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. Still, the legal paperwork that comes with establishing your company as a legal entity might seem daunting at first.
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.
To form an LLC in the Old Dominion, 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 can be accomplished through a planned, step-by-step approach. You can get additional help by using our services here at ZenBusiness. The below points break down the process into manageable actions, allowing you to get on your path to establishing your own LLC.
Step 1: Name your Virginia LLC
A well-chosen business name helps to attract future clients by providing insights into what services or products your company offers. A formally designated business name is also a legal requirement for your LLC to be recognized by the Virginia government. While you want a business name that’s clear and catchy, there are also legal requirements to consider as you brainstorm your brand’s alias. Keep the following points in mind as you consider prospective ideas:
- Your LLC name must be one-of-a-kind in the state. Virginia law does not allow duplicates of formal business names. Even if you think you’ve found the perfect moniker for your LLC, you can only use it if no other Virginia business has claimed it. To determine whether this is the case, conduct a Virginia business name search.
- Your official business name must include a specific version of the term “limited liability company.” If your business is going to be an LLC, the official name must recognize this fact. “Limited liability company” or an accepted variation of it must be incorporated into the name. You can choose how you want to do this. Acceptable options include “limited company,” “L.C.,” “LC,” “LLC,” or “L.L.C.” Whatever you decide on, it must be included at the end of your business name.
- Some words can’t be included. Words like “corporation” cannot be included, and there are specific words like “engineer” that can’t be used unless you prove your business legally provides this service. For additional information, visit the Virginia State Corporation Commission website.
After conducting your Virginia company search you should have settled on a unique name. You may want to make sure nobody else takes it before you can formally register your LLC with the state. To protect it, you can use our business name reservation service. We’ll take care of the paperwork with the Virginia Corporation Commission, and your chosen name will be reserved for 120 days. This gives you time to complete the LLC formation’s remaining steps without worrying that your business name will be stolen.
When you’re coming up with a business name, it’s wise to also consider whether you can secure a matching domain name so that your future website can be easily found online. We have a tool to help you do a preliminary domain name search, and our domain name registration service can help you secure the online name that will best serve your company.
There are a few other things you may want to consider when deciding on your Virginia LLC name. One thing is a Virginia fictitious name. Commonly referred to as a DBA or “Doing Business As” in other states, a fictitious name is another name you can use for your business. There’s a small filing fee for this.
Finally, to make sure you’re entirely in the clear with your business name, visit the United States Patent and Trademark Office website to see whether your business name or logo is federally trademarked. Trademarks can also happen at the state level. To find out more and/or apply for a state trademark, go to the Virginia Corporation Commission website page for trademarks.
Step 2: Appoint a registered agent in Virginia
Every LLC in Virginia must appoint a registered agent. This person is responsible for receiving legal documents for the business. For example, if a future client sues the company, the papers will be served to the Virginia registered agent as the business representative. The registered agent must be a legal resident of Virginia. They can also be a corporation that is permitted to do business in the state. In either case, they must have a physical address in the state. A P.O. box is not sufficient because legal paperwork like subpoenas is required to be delivered in person. Although you technically are permitted to designate yourself as a registered agent, this is not advisable.
For one thing, having someone serve you papers for a lawsuit at your business can cast a negative light on your business. One affordable solution is to hire an outside registered agent. This individual can receive paperwork on your behalf, without jeopardizing your business’s integrity. Another benefit of a registered agent service like ours is that we will store your paperwork securely in your digital dashboard, keeping them safe and organized. Some additional benefits of a registered agent service include:
- You can have an office in every state where you do business. If operating as a foreign (out-of-state) LLC in other states, using a registered agent service can allow you have a registered office in that state.
- It will be easier to move your business if needed. If you have to change your Virginia business location in the future, you won’t have to deal with the extra paperwork required to update your address because you are using a registered office as your business address.
Step 3: File Virginia Articles of Organization
The next step is to register with the Virginia State Corporation Commission. It can be intimidating and/or complicated for many people to file official government documents like this, which is why we’re here. With our business formation plans, our trained professionals handle the filing for you to make sure it’s done quickly and correctly the first time. But, even though we can handle this for you, we’ll show you how the process works below.
You must submit the Articles of Organization of a Virginia Limited Liability Company (Form LLC1011). This two-page document covers relevant details about your business. You need the following information to complete the form:
- Your LLC’s name
- Your registered agent’s name and address
- Your LLC’s principal office address
- The Articles of Organization must be signed and dated by the organizer, the authorized person filing the papers, and include their name and phone number. If you are filing the paperwork for an LLC of your own, you are the organizer.
You can file the Articles of Organization with the Virginia State Corporation Commission (SCC) Clerk by mail or online. A filing fee must be paid upon submission. For a paper filing, send a check payable to the State Corporation Commission. For online filing, you can pay via credit card or e-check.
If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the state approving your new LLC, you’ll likely want to keep it in a safe place along with your other important business documents, such as your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.
By now you’re realizing how often you’ll need to give out an address for your new LLC. That can be unsettling for some business owners, especially those running their company from home. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy.
With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary. Then we can send that mail to the address of your choice.
Step 4: Create an operating agreement
Virginia law does not require you to provide an operating agreement to establish your LLC. Still, it’s very wise to take this step when you are establishing your business, as it can help establish the rules for running your LLC. An operating agreement sets out the precise guidelines that your business will refer to in its day-to-day operations. This may include details such as:
- Who owns the LLC
- Rights and responsibilities of managers
- How profits are to be distributed
- Technicalities regarding change of ownership
If you are establishing an LLC with other people, the operating agreement can help avoid conflicts. Additionally, potential investors may ask to view an operating agreement before putting money into an LLC. Finally, a Virginia operating agreement further separates your business from you as a person in the eyes of the courts, helping you avoid personal liability in case of lawsuits.
Not sure how to create an operating agreement for your LLC? We offer a customizable template to help get you started.
Step 5: Apply for an EIN
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 paying taxes on your LLC’s 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. You can get an EIN through the IRS website, by mail, or by fax, but if you’re not fond of dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the red tape.
Even if your LLC doesn’t require an EIN, it can be useful for other reasons. It allows you to further 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.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds makes your taxes more difficult, and it could also be used against you if someone takes you to court to challenge whether you and your LLC are really separate entities (i.e., they want to sue you for not just your business assets, but also your personal assets).
We have partnered with LendingClub to offer our clients a discounted business bank account. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, check out the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.
Virginia LLC FAQs
How much does it cost to start an LLC in Virginia?
The state fees for forming a Virginia LLC range from $100 to $120, depending on whether you choose to reserve your business name or get a DBA. Note that this does not include ongoing operating costs like the annual registration fee (typically called an annual report fee in other states). Also, remember that fees change over time, so check the Virginia State Corporation Commission website for the most recent fee schedule.
What are the benefits of an LLC in Virginia?
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:
- Enjoy peace of mind knowing your business debts and liabilities are separate from your private person. If you face issues, such as a lawsuit, your personal assets are usually safe.
- Benefit from quick and easy LLC establishment and simplified management, compliance, and regulatory requirements.
- Take advantage of simplified tax work. Unless they elect to be taxed as a corporation, only the individual members (owners) of the LLC will be taxed, while the LLC will not be taxed on its profits by the federal government.
How is a Virginia LLC taxed?
An LLC allows for streamlined tax paperwork. As noted above, the business itself doesn’t have to pay federal income taxes on its profits. Instead, each member pays the taxes on their own earnings. This is unlike most corporations, in which profits are taxed twice, first at the business level and again at the individual shareholder level.
There are also state taxes to consider. Unless LLC members choose to have the business taxed as a corporation, they are only responsible for their individual taxes. In this case, the LLC isn’t taxed on its profits. There are other taxes to take into account, however:
- Instead of an annual report, which most states require of LLCs, Virginia requires that LLCs pay an annual registration fee to do business in the state. This is comparable to a state business tax. This is due on the last day of the month in which the company was formed or registered to transact business in Virginia.
- If the LLC has employees, state employer taxes and unemployment tax must be paid.
- If your LLC sells a physical product, you’ll need to register with the Virginia State Tax Department so that you can file and pay Sales and Use Tax. There are also additional taxes related to certain products, like liquor.
Those who purchase any of our plans get a free accounting consultation and tax assessment from our specialists to receive helpful resources and no-obligation recommendations around your bookkeeping, accounting, and tax needs.
What is the processing time to form my Virginia LLC?
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 and get your paperwork sooner. If you’re in a hurry to form your LLC and don’t want to deal with the state’s expedited filing processes yourself, we can handle it for you with our faster filing speeds service.
Do I need to file my operating agreement with the state of Virginia?
No, this is not required. Creating an operating agreement is still a smart move, however, as it can help protect you both as a business and an individual.
What tax structure should I choose for my Virginia LLC?
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.
Does Virginia allow a Series LLC?
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.
Which licenses and permits are required for an LLC in Virginia?
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.
You’ll need to make sure your LLC has all the licenses and permits it’s required to have by law. Unfortunately, because licensing varies by industry and location and can occur on the federal, state, and local levels, there’s no central place to check to see if you have all the licenses and permits you need. You’ll have to do some research.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
How do I add a member to an LLC in Virginia?
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 of an ownership percentage a new member can hold. Finally, you have to update the government on the changes.