you act as your company’s registered agent, you’ll be allowing some private information to become public.
- Legal issues. Registered agents can be served subpoenas or summons. If you act as your own agent, these legal documents could be delivered in front of clients or important business partners and impact your business relationships.
Step 4: File the Virginia Articles of Incorporation
Now, you’re ready to file your Articles of Incorporation. This document will be filed with the state to recognize and register your business. You cannot legally operate until this step happens.
You can file your Articles of Incorporation online or via mail. To fill out this form, you’ll need to provide the following information:
- Your corporation name and designation
- Your corporation purpose
- The shares of stock your corporation will issue
- Your registered agent’s name and address
- The number in your board of directors
- The names of all your directors
- The name of your incorporator
- The incorporator’s signature
You’ll pay a $25 filing fee and a charter fee. The charter fee is $50 per 25,000 shares for 1 million or fewer stock shares. If you issue more than 1 million stock shares, the charter fee is $2,500.
If mailing your form, send it to:
State Corporation Commission
PO Box 1197
Richmond, VA 23218-1197
Step 5: Create Corporate Bylaws
Next, it’s time to create your Virginia corporation bylaws. Your bylaws will dictate your corporation’s operating process, managerial structures, company regulations, shareholder voting structures, and stock shares.
Although Virginia requires you to create bylaws for your corporation, you do not need to file them with the state. Keep them on file with your other corporate records.
Step 6: Draft a Shareholder Agreement
Now that your corporate bylaws are in place, you’re ready to create a shareholder agreement. True to its name, this agreement is between the company and the shareholders. This document will remain private, viewable by only incorporators and shareholders.
Your shareholder agreement will often cover the financial and legal relationships between the shareholder and the corporation. It will also explain the operational procedures covered in your bylaws and outline any specific shareholder rights and responsibilities in greater detail.
Step 7: Issue Shares of Stock
By law, every corporation in Virginia must issue shares of stock. Now that your agreements are in place, your Virginia company is ready to start issuing shares of its own. When issuing your shares, make sure you never exceed the amount listed in your Articles of Incorporation.
Your stock shares can be issued privately or publicly. If sold privately, you might issue them among shareholders and incorporators in your business. If sold publicly, they’ll be on the marketplace for the general public to buy.
Step 8: Apply for Necessary Business Permits or Licenses
In some states, you’ll be required to register for a statewide general business license to operate. Virginia does not have this requirement at the state level, but many counties and cities do require a general business license.
Depending on your industry, you might also have special licensing requirements. You can determine if a special license is required for your industry on the Virginia State Corporation Commission website under Regulated Industries.
Be sure to reach out to the city and county where your corporation resides to learn if further special licenses or permits are required.
Licensing can be federal, state, or local, so there’s no one central place to check to ensure you have every license and permit your corporation needs. You’ll have to do some careful research or hire someone to do it for you.
Step 9: File for an EIN and Review Tax Requirements
Next, it’s time to register with the IRS. You’ll do this by applying for an Employer Identification Number (EIN). Your EIN works like a Social Security number, allowing your corporation to pay taxes, open bank accounts, apply for financing, and hire employees.
You’ll apply for your EIN online via the IRS website. You’ll receive your EIN right after completing the application.
At the state level, your corporation needs to register with the Virginia Department of Taxation. This will allow your corporation to pay state income tax and do some other important things. For example, if your corporation has employees, you’ll be required to set up a wage withholding account. You can do this online through the Virginia Department of Taxation. If your corporation collects sales tax, you’ll need to register online to collect sales tax through the Virginia Department of Taxation.
Step 10: Submit Your Corporation’s First Report
Lastly, all corporations in Virginia are required to file an annual report to remain compliant with the state. This report is free to submit.
To request your annual form, visit the Commission-Prescribed Forms Request webpage, and enter your company information. From here, Virginia will send your form and official due date.
How much does it cost to start a corporation in Virginia?
Starting a corporation in Virginia can vary in price depending on how you handle administrative filings and additional expenses you make while forming your business. At a minimum, you should expect to pay $75 to file your Articles of Incorporation (this goes up to $2,525 if you have more than 1 million shares). Keep in mind this does not include the fees you’ll pay to expedite filings, partner with an accountant, reserve your name, register a trade name, or obtain special licensing and permits. You can save time on the initial setup for your Virginia corporation by connecting with a trusted provider like ZenBusiness. We provide professional startup services and offer a customizable template and registered agent connections for just $49 per year.
What are the benefits of a corporation in Virginia?
There are different business entities to consider when forming a business. In Virginia, many business owners choose to start a corporation because of the protections and benefits this business type can offer.
Let’s look at a few of the key benefits:
- Finance separation. This protection ensures your personal finances remain separate from company finances and debts.
- Liability protection. This shields you from personal liability if your company is involved in a lawsuit.
- Global access. This asset allows you to reach a global marketplace, not limiting you to selling in just the United States.
Next, let’s review a few key disadvantages:
- Double taxation. Corporations are subject to double taxation in Virginia. This means you’ll be required to pay taxes on both your corporate profits and individual earnings.
- Rigid rules and reporting structures. Corporations have strict requirements they must follow to comply with the state. Some include annual reporting forms, appointing a board of directors, and creating corporate bylaws.
- Double taxation. Whenever your company earns a profit, you must pay corporate taxes on this profit. Any amount of profit distributed to shareholders will also be taxed on the individual level, resulting in double taxation.
How is an Virginia corporation taxed?
How your company is taxed in Virginia depends on your type of corporation. There are three main corporation types: C corporations, S corporations, and nonprofit corporations. You’ll default to a C corporation if you do not select otherwise.
- C corporations. This type of corporation is a separate business entity that has to pay corporate taxes. In addition, shareholders must pay taxes on their individual profits (double taxation).
- S corporations. This type of corporation is a pass-through business entity that does not have to pay federal taxes at the corporate level. Instead, earnings are passed through the company and on to the shareholders, who only pay taxes on their individual profits. This also applies to Virginia taxes, but S corporations and other pass-through entities still have to file a tax return (Form 502) for information purposes, even though they may not owe taxes to the commonwealth.
- Nonprofit corporations. These corporations can apply to the IRS to be exempt from federal taxes as long as they follow nonprofit regulations.
Virginia Corporation FAQs
- Does running a corporation in Virginia involve more paperwork than running other types of businesses?
In general, corporations face more complex reporting requirements than other business models. For example, since limited liability companies (LLCs) can’t issue shares, no shareholder agreement is needed.
- What is the difference between an LLC and a corporation in Virginia?
Both an LLC and a corporation are legally recognized business entities. However, a corporation may issue shares, while an LLC may not. There are also differences in terms of reporting and taxation requirements.
- How do I change my corporation’s name in Virginia?
You can change the name of your corporation in Virginia by filing an amendment with the Secretary of State.
- How many people are needed to form a corporation in Virginia?
A single person can form a corporation in Virginia.
- Can I form my Virginia corporation online?
Yes. Using the Secretary of State’s online filing system, you can take care of all of your business filings, including initial registration.
- How do I dissolve my Virginia corporation?
To dissolve your corporation, you will need to file the Articles of Dissolution.