Do you intend forming an LLC in Virginia and have no idea on what you need to do? Do you want to start a business in Virginia and want to form an LLC? If YES, here is how much it cost to form an LLC in Virginia successfully.
However, before we get started, let us take a quick look at Virginia and the benefits of creating an L.L.C. in the city. Virginia is a perfect place to start a Limited Liability Company. It is affordable, and there is no much paperwork. For starters, to make sure we are on the same page; a limited liability company is a business structure that can be owned by a single person or group of persons.
Forming a business as an L.L.C. helps protect the owner(s) against a lawsuit, cuts down the expenses of paperwork, makes the company more credible, and prevent it from being taxed twice. Forming an LLC in Virginia, you will need to file the Articles of Organization with the Virginia State Corporate Commission, which costs $100. You can apply online or by mail.
The Articles of Organization is the legal document that officially creates your Virginia Limited Liability Company. Read on to discover the things you need to do.
Starting a Business: How to Form an LLC in Virginia in 12 Steps
Choosing a company name is the first and most important step of forming an LLC in Virginia. Be sure to choose a name that complies with Virginia naming requirements and is easily searchable by potential clients.
Follow the naming guidelines:
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
- Your name must be distinguishable from any other Virginia limited liability company, corporation, or limited partnership.
For a complete list of naming rules in Virginia, you can read the State Corporation Commission guidelines.
- Is the name available in Virginia? Make sure the name you want isn’t already taken by doing a Business Entity Search on the State of Virginia’s website.
- Is the URL available? We recommend that you check online to see if your business name is available as a web domain. Even if you don’t plan to create a business website today, you may want to buy the URL in order to prevent others from acquiring it.
Table of Content
- Step 2: Appoint A Registered Agent in Virginia
- Step 3: File a Certificate of Organization
- Step 4: Prepare and File the Virginia Articles of Organization and Transmittal Form
- Step 5: Create an Operating Agreement
- Step 6: Acquire an Employer Identification number
- Step 7: Virginia LLC Annual Report and Personal Property Tax Return
- Step 8: Securing Business Licenses and /or Permits
- Step 9: Sort – Out Taxes
- Step 10: Open Your LLC Bank Account
- Step 11: Apply and Obtain Your Business Phone Number
- Step 12: File Your LLC Annual Report
- Step 13: Hiring of Employees
Step 2: Appoint A Registered Agent in Virginia
Next, you are required to choose a registered agent for your L.L.C. in Virginia. Every Virginia LLC must have an agent for service of process in the state. In Virginia, this is called a registered office (most other states require a registered agent).
A Resident Agent is the person or company who receives your LLC’s documents, notices and legal mail (called Service of Process). Because of this, the Resident Agent must have an actual street address in Virginia (PO boxes are not allowed by the state).
Picture your registered agent as your company representative to the state. It is important to note that not everyone can be a registered agent. For a person to be eligible to become a registered agent, the person or corporation must be a resident of Virginia.
That is to say, the individual or corporation must have a physical address within the state. If any member knows the ropes of being a registered agent, you may elect him or her rather than hiring one. This will help you save some dollars, especially if you are running a small business.
However, hiring a seasoned registered agent offers tons of benefits like privacy and peace of mind. Please note that you, your friend or family members or a commercial resident agent are qualified to be your LLC’s Resident Agent.
Step 3: File a Certificate of Organization
To register your Virginia LLC, you will need to file the Articles of Organization with the State Corporate Commission. You can apply online or by mail. Some states refer to the Articles of Organization as the Certificate of Formation or Certificate of Organization.
The Virginia Articles of Organization for an LLC (limited liability company) is a legal document to officially form your business. It contains information such as the name of the LLC, the name and address of the registered agent, and the state filing fee. After you file the Articles of Organization, we recommend you obtain an Employer Identification Number (EIN) if you plan to hire employees and open a business bank account.
Now is a good time to consider whether your Virginia LLC will be member-managed or manager-managed. We recommend learning more about member-managed vs manager-managed LLCs before you file. Please note that State Filing Cost: $100, payable to the State Corporate Commission. (Non – refundable)
State Corporation Commission
P.O. Box 1197
Richmond, VA 23218-1197
Please note that if you’re expanding your existing LLC to the State of Virginia, you will need to form a Foreign LLC.
Step 4: Prepare and File the Virginia Articles of Organization and Transmittal Form
For successful registration of your L.L.C., you will be required to file articles of organization. These forms will help you to set up your L.L.C. officially. A Virginia LLC is created by filing a Certificate of Organization Domestic Limited Liability Company (Form DSCB:15-8913) with the Department of State.
The certificate must include: the LLC’s name and address; the name and address of the LLC’s registered agent; the name and address of each organizer of the LLC; whether the LLC will be run by a manager; and whether the LLC will provide professional services (applicable to certain restricted professional companies). The certificate must be accompanied by a completed New Entity Docketing Statement (Form DSCB:15-134A).
This form must include the LLC’s name, the name and address of person responsible for initial tax reports; its purpose; its effective date, if any; its EIN, if any; and its fiscal year end. The certificate and docketing statement may be filed online or by mail. The filing fee is $125.
Step 5: Create an Operating Agreement
In Virginia, LLCs are not required to have a written operating agreement, but it is international best practice to have one. An Operating Agreement lists the rights and obligations of the members of the LLC. These include rules on how the LLC should be run, how taxes are to be paid, and how profits / losses are to be shared among the members.
The Operating Agreement also contains the list of members of your LLC and how much their stake is in the business. Even if you have a Single – Member LLC (you’re the only owner), it’s still best practice to have an Operating Agreement.
Please note that it is not mandatory to send the Operating Agreement to the Virginia State Department of Assessments and Taxation, or to any other state agency. Just give a copy to any necessary members and keep a copy with your LLC’s business records.
The bottom line is that, in case your LLC is sued, having an Operating Agreement shows that your LLC is operating properly. This helps maintain your personal liability protection.
Step 6: Acquire an Employer Identification number
An EIN is sometimes referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN) is a 9 – digit number similar to a social security number. The Employer identification number will be used to identify your business. It is like a social security number for your company.
An Employer Identification number is essential because you will need it to open a business account for your company, to hire employees as well as tax purposes. You can obtain your E.I.N. from the I.R.S. after creating your company. You can do it via mail or online. Note: It won’t cost you a dime to get an E.I.N. from the I.R.S.
You can obtain an EIN from the IRS either
- Via mail (approval takes 4 weeks)
- Via fax (approval takes 4 business days)
- Via online application (approval is instant at the end of the application)
Step 7: Virginia LLC Annual Report and Personal Property Tax Return
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses.
Department of Revenue: In some cases, for example if you have employees or will be selling goods and collecting sales tax, you’ll need to register with the Virginia Department of Revenue (DOR). (Virginia also has other LLC-related taxes and DOR filings not covered here.) In many of these cases, the process starts by registering online through the Revenue e-Services Centre or mailing in Form PA-100.
Step 8: Securing Business Licenses and /or Permits
The next step you are expected to take is to secure your business license and permits as the case may be. The type of business licenses and / or permits your LLC will need to legally operate in Virginia will depend on its location and the industry it is involved in.
Please note that in order to operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc. The details of business licenses and permits vary from state to state. Make sure you read carefully. Don’t be surprised if there are short classes required as well.
Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain. To find out more, contact your local agencies in the city, town or county where your LLC is located.
Step 9: Sort – Out Taxes
- Federal taxes: LLCs have “pass through” taxation. Profits or losses flow through to your personal tax return and are usually listed on a Schedule C.
- State and local taxes: Virginia LLCs must register and pay taxes with the PA Department of Revenue, as well as your local municipality (city, town, county, etc.). Depending on the nature of your business, you may be required to register for one or more forms of state tax.
- Sales Tax: If you are selling a physical product, you’ll typically need to register for a sellers permit through the Virginia Combined Registration Online Application website. This certificate allows a business to collect sales tax on taxable sales.
Sales tax, also called “Sales and Use Tax,” is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Employer Taxes: If you have employees in Virginia, you will have to register for the Unemployment Insurance Tax, and the Employee Withholding Tax through the Virginia Department of Labor, Licensing, and Regulation.
Step 10: Open Your LLC Bank Account
In order to keep your business finances apart from your personal finances, it si advisable that you open a separate bank account for your Virginia LLC. It will indeed help you maintain your personal liability protection. A separate bank account helps maintain your liability protection and it also makes business accounting and taxes a lot easier.
The items needed to open an account in Virginia are your approved Articles of Organization, EIN Confirmation Letter from the IRS, and your driver’s license or passport. We also recommend calling the bank ahead of time to find out if additional documents are required.
Tips: Look for free business checking: Call a few banks in Virginia and take down notes for comparison. Some banks charge monthly maintenance fees for your LLC’s checking accounts, others don’t.
- Debit card: A debit card for your LLC will be issued when opening the account.
- Credit card: If you want to start building business credit for your Virginia LLC (or get travel and cashback rewards), you can get a credit card or two for your LLC. We recommend using creditcards.com to find a business credit card.
Step 11: Apply and Obtain Your Business Phone Number
Instead of using your home telephone number or your cell phone, you can purchase an affordable “virtual business number” specifically for your Virginia LLC. You can set this virtual business phone up to forward to your cell phone, go through voice prompts, or configure it any way you’d like.
You can check out Phone.com as they have the cheapest plans and their customer service is excellent. They offer local phone numbers as well as 1-800 toll-free numbers. You can easily setup call forwarding, pre-recorded prompts, and get voicemail messages forwarded to your email.
Getting a separate business phone number for your Virginia LLC is also a good idea in order to keep your actual number private from those pesky “public record” websites.
Step 12: File Your LLC Annual Report
Virginia does not require an annual report. However, it does require payment of an annual registration fee to the State Corporate Commission.
Fee: $50 (Nonrefundable)
Due Date: Due the last day of the month in which the LLC was registered to transact business in Virginia.
Late Filings: Your LLC will be charged a $25 late fee if you miss your filing deadline. Virginia will also dissolve your LLC after three months for failure to pay your annual registration.
Please note that Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Virginia, you will need to register as a foreign LLC. This can be done by mail.
Fee: $100, payable to the State Corporation Commission (Nonrefundable)
State Corporation Commission
P.O. Box 1197
Richmond, VA 23218
Step 13: Hiring of Employees
Of course, registering an LLC means that you will need employees and in order to get it right as regard hiring employees, then you should ensure that you stay on the side of the law and here are some steps you should follow:
- Verify that new employees are able to work in the US
- Report employees as “new hires” to the State
- Provide workers’ compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your workspace
Lastly, ensure that you find out more information from the Virginia Department of Labor, Licensing, and Regulation website.
After you have successfully formed your LLC in Virginia and you are up and running, then you should ensure that you apply and obtain a Certificate of Good Standing.
A Certificate of Good Standing, known in Virginia as a Certificate of Status, verifies that your LLC was legally formed and has been properly maintained. Several instances where you might need to get one include: Seeking funding from banks or other lenders, forming your business as a foreign LLC in another state and Obtaining or renewing specific business licenses or permits.
N.B: Even after forming your LLC in Virginia, there are still some things you need to put in place before you commence operation. Please, note that the information in this article is provided only for general purpose and it is no way a legal advice. No lawyer – client relationship is established or should any such relationship be assumed. For legal advice, please consult with a professional lawyer.
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