How to Form an LLC in Virginia

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Virginia LLC Quick Facts

Virginia LLC Costs

Initial LLC Filing Fee – $100

 

Recurring State Fee: Annual Report – $50

LLC Processing Time

Online: Immediate filing

By Mail: Up to 2 weeks

 

Expedited processing is available for an additional fee

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Quick Reference

The Limited Liability Company (LLC) is a popular entity structure for businesses starting in the state of Virginia. The LLC provides personal liability protection and has the potential to save money on taxes. With our step-by-step guide, you can learn how to form an LLC in Virginia without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Costs to Form a Virginia LLC

To form a Limited Liability Company in Virginia, file the Articles of Organization with the Virginia State Corporation Commission.  The LLC filing fee is $100.

Approval for the LLC is typically less than two weeks when filing by mail and filing online through the eFile Express approval is immediate.

Guide to Forming an LLC in Virginia

Step 1: Create an Account with the State Corporation Commission

The steps for filing online or by mail are largely the same.  The screenshots show how to file online with the eFile Express system as the filing is instant.

Step 2: Select an Entity Name

Enter the name you want for the LLC.  The LLC’s name also has to differ from other entity names registered with the State Corporation Commission.  You can also check on Virginia LLC name availability or contact the Clerk’s Office of the Virginia State Corporation Commission by calling 804-371-8733 or 866-722-2551, before going through the filing process to ensure the one you want is available.

The name of the LLC must also include a designator at the end of the business name and describes what type of business entity it is. Words and abbreviations that are available to use as designators include:

  • Limited Liability Company
  • Limited Company
  • L.L.C.
  • LLC
  • L.C.
  • LC

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

Before settling on a name, you may want to do a domain name (also referred to as a URL) search to match your business name and website address.

If there is a name you want, but are not ready to register the LLC, you can file the Reservation of a Business Entity Name (Form SCC631) with the Commonwealth of Virginia State Corporation Commission. The name reservation will hold a name for up to 120 days, at a cost of $10.

If you plan to use a different name from the one that you register (perhaps you want to run multiple businesses under the LLC), you can use a fictitious name (sometimes referred to as a trade name, assumed name, DBA, or Doing Business As name).  To register a fictitious name, the Certificate of Assumed or Fictitious Name, along with a $10 filing fee will need to be sent to the Commonwealth of Virginia State Corporation Commission.

Enter the name along with the designator you would like to use and click on “Check Name”  If the name is distinguishable, a message will show up saying, “Proposed Entity Name is distinguishable.”  If the name you select is not distinguishable, the message will say, “Name is not distinguishable from another entity in the Commission records,” and a new name will need to be selected.

Register an LLC Name in Virginia

Step 3: Appoint a Registered Agent

A Registered Agent in Virginia must be identified before forming an LLC.  The Registered Agent can either be a resident of Virginia (Select “an individual who is a resident of Virginia” button) or a business or Registered Agent service (Select “a corporation or limited liability company that is authorized or registered to transact business in Virginia” button).  The address of the agent must be a physical street address since Post Office Boxes are not allowed, is available during normal business hours, and will act as a central point of contact for service of process, to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.

Even though the business owner can be the registered agent, their name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home.

Virginia LLC Registered Agent

Step 4: Indicate the Principal Address

In this section, enter the street address, city, state, and zip code of the initial principal office.  This address can be the LLC’s physical address, or it can be the address where the business records are stored.  You may not use a PO Box for the designated office.

VA LLC Principal Office

Step 5: Signature

Have an individual forming the LLC to accept the terms and conditions and sign.  Click the “Document Preview” button to review the document.

Step 6: Review

Review that all the information is correct.  If there are no corrections, click “Pay and File.”

Step 7: Pay and File

Pay and file the Articles of Organization.

If filing online, the LLC will be approved immediately.

If sending by mail, send to:
State Corporation Commission Clerk’s Office
PO Box 1197
Richmond, VA 23218-1197

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Virginia LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, how new members are added and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Virginia operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax Identification Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally, the bank will request a Virginia Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

In addition to forming the LLC, there will likely be various business licenses and permits needed before starting the business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Sales Tax Certificate – To sell products and certain services, registration with the Virginia Department of Taxation will be necessary.

Related: What Business Licenses are Needed in Virginia?

Get Business Insurance

Even with the asset protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

File the Annual Registration

Instead of an annual report, LLCs are required to file an annual registration with the Virginia State Corporation Commission.  The annual registration fee is $50 and is due each year on the last day of the month that the LLC was formed.  For example, if the LLC was formed on November 15, 2020, the first annual registration would be due on November 30th, 2021.

If the Annual Registrations aren’t paid by the due date, the Virginia Corporations Commission will assess a $25 penalty to the LLC and eventually dissolution if not paid.

Related: How to File a Virginia LLC Annual Registration