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2022 Guide to Starting an LLC in Virginia

Virginia LLC Quick Facts

Virginia LLC Costs

Initial Cost:
– State LLC Filing Fee: $100

 

Recurring Cost:
– Annual Report Filing Fee: $50

Virginia LLC Processing Time

– Filing Online: Immediate
– Filing by Mail: 2 weeks

Not sure about filing an LLC yourself?

Want an LLC, but not sure about filing the paperwork yourself? Let Zenbusiness, IncFile, or IncAuthority help guide you through the LLC formation process, so you know everything was done right.

IncFile and IncAuthority are both currently running a special where you only pay state fees for your LLC formation!

Overview

Guide to Starting an LLC in Virginia

An LLC, or Limited Liability Company, is a type of business entity that provides limited liability to its owners. This means that the personal assets of the LLC’s owners are protected in the event that the business is sued. An LLC can be set up with just a few simple steps, and it can be operated like any other type of business.

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.

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.

Related: Guide to starting a business in Virginia

Steps to Form a Virginia LLC

This guide will provide you with all of the information you need to start an LLC in Virginia. The process is relatively simple, and with a little guidance, you can have your LLC up and running in no time. We will walk you through the steps involved in setting up your LLC, from initial filing to ongoing maintenance. So, let’s get started!

Total Time: 10 minutes

Step 1: Choose a Name for the LLC

The first step in forming a Virginia Limited Liability Company is to make sure the name you want is available.  

It’s critical to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Virginia. The Virginia State Corporation Commission makes it easy to search and verify if your LLC name is available.  Here is more information on how to do a Virginia LLC name search. 

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
– 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.

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

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.

Before settling on a name, you may want to do a domain name search (also referred to as a URL) search to see if there is a domain available to match your business name.

Step 2: Appoint a Virginia Registered Agent

Every LLC in Virginia is required to have a Registered Agent. A Registered Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.

The basic requirements to be a Registered Agent in Virginia include:
– The agent must be a Virginia resident at least 18 years of age or a commercial Registered Agent service with a registered office in the state.
– The agent must have a physical address in the state (PO Boxes aren’t allowed).
– The agent must generally be available during normal business hours at the address provided to receive service of process.

Learn more about the requirements for a Registered Agent in Virginia

Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when running the business from home or while still employed.  Hiring a commercial Registered Agent service like Northwest Registered Agent will help keep the owner’s names from being listed on the state’s website.

Step 3: File the Virginia Articles of Organization

The paperwork to officially create an LLC in Virginia is called the Articles of Organization. To submit the paperwork, either file online through the Virginia State Corporation Commission’s website. If you prefer to fill out and mail the application, download the Articles of Organization (Form LLC-1011).

Related: How to fill out the Virginia LLC Articles of Organization

Estimated Cost: 100 USD

Consider using an LLC formation service like Zenbusiness, IncAuthority, Northwest, or IncFile to guide you through the LLC formation process, so you know everything was done right.

IncAuthority and IncFile are currently running a special where you only pay state fees for your LLC formation and they do the rest!

What needs to be done after forming your Virginia 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, LLC 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 is that 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 starting.
  • 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?

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 were formed on November 15th, 2021, the first annual registration would be due on November 30th, 2022.

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

Common Questions To Starting An LLC In Virginia

How much does it cost to start an LLC in Virginia?

The Virginia State Corporation Commission filing fee to start an LLC in Virginia is $100.

How long does it take to start an LLC in Virginia?

LLCs in Virginia that are formed online through the Virginia State Corporation Commission’s website are processed immediately, while mailed-in forms can take up to two weeks.

Is there a yearly fee for an LLC in Virginia?

Each year, an annual report and $50 filing fee must be sent to the Virginia State Corporation Commission.

Where do you check if your Virginia LLC name is available?

You can check if your Virginia LLC name is available by searching the Virginia State Corporation Commission’s business entity registry.

If you find that your desired name is already in use, you can try variations on the spelling or choose a different name altogether, but no two names can match.

Can you be your own Registered Agent in Virginia?

Yes! Actually, anyone can act as a Registered Agent, provided they are at least 18 years old, reside in the state of Virginia, and are generally available to receive documents during normal business hours.

Related: What are the requirements for a Registered Agent in Virginia?

Does an LLC need a business license in Virginia?

It’s sometimes thought that the LLC and business license are the same in Virginia, but they aren’t. An LLC is referred to as the business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to legally operate.

Related: What business licenses are needed in Virginia?

What is a Foreign Limited Liability Company?

A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state that wants to physically operate in Virginia. Physically operating means having a presence, such as having an office or hiring an employee.

Related: What is a foreign LLC?

What is a Series LLC?

A traditional LLC is the most common form of LLC, however, some states, such as Virginia, allow for the creation of a Series LLC. A series LLC is comprised of a parent LLC with one or more individual series within the umbrella of the LLC. The individual series are protected from liabilities and losses suffered by the other individual series and the holding company.

Read more: What is a Series LLC?

What is a Professional Limited Liability Company?

Businesses that require occupational licensing in Virginia, such as accountants, architects, veterinarians, etc., can register a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.

Related: What is a Professional Limited Liability Company?

Is an LLC the same as a corporation?

The LLC is one of four main types of business entities. You can learn more about each here:
What is a sole proprietorship?
What is a general partnership?
How to form a Virginia corporation

Should you use a formation service, hire an attorney or do it yourself?

Following our guide, most people will be able to form an LLC on their own, however, an attorney will provide far greater legal protection for your business.

While an attorney may be out of the budget, another option is using an LLC formation service like IncFile or IncAuthority will guide you through the process and guarantee it’s done right. These LLC services don’t cost any extra to do so!

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