Guide to Starting an LLC in West Virginia
If you are looking to start a business in West Virginia, you may be wondering about the process of forming a Limited Liability Company (LLC). An LLC is a type of business structure that provides limited liability protection for its owners. This means that if the business is sued, the owners’ personal assets are protected.
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, general partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.
Steps to Form a West Virginia LLC
While it can be intimidating to form an LLC for the first time, with a little research and patience, you can learn how to form an LLC in West Virginia without an attorney.
Let’s break down the steps to complete the West Virginia LLC formation process.
Total Time: 10 minutes
Step 1: Choose a Name for the LLC
The first step in forming a West 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 West Virginia. The West Virginia Secretary of State makes it easy to search and verify if your LLC name is available. Here is more information on how to search available West Virginia LLC names.
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
– Ltd. Liability Company
– Ltd. Liability Co.
– Limited Company
– Ltd. Company
– Ltd. Co.
A comma may be used after the business name and before the end of the name. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
If there is an LLC name you want to use, but you are not ready to register the LLC, you can file the Application for Name Reservation. The name reservation filing fee is $15 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 trade name (sometimes referred to as a fictitious business name, assumed name, DBA, or Doing Business As name). File the Trade Name Reservation form along with the fee of $25 with the Secretary of State.
Before settling on a name, you may want to do a domain name search to try and match your business name and website address.
Step 2: Appoint a West Virginia Registered Agent (optional)
In most states, a Registered Agent is required by all LLCs; however, in West Virginia, it is optional.
A Registered Agent acts as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC (referred to as an agent for service of process).
The basic requirements to be a Registered Agent in West Virginia include:
– The agent must be a West 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 West Virginia
Any individual meeting the requirements can be the agent; however, the agent’s name and address becomes public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed. Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.
Step 3: File the West Virginia Articles of Organization
The paperwork to officially create an LLC in West Virginia is called the Articles of Organization. To submit the paperwork, either file online on the West Virginia Secretary of State’s website or download and mail the Articles of Organization (Form LLD-1)
When filling out the Articles of Organization, a few sections and terms can be confusing. Let’s go over a few of these sections to help get your LLC started right.
Type of LLC – Choose whether the business is a regular LLC (most common) or PLLC (Professional LLC). A Professional LLC is an LLC that provides a service that requires licensing in West Virginia. See West Virginia Licenses and Permits for more information on which services require licensing.
If your business is licensed, be sure to attach the Verification of Eligibility proving licensure.
Principal Office 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 the address where the business records are stored. This does not need to be an address in West Virginia, but you may not use a PO Box for the designated office.
If you prefer to have the LLC records sent to a different address, enter that information in the Mailing Address Section. If the address is the same as the principal office, leave it blank. A Post Office Box is acceptable to use.
Initial Designated Office – The Designated Office is the physical address where the business will operate. This address has to be in West Virginia and can’t be a PO Box.
If there is an address where notifications should be mailed, enter that address in the Mailing Address section.
Organizers – An LLC Organizer is someone involved with the formation of the Articles of Organization. The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any LLC member can be listed as an organizer.
At least one organizer must be listed; however, each organizer having decision making authority for the LLC must be entered.
LLC Existence – In this section, you can indicate how long it will remain in existence. Most LLCs will choose “At-Will”; however, some businesses (usually investment related) will have a specific closure date and will choose “Term.”
Member Information – The names and addresses of each LLC member must be listed. If there are more than four members, attach an additional page.
LLC Management – This section asks if the LLC is Member-Managed or Manager-Managed.
– Member-Managed LLCs have an active involvement in the management and have the authority to act on behalf of the LLC.
– Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation. This is generally used when there are passive members in the LLC, and the members do not actively manage or operate in the affairs of the business.
Most LLCs are member-managed and will often be the same individuals listed in
Member Liability – This section asks whether the LLC members are liable for the debts, obligations, and liabilities of the LLC. Selecting “No” means all LLC debts, obligations, and liabilities are obligations to the LLC. Choosing “Yes” means members are liable for the LLC’s debts, obligations, and liabilities.
If you select “Yes,” be sure to have their written consent saved with the company records.
LLC Purpose – Provide some basic information about what the business does. You will need to provide some basic information otherwise, the LLC filing will be rejected. If you want to keep the business purpose more open-ended, you can add “…including the transaction of any or all lawful business for which corporations may be incorporated in West Virginia” in addition to the original purpose statement.
Effective Date – If you want the LLC to start immediately, choose the check box “the date and time of filing in the Secretary of State’s Office.” If you want the LLC to start later, choose “the following date” and enter a date less than 90 days in the future.
The main reason for delaying the LLC start date is when the filing is made close to the end of a calendar year, and the business isn’t going to have any activity until the start of the year. You can eliminate the need to file a partial-year business tax return by delaying the start date until the following year.
Estimated Cost: 100 USD
Turnaround Time: It normally takes 5-10 days for the LLC paperwork to be approved by the West Virginia Secretary of State’s office.
IncAuthority and IncFile are currently running a special where you only pay state fees for your LLC formation and they do the rest!
You have a West Virginia LLC! Now what??
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 West 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, and more.
West Virginia does 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.
Obtain an EIN
The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) 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
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 West Virginia Certificate of Good Standing to prove the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
After forming the LLC, there will likely be various business licenses and permits before starting the business. Some common registrations include:
- Business Registration Certificate – All LLCs will need to obtain a Business Registration Certificate (sometimes known as a Business License) from the West Virginia State Tax Department. Form WV/BUS-APP is used to register for a West Virginia Seller’s Permit.
- 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. Licensed professionals going into business have the option of forming a Professional Limited Liability Company (sometimes referred to as a PLLC or Professional LLC), which allows them more options in naming their LLC. The steps for forming a PLLC are similar to the LLC.
File Annual Reports
LLCs are required to file an annual report with the West Virginia Secretary of State. The annual report updates ownership information and other details.
Common Questions To Starting An LLC In West Virginia
How much does it cost to start an LLC in West Virginia?
To state filing fee to start an LLC in West Virginia is $100.
How long does it take to start an LLC in West Virginia?
To form an LLC in West Virginia, it normally takes 5-10 days for the LLC paperwork to be approved by the West Virginia Secretary of State’s office.
Is there a yearly fee for an LLC in West Virginia?
Each year, an annual report and $25 filing fee must be submitted to the West Virginia Secretary of State.
Do I have to pay to hire a registered agent?
No. Anyone can act as a registered agent, provided they are at least 18 years old, reside in the state, and are generally available to receive documents during normal business hours.
Which licenses and permits are required for an LLC in West Virginia?
It’s sometimes thought that the LLC and business license are the same in West 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 or permit, on the other hand, is approval from a government entity to legally operate. Different types of licenses are required depending on where the business is located and what the business does.
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 West Virginia. Physically operating means having a presence, such as having an office or hiring an employee.