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If you’re starting a business and you want to officialize it, there are different types of businesses available. Starting a Limited Liability Company (LLC) in the states (and specifically in VA) allows small businesses to gain liability protection while taking advantage of a modern economy and a competitive advantage with affordable overall business operating costs.
Forming an LLC in Virginia has its benefits: It’s a business-friendly state, with several tax advantages for new businesses. Virginia is also a right-to-work state with numerous developmental programs and an educated workforce, which can make it even more appealing for some business owners.
To register LLC in VA, you’ll typically need to follow several steps, some of which involve the Virginia State Corporation Commission (SCC): A state agency that handles numerous legal processes for businesses, including LLCs. It also enforces rules for LLCs in the state, including collecting filing fees and enforcing name requirements.
Here’s a breakdown of the steps you’ll need to take in order to create an LLC in VA:
Below, you’ll find a detailed explanation to walk you through each step.
Choosing a name for your LLC is the first step in the process, and one of the first things you’ll want to do if you’re just starting a business. As you will see below, you will need to follow the states’ business entity naming rules when naming your business, and if you plan to start it later, you might want to reserve your desirable name in the meantime.
If you want to act under a different name than your legal business name, you will need to file a DBA. You should also consider registering it for a trademark in order to have stronger protection of it. If you plan to have a website for your business in the future, then it’s best practice to make sure your domain name is relevant, so it’s recommended to check that as well.
Most of this is done through the SCC. You can download the appropriate files or fill them out at scc.virginia.gov.
Here are some of the main state requirements in regard to your Virginia LLC name:
If for any reason you’re not ready to register as an LLC yet but you already found a name that fits your company and is available (i.e. no names turn up in the search), you can then reserve your name. This reservation allows you to hold the name for up to 120 days in VA and requires a $10 fee.
To reserve your name, fill out Form SCC631. You can then submit it by mail. You can also fill out the form online and use the Clerk’s Information System (which requires you to create an account without charge) to send the completed online version to the SCC.
If you opt to use one, you need to set up a fictitious name, also referred to as “doing business as (DBA) or “assumed name.” This DBA allows you to set up another name to use during the course of business that’s associated with your business’s legal name.
In Virginia, you need to do this with the county clerk’s office in the county where the business is located. There is another $10 filing fee for this. Once you obtain the necessary certificate from your local county office, you’ll need to file that certificate with the Clerk’s Information System.
Registering your business name should provide protection from anyone else using the exact name (including the LLC abbreviation). If you want to gain wider protection in the state, i.e. preventing others to use variations of your LLC name, business logo, etc., or have protection on the federal level, you’ll need to register your name as a trademark.
On the state level, the Division of Securities and Retail Franchising acts as the registration depository in Virginia for all trademarks. This falls under the Virginia Trademark and Service Mark Act. There is a $30 non-refundable registration fee. To do so, submit Form TM1 (Application for Registration of a Trademark). If you are registering a Service Mark, use Form TM1 as well.
For nationwide trademark registration (a federal level that gives you protection throughout all states), visit the USPTO website for more information.
All LLCs in Virginia must designate a registered agent, which is a person or a business entity that accepts bureaucratic documents such as legal documentation, tax notices, etc. on behalf of the LLC.
Virginia’s rules in this area are quite restrictive and specific on who can be the registered agent:
Once you appoint a registered agent, you have to list the registered office as the point of contact of the LLC.
The next step in the process to register LLC in VA is to file the Articles of Organization (Form LLC-1011). The form can be filed through the online portal (Virginia SCC), or by downloading and mailing it. It’s important to notice the difference between having a domestic LLC operating in Virginia, meaning an LLC that was established and operating in the state, and a foreign LLC established in a different state and operating in Virginia. Having a foreign LLC may incur additional fees.
Fees:
There is a $100 non-refundable fee. You must make payment online with a credit card or an eCheck. It is also possible to send a check payable to State Corporation Commission.
Filing:
The SCC encourages individuals to complete all documentation online.
To do so, visit https://cis.scc.virginia.gov. If you have not done so, you’ll need to register an account on the site. You can then fill out the form and submit it online through that portal.
You can also download the form from the website, print it, and mail it to one of the addresses listed above.
However, if you plan to send this information via mail, you can do so at the following addresses:
State Corporation Commission
Clerk’s Office
P.O. Box 1197
Richmond, VA 23218-1197
Or send to:
Courier Delivery Address
1300 E. Main Street. 1st Floor
Richmond, VA 23219
The next step will be to create your LLC operating agreement, an internal document that establishes the guidelines for running the LLC (for example, it defines the specific rights of each member and manager within the business).
Virginia does not have any specific rules for operating agreements for LLCs, nor require you to create one. However, the operating agreement is a quite valuable business document, and it is typically worth investing in as you set out to create your LLC.
One of its core aspects is outlining how the LLC should be managed and who is in charge of what, mainly because it helps distinguish the LLC as a business that is separate from any other organization and separate from your personal assets. This is even more important if your LLC is a multi-member LLC (i.e. there is more than one owner or officer).
Some of the aspects to include in an operating agreement are:
If you do decide to create an operating agreement, it’s best practice to have each owner and member sign the documents and receive a copy of them, and file them with other business documents to keep close at hand. You do not have to file them with the state.
Form a Virginia LLC,
Hassle-Free
An Employer Identification Number (EIN) is a big part of becoming a business owner. It is necessary if your LLC has more than one member. If you don’t have any employees and have just one member in your LLC, you may benefit from an EIN if you choose to have your LLC taxed as a corporation instead of as a sole proprietorship.
The process of getting an EIN is simple and straightforward. The entire process is done through the IRS’s website. You’ll need to determine your eligibility, and complete and submit an online application. Your EIN is then immediately accessible to you, and you can download or save this information.
To be eligible for an EIN, you must:
If you’re not sure whether you need an EIN, check this page. If you do not want to go through this process alone, you don’t have to. We can help you complete it as a part of the services we offer.
In Virginia, your company will file and pay taxes for various situations. It’s important to understand what to expect before you start your business, as taxes should be something you take into account in your LLC’s pricing strategy.
Complying with tax requirements is essential for a business owner, otherwise the taxing authorities at the state or federal level (and sometimes local levels) may place a lien on your business and take ownership of your assets.
Here’s a look at some of the state-specific taxes you may need to pay. It is worth working closely with an accountant when it comes to completing taxes for your business as tax laws change over time.
How will your VA LLC be taxed?
LLCs are pass-through tax entities, meaning that each of its members pays taxes on their earnings from it. In other words, your LLC is not required to file its own taxes and pay taxes on the revenue. Rather, the members of your LLC, such as the owner, can pay taxes on their private income tax reports for the revenue they were paid from the LLC.
Here are the common types of taxes you will probably need to pay:
In Virginia, if you are an LLC and choose to be treated as a sole proprietorship, your business does not pay any income tax, but you pay (on your personal tax return) 2%-5.75% on your profits from the LLC.
Alternatively, you can elect for your business to be treated as a corporation for tax purposes (to do this for the federal level, fill out Form 2553 with the IRS). If you decide to file as a corporation, on the state level the company itself files a separate tax return. The corporate income tax in Virginia is 6% of the net income from all Virginia sources. The LLC must pay this tax through the Department of Taxation in Virginia. It’s done by using Form 500 (an income tax form).
Sales tax is levied on any sale of products or goods to customers. It is the responsibility of your LLC (i.e. you!) to collect the sales tax from your customers at the time of the sale and then pay those funds to the associated tax authority.
To do this, you’ll need to register your LLC with the Department of Taxation. You can set this up online, or complete the registration by mail using Form R-1. Once you have registered, you’ll receive a Certificate of Registration (Form ST-4) and sales tax account number from the state.
Once this happens, you are then responsible for making payments on a routine basis for all sales taxes you’ve collected. Most often, this is done monthly or every quarter. You can make those payments online with Virginia Tax through your account.
If you are operating your LLC on your own, without employees, you’ll pay federal and state self-employment tax. If you are a member or a manager of the LLC, and you withdraw profits from the LLC, you need to pay this tax. This tax includes payments for Social Security, Medicare, and FICA taxes.
The current self-employment tax in Virginia is 15.3%. You need to apply this tax to all of the earnings you withdraw from your LLC each year. There are deductions that may lower these costs, such as business expenses.
If your company is taxed as a corporation, you will pay less self-employment tax under IRS rules. Under this rule, you will declare some of your income as a salary within your business. Any other money you take from the LLC is a distribution or withdrawal.
If you pay employees through your LLC, you may have other tax implications to keep in mind. (It’s always best to speak to an accountant or another professional who can help you determine the best tax planning for your business).
All employers in the state must pay a payroll tax. This is collected and withheld through your payroll — how you pay employees — when they receive their wages. You’ll withhold 7.65 percent of any taxable salary they have. Then, you’ll need to submit these to the Virginia Tax Authority.
You’ve done the hard work of forming an LLC in VA (congratulations!). However, there are a few more specific steps to take to ensure your business is properly set up and ready to thrive.
Below are some of the main things you might need to take care of:
It’s critical and advisable to keep your business and personal income and expenses separate from those of your business. If you have not done so yet, now is the time to open a separate business bank account.
Having a separate business bank account from your personal income may help minimize risk to your personal assets should someone file a lawsuit or claim after your business. In addition, it helps to place limited liability on you personally for the actions of your LLC. For many organizations, this is one of the main reasons to create an LLC in the first place.
Many banks and credit unions offer business-specific banking accounts for both checking and savings needs. When choosing them, be sure to consider any fees, especially if they are linked to transactions completed per month or minimum deposit requirements. Choose what works best for your business now.
Depending on the type of LLC you operate, you may need to obtain a business license. Virginia does not have a single business license that applies to all companies, but it does have some industry-specific licensing requirements. In Virginia, many cities require businesses to register with them directly to provide services within the city.
Those working in fields such as real estate, engineering, electricians, home inspectors, and others need to obtain a state license. The state outlines each one of these requirements at Virginia.gov/services/licenses. The actual process of completing a license registration differs from one industry to the next, but it is done fully online in most cases.
The next step in establishing your LLC is to establish your financials. You may have your business accounts set up and perhaps already opened a business credit card. Now, you need to organize your financials.
To do that, work with a tax advisor and accountant. They can help you to set up proper software to manage the collection, holding, and management of payments for your taxes. In addition, you’ll want to ensure you talk to an accountant who can verify the best tax structure for your business and help you obtain any tax breaks available to your company.
An accountant can also help you manage your books to show profit and loss, expense reports, and much more. This type of information is valuable to you as you grow your business by understanding what your customers need and want.
It’s also a good idea to have a business lawyer on hand. This professional can help you establish contracts and all legal aspects of your company’s services. They can also help you set rules for your employees, vendor contracts, and succession planning.
Filing fees for registering your LLC is $100, but other costs might be incurred; read more here.
Virginia requires LLCs to pay an annual $50 registration fee (paid through the SCC eFile system online). This fee is paid at the end of your LLC’s anniversary month (the month of formation). If you fail to make payment on time, a $25 fee is assessed.
To form a VA LLC, you must send the articles of organization (Form LLC-1011) to the Virginia State Corporation Commission (SCC). This can be done online or by mail, and include a filing fee of $100.
In Virginia, LLCs are not required to file an annual report (in other states, they must do so).
It typically takes about 1-2 for the state to process the articles of organization. You can pay a $200 fee for an expedited service and receive a filing response within 1 business day (sometimes on the same day).
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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