How to Start Your LLC in Virginia

This manual is a detailed, stepwise way to create your LLC in Virginia, such as naming your business, and registering the Articles of Organization, and finding a registered agent, and obtaining licenses and managing taxes.

1. Name Your Virginia LLC

The selection of an appropriate business name is a very important initial step, as it will determine your brand and it will be the initial impression one makes to the clients.

Begin by defining clearly your business idea. Clear concept will enable one to brainstorm out names that reflect your services or products. Then, you could consult your friends or colleagues whom you trust to understand their possible responses to your name ideas. Do online searches, so as to ensure that your desired names are not taken by other businesses that are in operation and that, a good domain name is found.

Once you have shortened your list, look up the US Patent and Trademark Office USPTO and be sure your name is not used as a trademark for any national use. After being sure that you have the name, you can make a reservation of the name in the Virginia State Corporation Commission (SCC) via the Clerk Information System (CIS).

Doing Business As (DBA)

In case you prefer to do business under a different name other than your LLC, a DBA can be registered, or a fictitious name as the case is called in Virginia. This will enable you to have different product lines or have more than one brand name under the same LLC. As an example, a company under LLC name "JJ's Waffles" may conduct business under the name of JJ's Muffins under DBA. DBAs create an opportunity to open different bank accounts with different business names. Filing fictitious name is done at a cost of 10 dollars and this is done via the same CIS portal like in the name reservation.

2. Select a Registered Agent

According to the laws of Virginia, every LLC is obliged to appoint an agent of the company (referred to as a registered agent), who will be able to receive official correspondence, legal notices, and taxing documents. The registered agent can be an LLC member, a resident of Virginia, or a service of professional registered agent.

In order to qualify, a registered agent should:

• Be at least 18 years old
• Physical address in Virginia (P.O. Boxes will not be accepted)
• Be present at normal working hours.

A large number of entrepreneurs use a registered agent service to guarantee a lack of regulations and privacy. Making a personal selection as a registered agent implies that you should be usable at your business address within business hours.

3. Decide on Your Management Structure

Virginia LLCs may be either member-managed or manager-managed, with the decision to adopt one structure or the other being determined by the extent to which the owners are interested in taking part with the day-to-day activities.

In a member managed LLC, members actively partake in day to day operations and decision making. This is the best type of LLC structure that relates to a small LLC with hands-on members.

Under manager-managed LLC, there is one or more managers (not necessarily members) who manage operations, and passive members. It is appropriate in LLCs having several investors that would like to play a hands-off role.

In case your LLC fails to indicate a type of management in the Articles of Organization, it becomes a member-managed type.

4. Submit Articles of Organization

Your LLC is officially formed by the Articles of Organization with the Virginia State Corporation Commission (SCC). Filing is done online through the Information System of the Clerk of the SCC and through the mail with the help of forms.

The information that is needed is:

• LLC name
• Principal office address
• Name and office address of registered agent.
• The LLC is either member-managed or manager-managed.
• Length of LLC (which is usually perpetual)

Contact Information of Virginia SCC:
Website: Virginia SCC
Phone: (804) 371-9733
Physical Address: 1197 P.O. Box Richmond, VA 23218.

5. Prepare an Operating Agreement

An operating agreement is very advisable though not mandatory in Virginia. This is a document of your LLC rules on the inside, management style, profits division and dispute resolution or changes of members.

Some of the essential factors are:

• Name and address and life span of LLC.
• Registered agents data.
• Membership details
• Voting procedures and management.
• Profit and loss allocation
• Member change procedures or member dispute procedures.
• Bookkeeping and communication rules.

Single-member LLCs also have the advantage of having an operating agreement because it assists in proving to banks, landlords, and prospective investors the viability of your business operation. There are templates on the internet, yet a professional lawyer may guarantee the adherence and readability.

6. Get an Employer Identification Number (EIN)

LLCs of over one member or employing workers need an EIN issued by the IRS. One also needs to open a business bank account and file federal taxes.

An IRS identifies a responsible party; the individual is in charge of the funds and assets of the entity; this should not be an entity. The applications may be done online, through mail or fax.

7. Get Business licenses and Permits

Depending on industry and location, you might require federal, state or local licenses and permits. Though Virginia does not have any general business license all over the state, some professions like contractors, childcare providers and health services are subject to licensure.

You may also need:

• Building and zoning permits
• Health or fire permits
• DBA/ fictitious name registration.
• The sales tax is allowable when the goods or services are taxable.

There is no need to declare the requirements blindly, always check with the local city or county offices, and even discuss with a business attorney to make sure everything is being done. Such services as MyCorporation may help in obtaining all the required permits.

8. Choose Your Tax Status

Virginia LLCs are by default pass-through entities. Profits and losses are passed to personal tax returns of members without any corporate taxation.

Default Tax Treatment

• Single-Member LLC: It is taxed as a sole proprietorship; the income is reported on Schedule C. Self-employment taxes are paid.
• Multi-Member LLC: Taxed like a partnership; should fill in Form 1065, with income being distributed to personal tax returns of the members.

Elections into optional corporate tax

LLCs have the option of strategic benefits of corporate taxation:

• C-Corporation: The profit is taxed on corporate tax. Members are taxed on separate dividends, which will save them self-employment tax on dividends.
• S-Corporation: The entire income flows down to tax returns of the members, but the members have to take on a reasonable salary which is subject to payroll taxes, and the rest of the profits are not subjected to self-employment tax.

A tax professional should help you to choose the best structure of your LLC.

Other Requirements

Open a Business Bank Account

Isolate personal and business finances to defend your liability. The Banks normally need your EIN and Articles of Organization.

Business Credit Card

Setting a credit to your LLC may be useful to control the flow of cash and allow taking a loan or credit in the future.

Business Insurance

Secure your investment by means of general liability or professional liability (E&O), workers compensation, property, equipment breakdown, commercial auto or combined Business Owner's Policy (BOP).

Recordkeeping

Keep store formation documents, operating agreements, vendor contracts and other legal or financial records safely.

Annual Registration Fee

Virginia LLCs are required to pay an annual payment of 50 dollars in order to be in a good stand. Failure to make payments on time attracts a penalty of 25 dollars.

Virginia LLC FAQs