A Virginia LLC is a way to legally structure your business. The key factors that make limited liability companies attractive are convenience, liability protection, and relative ease to do business.
Note, that while business is an important aspect to create an LLC in Virginia, it is not the only consideration. It’s also possible to use LLCs to hold assets like real estate, vehicles, etc.
Our quick guide on how to start an LLC in Virginia presents the highlights of what it takes to form an LLC in Virginia and some pointers to make it easier for you.
1. Choose A Name For Your Virginia LLC
Picking a name is the first step to forming an LLC. The name you choose should be unique and distinguishable. This means you can’t have a name that is the same or very similar to existing entities registered with the state of Virginia.
So, once you’ve picked a name, you’ll have to check if it’s available to be registered. It helps to have a few names in mind. That way, if your first choice isn’t available, you can move to the next one.
Virginia has two tools that you can use to check for the availability of names.
- Business entity search shows existing businesses/entities.
- Virginia SCC: Name Availability Search is a more “intelligent” tool that shows if a name is available for use.
Additional checks and diligence may still be needed, but these tools will set you on the right path. You can also contact Virginia State Corporation Commission for name assistance.
The phone number is 804-371-9733, available from 8:15 am – 5:00 pm ET on regular business days.
Naming Designators For LLCs in Virginia
The name of any LLC should end with a proper designator. This is usually “limited liability company” or its legally accepted variations. These include:
- LLC
- L.L.C.
- Limited Liability Company
- Limited Company
- LC
- L.C.
2. Appoint A Virginia LLC Registered Agent
Every LLC in Virginia must maintain a registered agent in the state. A registered agent is a person or entity (company) that receives ‘service of process’ on behalf of your LLC. This includes some correspondence from the state, lawsuits, subpoenas, summons, and other relevant documents.
If a person serves as the registered agent, they must be above 18 years of age and a legal resident of the state. Companies serving as registered agents should be licensed/registered to do business in the state.
Apart from those already mentioned, the registered agent should meet the following requirements:
- Have a physical street address in Virginia (PO Box addresses aren’t accepted).
- Maintain normal business hours (9 am – 5 pm). Generally speaking, this means the registered agent should be available for communication/receiving mail when and if needed.
As such, you can exercise the following options when appointing a registered agent for your VA LLC:
- You can be the registered agent for your LLC
- Other members of the LLC or friends/family members can be appointed as registered agents
- If you have another business or company, it can be the registered agent (an LLC can’t be its own registered agent)
- You can hire a commercial registered agent
Hiring commercial registered agents is a viable option since you can rely on them to handle these processes. Additionally, they’ll have no problem maintaining business hours and thus availability won’t be a problem.
Since a registered agent’s address and relevant contact information forms part of the public record, this option may look more attractive for people concerned about their privacy.
3. Filing VA LLC Articles Of Organization
Once you’ve completed the Virginia LLC requirements, it’s time for the key step – filing the Articles of Organization. Your LLC comes into existence once the state accepts (or approves) the Articles of Organization. The documents will be filed with the Virginia Corporation Commission.
You can file these documents online or via mail. Filing online is more convenient as it’s faster and more convenient. To file online, visit the Virginia New Entity Formation page and follow the process.
When filing through mail, download form Articles of Organization (Form LLC-1011). Mail the completed form, along with the filing fee to:
Clerk of the State
Corporation Commission
PO Box 1197
Richmond, Virginia 23218-1197
Virginia LLC filing fee (sometimes also called the Articles of Organization fee), is $100. If you’re filing online, the fee can be paid via most credit cards. Those filing through mail have to include a check or money order payable to “State Corporation Commission”.
Generally, it’s recommended to make the check/money order worth $103.50. This includes a $3.50 fee for a certified copy, which you’ll need for your records.
4. Create An Operating Agreement
An Operating Agreement is not a legal necessity for your LLC. However, it is strongly recommended and can come in handy if you ever do find yourself in a legal jam. The Operating Agreement is an ‘internal document’ of your company. As such, you don’t need to file it with the State Corporation Commission or any other government agency.
Numerous facets of your business operation and other detail can become a part of the Operating Agreement. These include (but are not limited to) how much of the company each member owns, distribution of profits/losses, approach to taxation, responsibilities, conflict resolution, and more.
While it is immensely important for multi-member LLCs, single-member companies too should have an operating agreement in place.
This shows your company is doing business as intended and has covered all necessary facets for good practice.
5. Get A Federal Tax ID (EIN) For Your VA LLC
An Employer Identification Number (EIN) is a Federal Tax ID. It’s known by several other names as well, including FEIN, Federal Employer ID Number, and more.
To get an EIN for your Virginia LLC, you’ll have to file with the IRS. The filing is free and can be completed online.
However, there are a few cases where filing online may not be possible. This can happen if you don’t have an SSN or if the owner of the LLC is another entity/company. In this case, you can file Form SS-4.
You can file Form SS-4 via mail or fax. The latter is usually faster and is processed in days. Filing via mail can take a few weeks.
In some ways, the EIN is like the SSN for your business. You don’t just need it for tax purposes, but also several other functions. These include having a separate bank account for your LLC, getting a credit card for your business, hiring employees, collecting and filing local and state taxes, and more.
You should file for the Federal Tax ID (EIN) only after your LLC has been approved by the state.
6. Annual Registration Fee For Your Virginia LLC
Every LLC in the state of Virginia must pay an Annual Registration Fee of $50. This fee is due every year, on or before the last day of the month in which your LLC was created. So, if your LLC was created in March 2020, you must pay the fee before April 1, 2021.
Virginia Corporations Commission will mail a notice of assessment to the LLC’s registered agent. Failure to pay the annual registration fee on time will result in a penalty of $25.
7. Permits, Licenses, And Taxation
Necessary permits for your Virginia LLC depend on the specific industry of your business and local and state laws. Some laws and fees/taxes for your business will be laid down by the city/county where your business is operating. Others will depend on state and federal laws.
Generally speaking, when conducting business, consider permits, licenses, and taxation on three levels:
- Local
- State
- Federal
As for federal income tax, LLCs are usually considered pass through entities. This means that the income from the company can be reported as part of your personal returns. While “pass through” is the default approach, you can also have your LLC taxed as a corporation, depending on your preferences.
Good and responsible tax planning is important for any individual as well as a company. Remember to stay compliant with tax and legal regulations, and consider local, state, and federal roles in the process.