Licensed professionals in Virginia can form a business entity known as a Virginia professional limited liability company (PLLC). Starting your new practice or entity in Virginia can be both exciting and stressful. You get the chance to chase your dreams, but choosing the right options may seem intimidating. You can open a professional corporation (PC), which may offer certain liability and tax advantages, but starting a PLLC is easier and has many of the same advantages.
In this guide, we’ll help you navigate the process of forming a Virginia PLLC step-by-step. So, let’s get started.
Who can form a PLLC in Virginia?
Per the Virginia Professional Limited Liability Company Act, these professionals can form a professional LLC:
- Professional engineers, land surveyors, or landscape architects
- Practitioners of healing arts, optometrists, physical therapists, practitioners of audiology
- Pharmacists, nurse practitioners, veterinarians
- Medical professionals like surgeons and dentists
- Public accountants, certified public accountants (CPAs)
- Insurance consultants and agents
- Clinical nurse specialists
Every member should possess a valid license in the professional service specified in the Articles of Organization. Managers, members, agents, and employees can perform the specified services.
Should you form a Virginia professional limited liability company or a professional corporation?
Forming a PLLC is simpler than creating a professional corporation. Plus, there’s more flexibility in how the business is organized and taxed in a PLLC.
PCs have a rigid structure with high-level liability protections. The main difference is in the taxation methods for these two. PCs are taxed twice on their profits, first at the corporate level and again when the profits are distributed to the individual shareholders, while a professional LLC can be a “pass-through” unless its members elect otherwise. Pass-through taxation avoids the “double taxation” experienced by C corporations by only taxing profits at the individual level, not the business level. PCs are also subject to additional record-keeping requirements.
Choose a name for your Virginia PLLC
Take your time to find a unique, memorable, and interesting name that represents your business.
Don’t include any phrase or word that’s unlawful, derogatory, or implies that your professional LLC is a limited partnership or corporation. You can visit the Virginia State Corporation Commission website to view the state’s business naming regulations and make sure your desired name is distinguishable from other entities in the commonwealth.
Naming restrictions for a Virginia professional LLC
Every PLLC formed in Virginia should have one of these abbreviations or words at the end of its name:
- Professional limited company
- Professional limited liability company
- A professional limited liability company
Check whether your preferred name is available
Check the Virginia State Corporation Commission’s (SCC) website to see if your preferred name is available. If it’s available, you can visit the Clerk Information System (CIS) to reserve the name online with the commission. By paying $10 and completing the necessary form, you can ensure no one else takes your name for 120 days.
If you’d rather save time, let ZenBusiness handle reserving your PLLC name for you with our name reservation service.
While you’re thinking about names, consider looking for a domain name that aligns with your business. Use the ZenBusiness domain registration service. This way you can take your business online.
Select a Virginia registered agent
A Virginia registered agent is someone who can accept legal documents and correspondence from the commonwealth on behalf of your PLLC. They must be a resident of Virginia, have a physical address in the state, and be available during standard business hours.
Every PLLC in Virginia must appoint a registered agent. You can act as your own registered agent, but this can tie you to the office as well as create awkward situations if you’re delivered a subpoena in front of a client.
Make this easier by using our third-party registered agent services and focus on growing your practice.
Complete and file Virginia Articles of Organization
Next, you need to file the Articles of Organization. This mandatory document contains:
- The business name
- Its specific and sole purpose
- Information about the registered agent
- Number of members with contact details
- Registered office and principal office
It’s important to decide if your professional LLC will be manager-managed or member-managed. Member-managed occurs when members oversee the day-to-day activities of your PLLC and make decisions on the PLLC’s behalf. Manager-managed occurs when you appoint a member(s) or hire an individual(s) from outside the PLLC with or without a stake in ownership to manage your PLLC.
You can find Form LLC-1103 for this purpose on the commission’s website. A fee of $100 is needed for processing the articles. You can pay online with a credit card or mail in the articles to the address on the form, along with the processing fee payable by check.
Create an operating agreement for the PLLC
Though it isn’t legally required, preparing an operating agreement is extremely important for any PLLC. It can help you avoid future conflicts and allows you to customize the rules of your PLLC. This legally binding document outlines:
- Rules and policies of your Virginia PLLC
- Succession plans
- Member details and ownership rights
- Voting rights of members
Draft this document carefully.
Handle Virginia tax obligations
Next, apply for a Federal Employer Identification Number (EIN) with the IRS before you start your business. This number is a legal requirement for most PLLCs. You can reach out to us for quick and easy EIN registration.
Apart from federal taxes, you’ll have to file state-level taxes. Per the Code of Virginia, any local taxes imposed by a city, county, or town won’t apply to PLLC income, which is subject to state-level taxes only.
Obtain Virginia business licenses and permits
There’s no general business license for professional LLCs. As a professional, you need to obtain the relevant license, registration, or certificate from your respective state board or authority.
Visit the Virginia Department of Professional and Occupational Regulation to check licensing information for different professions. Check if any local permits are necessary in your county or city for your business or profession.
To ensure you have every license and permit to run your PLLC, use ZenBusiness’s business license report service.
Acquire insurance for your Virginia PLLC
PLLCs are typically required to obtain general liability insurance and unemployment insurance, and members must maintain individual malpractice insurance. If you hire two or more employees, you need workers’ compensation coverage unless you’re eligible for a waiver or exception. You can visit Virginia Workers’ Compensation Commission for more details.
Open a business bank account
Keep your business and personal assets separate by opening a business bank account. You’ll likely need copies of your Articles of Organization and operating agreement to get started.
Ready to kick-start your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain name, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
Virginia PLLC FAQs
What are the filing fees for a Virginia PLLC?
To file the Articles of Organization for your PLLC, you need to pay a fee of $100 to the Virginia State Corporation Commission.
Do I need a lawyer to form a Virginia PLLC?
You don’t have to hire a lawyer. The process is straightforward and forms are available online.
Does Virginia have a professional corporation (PC) entity?
Yes. You can form a PC entity in Virginia.
Can professionals from different fields form a Virginia PLLC together?
Some related professional services can be combined to form a PLLC. For example, architects, land surveyors, and professional engineers can work together for a single purpose. For more details, visit the Virginia State Corporation Commission’s website.
How will I be taxed as a Virginia PLLC?
When you form a Virginia PLLC, you get the flexibility to choose to be taxed as a corporation or a pass-through entity. This means the responsibility for paying federal income taxes “passes through” the business entity and is passed onto the individual LLC members without first being taxed at the business level, which is one of the advantages of this business structure.