If you’re starting a business in Virginia, one of the first considerations is choosing a business structure. Many entrepreneurs form a limited liability company, or LLC, because of its tax and legal advantages. For example, an LLC will protect your personal assets, like your home, if your business is sued or files for bankruptcy. Plus, you’ll pay fewer taxes with an LLC than with a corporation.
This guide will help you form your LLC in Virginia. We’ll cover everything from choosing your business name to filing the required paperwork with the state. We’ll also share tips to make this process as straightforward as possible.
Here are the steps to start an LLC in Virginia:
- Choose a business name.
- Select a registered agent.
- File your LLC articles of organization.
- Get an employer identification number (EIN) from the IRS.
- Create an operating agreement.
- Register to pay state taxes.
- Set up your business to hire employees (if applicable).
- Apply for business licenses (if applicable).
- Pay a renewal fee.
9 steps to start an LLC in Virginia
1. Choose a business name
Derek A. Colvin, partner at the Virginia-based law firm, Waldrop and Colvin PLLC, says “the key to selecting a name for any LLC is to confirm (i) the name is legally permissible, (ii) the name is distinguishable and available for registration in your state and (iii) the name doesn’t expose the business to a claim of trademark infringement.”
To select an appropriate name for your LLC, follow the naming guidelines provided by the Virginia State Corporation Commission. In addition, we’ve created a business naming guide to help you choose a name that is appropriate, marketable and is not protected from national infringement.
Once you’ve chosen a name you like, make sure it is available for use in Virginia by running it through Virginia’s name check availability search tool. If the name appears in this database, you must choose another one. You can do so by either coming up with a completely different name or distinguishing the name from the existing one. Refer back to Virginia’s naming guidelines for rules on how names can and cannot be distinguished.
Colvin says you can then “lock in” a name before forming your LLC by filling out an application for reservation of name. To do so, you must create a clerk’s information system (CIS) account, then click the “online services” and the “name reservation” link to get started. It costs $10 to reserve your business name for 120 days, and you can renew your reservation for as long as you need before officially forming your LLC.
2. Select a registered agent
A registered agent is a designated individual who receives tax and legal documents for your business. You must maintain a registered agent as long as you operate your LLC in Virginia. You can serve as your LLC’s registered agent, appoint an internal manager or hire a lawyer or registered agent service provider to fulfill the role.
Many LLC owners opt to hire a registered agent instead of fulfilling this requirement internally. This is because the role can be demanding. The registered agent must be available at all times at a set business address to receive legal documentation on your LLC’s behalf. Failing to meet this expectation could mean penalties or legal entanglements for which defense can be difficult.
To learn more about the requirements demanded of this role, read our registered agent guide. To find a registered agent that can best meet your LLC’s needs, read our best registered agent services list.
3. File your LLC articles of organization
In step one, if you reserved a business name, you already created a CIS account. You can use this account to also file your LLC articles of organization. This form legally initiates your LLC in the state of Virginia.
To register your LLC, if you don’t have a CIS account yet, you must create one. Then, follow the system prompts to form your LLC. You can use the state-published click-by-click tutorial on how to form a Virginia limited liability company as a handy reference. Once you fill in all required fields, you must pay a $100 filing fee.
Pro Tip: If you ever need to prove your LLC’s existence or compliance status to open a bank account or attract an investor, for example, you can apply for a certificate of fact of existence or registration for $6.
4. Get an EIN from the IRS
Your newly formed LLC needs an employer identification number (EIN) to obtain business permits and licenses, hire employees and open a business bank account. This number identifies your LLC much like a Social Security number identifies a person. You can get one for your LLC immediately and for free through the IRS website.
To learn more about how to fill out the EIN form and to put your EIN to work for your LLC, read our EIN guide.
5. Create an operating agreement
An operating agreement outlines the operational procedures, structure and financial considerations of your LLC. It also records your LLC members’ rights, responsibilities, protections and powers.
In doing so, it provides a means for your LLC to defend its members’ limited liability protection in court, override state LLC operating rules that may contradict your LLC’s interests and resolve member disputes that may otherwise lead to the LLCs dissolution. It is often then used to complete key business tasks such as opening a bank account or engaging an investor.
To learn how to create an operating agreement and how to use it to support your business, read our operating agreement guide.
6. Register to pay state taxes
You must register your LLC with Virginia Tax. LLCs are pass-through entities, meaning members are responsible for paying taxes on their personal income tax returns based on their ownership percentages. This means that a Virginia LLC does not directly pay income taxes.
However, depending on how you operate your business and your industry, you may need to pay other Virginia-based taxes. For example, if you sell physical products or applicable services, you’ll have to collect and pay sales and use tax. If you have employees, you’ll also need to withhold and remit taxes from their paychecks. Other types of taxes your LLC may have to pay in Virginia include:
- Motor vehicle rental tax.
- Vending machine tax.
- Insurance premium license tax.
- Digital media fees.
- Watercraft tax.
- Communications tax.
- Litter tax.
When you register your LLC with Virginia Tax, you will immediately receive tax account numbers for the types of taxes your LLC must pay. These tax account numbers can then be used to pay the applicable taxes.
7. Set up your business to hire employees (if applicable)
If your LLC has employees, you must register your business with the Virginia Employment Commission. This step must be taken if your quarterly payroll is $1,500 or more and you employ a worker for 20 weeks or more during the year. The account allows you to report new employees and pay unemployment taxes for them.
You must also obtain workers’ compensation insurance if you have more than two employees. Workers’ compensation insurance covers your employees’ medical bills and a percentage of their lost wages (if applicable) should they get injured or sick while performing services for your LLC. For help with this requirement, many of the best payroll software providers offer workers compensation insurance enrollment and administrative services, such as Rippling and Gusto.
8. Apply for business licenses (if applicable)
Depending on the nature of your business, you may need to apply for professional licensure. For example, you must apply if you’re a tattooist, contractor, architect, electrician or real estate appraiser. The Virginia Department of Professional and Occupational Regulation publishes a complete list of applicable professions and occupations. Click on your profession to learn how to apply.
Based on the location of your business, you may need to obtain local permits and licenses. For example, in Fairfax County, LLC owners must apply for a business, professional and occupational license (BPOL). You must renew your license every year your LLC exists in the county. Your licensing fee will depend on your company’s gross revenue. For instance, if you make $95,000 worth of sales, you must pay $50 for your BPOL and if you make $10,000 or less, there is no BPOL fee.
Licensing requirements and fees vary by county and city. You should visit your county and city’s websites to ensure your LLC remains in compliance.
Finding and applying for all the licenses and permits that may apply to your LLC can be a tedious process. We’ve created a business licensing guide to help you.
9. Pay a renewal fee
While in most states, LLCs are required to file an annual report, this is not the case in Virginia. However, you must renew your LLC each year by paying a fee. This fee must be paid on the last day of the month in which your LLC was formed each year. You can pay your annual registration fee of $50 online using your CIS account. For guidance on paying your fee, Virginia publishes a tutorial.
Find the best LLC services for Virginia: Best LLC services of 2023