Starting LLC in Virginia: Peculiarities & Detailed Manual
Want to start an LLC in Virginia? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Virginia, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Virginia LLC: The Notion & Essence
Many Virginia business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Virginia puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Virginia’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Virginia obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Virginia’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Virginia and will help you to start an LLC. The agent can be an Virginia resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Virginia notifies:
Every business company eligible to run an office in Virginia must appoint a registered agent and enroll a statutory seat in the Commonwealth. These obligations must be continuously fulfilled throughout the company operation. The registered agent is obliged to send all lawsuits, demands, or claims forwarded to the company. At any given time, an LLC may appoint more than one agent.
A registered agent guarantees an excellent reputation for your Virginia LLC. Also, if your business gets worse, Virginia can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Virginia, you must file the Articles of Association with the Virginia State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
Cost to establish an LLC: Virginia demands a $100 fee for starting an LLC.
Processing: Virginia authorities need 1-3 business days to handle your mailed papers and forward the finalized version. Online fillings will be processed in 1-2 days. Be aware that the process won’t start until you’ve submitted all necessary documents duly organized.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Virginia, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
Virginia defines state-level taxes with regards to the type of business. If you run a pass-through entity either at your sole discretion or in partnership, you’ll be responsible for filing a 502W form and covering corresponding taxes. You’ll find all details as well as filing forms here.
Contrariwise, LLCs registered as corporations must cover the state’s corporate income taxes. The percentage of corporate taxes depends on your actual income; it starts with 6% and may go further up. A comprehensive guide on current corporate income taxes in Virginia is available here.
LLCs operating in retail are obliged to pay the streamlined sales tax. It currently amounts to 4.3%. Further information on the tax is offered here.
LLC proprietors with staff must pay several taxes dedicated to the labor force. They must arrange withholding taxes. These payments are extracted from the staff’s income. The whole procedure of managing withholding taxes is covered here. Additionally, LLCs registered in Virginia must fund the state’s unemployment insurance.
This payment isn’t a tax by nature still, we mention it, as you must provide it regularly. The Virginia Employment Commission offers further guidance on the fund.
Besides general taxes, Virginia levies industry-specific taxes. Thus, it charges extra LLCs operating in corn and cotton assessments, forest products, and others. You’ll access further details as well as filings here.
Local Tax Business Demands
The exact location of your LLC influences the amount of taxes you are to pay. Thus, several counties are allowed to charge extra taxes for road maintenance and other local amenities. Consequently, your tax rate may rise up to 6%.
A comprehensive guide on local taxes is available here. We suggest you should make an appointment with your local government officials to get a full picture of all local requirements.
Stage №6: Getting Business Licenses & Permits
Virginia relieves LLC owners from obtaining a statewide general business license. Still, the state maintains the licensure demanded by the federal government. The requirement applies to LLCs operating within certain branches like agriculture, broadcasting, wildlife, and others. We suggest you should consult the list of federally-regulated industries with mandatory permits offered by the Small Business Association.
As Virginia levies industry-specific taxes, the state naturally obliges LLC owners to obtain permits dedicated to these industries. The government office issues a considerable amount of licenses in question, so you’ll find the one reflecting your business. We advise you to turn to OneStop to look through the state database of permits. Be aware that local municipalities may demand specific licenses.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Virginia Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Every LLC must report its profits at the end of a fiscal year. Keep in mind that you must submit the form regardless, even if your company bears losses. Virginia provides all necessary details on managing income reporting here.
Referring to the services of a qualified accountant
Virginia obliges LLCs to submit an annual report. You have an option of making it online or acquiring a paper form here. You must submit it every year prior to the date of your LLC formation. An annual report updates the state on all vital changes your business has been through a reporting year.