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Starting a company of your own in Virginia is an exciting prospect. You will get to be your own boss, overseeing every aspect of operations. The legal paperwork that comes with establishing your company as a legal entity might be daunting at first, but it doesn’t have to be.
Creating a limited liability company (LLC) in Virginia doesn’t have to be complicated. It just requires knowing which steps to complete at which time. This guide can provide you with a comprehensive how-to, taking you through the procedure from start to finish.
1Name Your Virginia LLC
Appoint a Registered Agent in Virginia
File Virginia Articles of Organization
Create an Operating Agreement
Apply for an EIN
To form an LLC in Virginia, you have to register your business with the Virginia State Corporation Commission. Before you can file this paperwork, however, you have to complete a couple of other steps, including choosing an LLC name, designating a registered agent, and formulating an Operating Agreement.
As part of establishing an LLC, you also have to apply for an Employer Identification Number (EIN) with the IRS. Finally, you have to figure out your tax obligations at the federal and state levels.
While it might sound like a lot, these requirements are easily accomplished through a planned, step-by-step approach. The below points break down the process into manageable actions, allowing you to get on your path to establishing your own LLC.
To ensure you are tax compliant, you may need to obtain an Employer Identification Number (EIN). This is similar to the tax identification number assigned to individuals. It’s basically an identifier for your LLC and will be needed for tasks like hiring employees and tax purposes on your LLCs profits.
You need an EIN if your LLC has two or more members. If you are a one-person LLC, you still must obtain an EIN if you plan to have employees or if you choose to have your LLC taxed as a corporation, not a sole proprietorship. To get your EIN, apply on the Internal Revenue Service (IRS) website. This is free of charge, and the EIN will be issued right away.
Even if your LLC doesn’t require an EIN, it can be useful for other reasons. It allows you to differentiate your personal finances from those of your LLC, for example, or it can be used to open a business bank account.
There are also state taxes to take into account. If you have employees or are selling goods that incur a sales tax, you must register with the Virginia Department of Taxation. You can do this via mail using the Virginia Department of Taxation Business Registration Form (Form R-1) or online via the VATAX online service.
ZenBusiness provides comprehensive support for LLCs, from foundation to ongoing operations with our business formation services. In addition to completing your LLC filing paperwork, we will provide a template for creating your Operating Agreement and act as your registered agent. You can also sign up for additional services, like ensuring that your business is in line with state licensing regulations. With our package plans, we streamline your entrepreneurial endeavors.
We have already touched on some of the benefits of an LLC above. Overall, this is an uncomplicated business structure to start with minimal personal requirements or financial commitments. For the benefits you get, it’s well worth the investment.
With an LLC, you can:
For more detailed insights into how you’ll benefit from the LLC structure as a business owner, check out our insider insights on the subject.
Usually, the Virginia State Corporation Commission requires three to five business days to process the submission of the Articles of Organization. If you want same-day or next-day service, you can pay an expediting fee ($100 or $50, depending on the form) and get your paperwork sooner.
No, this is not required. Creating an Operating Agreement is still a smart move, however, as it can protect you both as a business and individual.
The majority of entrepreneurs opt to have their LLC taxed the default way, meaning as a sole proprietorship or partnership (depending on whether you have one member or more), due to the aforementioned streamlining of taxation this allows. You will pay both state and federal taxes on whatever income you earn from the LLC, but the LLC itself will not owe taxes on its profits. Each member is responsible for their own taxes.
Filing taxes as a corporation becomes more complicated and is generally only warranted for LLCs with very high earnings. A certified tax professional can advise as to whether this is the right option for you.
A Series LLC refers to an arrangement in which multiple LLCs operate under the umbrella of one larger LLC. Each LLC interest has its own rights and obligations, as well as its own distinct assets. Virginia passed legislation allowing for Series LLCs in March of 2019, and this structure has been available in Virginia as of July 1, 2020.
Virginia does not have a general business license requirement, but certain occupations will require additional licenses. This varies within the state, depending on the city or county. Check with the clerk of the city or county of your LLC’s primary place of business to learn if you need a license for your goods or services. Licenses and permits are often industry-specific and can exist on the federal level in addition to state and local, so you’ll have to do some research to determine what your business needs.
In any case, we recommend hiring a professional service like ZenBusiness, who will provide you with a comprehensive package of all the licenses and insurance required for your Virginia LLC.
Before adding a member, review your Operating Agreement to see if guidelines are in place for this procedure. If your LLC has other members, they may need to agree on the addition of new members. There may also be other details defined, such as how large a share a new member can hold. Finally, you have to ensure that new members file the required tax paperwork.
To dissolve your Virginia LLC, complete the Articles of Cancellation of a Virginia Limited Liability Company (Form LLC1050). This attests to the fact that you have been winding up the LLC’s affairs. It requires the signature of a member of the LLC. You must pay a $25 filing fee.
If you transfer only part of the business, you follow the procedure for adding a new member to the LLC (see above). If you transfer full ownership of an LLC, check the buy-sell or buyout provisions of your Operating Agreement. A purchase agreement must be drafted in line with any terms laid out in the Operating Agreement. There are also aspects to consider, such as whether you want to sell the stock of your corporation or membership units or sell the assets of the business — in which case any liabilities linked to the business likewise transfer to the new owner. Following a full sale, you must also file final tax returns.
With this guide by your side, you can begin the process of starting a business in Virginia. If you want assistance with any of these steps, ZenBusiness can help. Get in touch to discuss how we can help your business thrive.
Want to learn more about starting a business in Virginia? Contact us today!
Already a Virginia small business owner? ZenBusiness can also help you run or grow your Virginia small business.
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