LLC Virginia: Everything You Need to Know
LLCs in Virginia are treated as corporations, limited liability partnerships, or single-member LLCs and are subject to federal income tax classifications. 8 min read
To start an LLC in Virginia, you need to complete a series of steps before and after formation, such as securing licenses and permits, registering for state taxes, and opening a business bank account. Below are all the necessary steps you’ll need to take to seamlessly start a LLC in Virginia.
Is an LLC Right for You?
Before you begin the process, determine if forming a Limited Liability Corporation (LLC) is the right choice for your business. LLCs in Virginia are treated as corporations, limited liability partnerships, or single-member LLCs and are subject to federal income tax classifications.
LLCs provide important legal protections for individual business owners and partnerships, shielding them from personal liability, debts, and, in many instances, court-imposed settlements incurred by the business.
Choose A Name for Your LLC
After ascertaining that an LCC is the right structure for your venture, choose a name that suits your business undertaking and is easily recognizable to potential customers.
To confirm the name is not in use, conduct a name search on the Virginia State Corporations Commission’s (VSCC) Office of the Clerk website. The easiest way to ensure your name will be approved is to make it distinguishable from other LLCs and include “Limited Liability Company,” “LLC,” or “LC” at the end.
File a name reservation application with the VSCC for $10. The reservation form must include: LLC name, applicant’s name and address, signature of registered agent and date, and a daytime phone number and contact person. A name may be reserved for up to 120 days. You can renew the reservation for successive periods of 120 days, as long as you do so during the 45-day period before the reservation expires.
Select A Registered Agent
You need to select a registered agent for your Virginia LLC. A registered agent must be a person or business that can send and receive legal documents on behalf of your LLC during 9 a.m. to 5 p.m. business hours on regular Monday to Friday business days.
The registered agent must be a Virginia resident with a physical address in the state who is an LLC member or manager, a member or manager of an LLC that the LLC is associated with, an officer or director of a corporation the LLC has a relationship with, or a general partner of a general or limited partnership that has a relationship with the LLC, a trustee of a trust that has an association with the LLC, or any member of the Virginia State Bar. You can also elect an individual within the company, including yourself, to be the LLC’s registered agent.
A registered agent can be particularly beneficial for anyone who wishes to form a Virginia LLC but does not live in the state. A registered agent also ensures the privacy of LLC members by protecting their home addresses and personal information from public records.
To register your LLC, file Articles of Organization (Form LLC-1011) on the VSCC’s New Entity Formation webpage, or by mail for $100. The LLC’s name, address, and purpose; registered service agent’s name and address; founding date; and the name and address of one or more organizer must all be documented in your LLC’s Articles of Organization.
It will cost $25 for filing a cancellation of your LLC every year on the anniversary of the LLC’s formation, and the state assesses a $50 registration fee.
Once you have registered your Articles of Organization, your LLC will be assigned a Virginia Tax account number. This will be the number that you include on tax filings, payments and returns. This is also important if your LLC will be selling retail goods and services because you will need this number to register for Virginia sales tax collection. Most stationary businesses can do so by completing Form ST-9 but check with the Department of Taxation to ensure you are properly registered.
Foreign LLC in Virginia
Any LLC based in any other state must register with the VCCC to legally conduct business in Virginia. They are officially called “foreign LLCs.”
As with Virginia-based LLCs, foreign LLCs must appoint a registered agent who meets the same criteria as that required for in-state businesses. If you are an out-of-state business that wants to expand into Virginia, file an Application for a Certificate of Registration to Transact Business in Virginia as a Foreign Limited Liability Company (Form LLC-1052) on the VCCC’s New Entity Formation webpage for $100.
The application must be accompanied by a less than one-year-old certified copy of your LLC's original Articles of Organization from its home state. It must be certified by the home state
Secretary of State that it is a “true and correct copy” of the official records. A Certificate of Good Standing will not be adequate to register as a foreign LLC in Virginia.
Secure an EIN
Regardless of how many employees, if any, your LLC has, secure an IRS Employee Identification Number (EIN) by completing an online application on the IRS’s website. EINs are free and required by banks to open a business checking account. If your business involves retail transactions, you must collect sales tax, which will require your LLC to register with the Virginia Department of Taxation.
Virginia LLCs that hire employees must register for Unemployment Insurance Tax and Employee Withholding Tax. Register for Unemployment Insurance Tax through the Virginia Employment Commission and Economic Development and for Employee Withholding Tax through the Virginia Department of Taxation.
Obtain Business Licenses & Permits
To operate your LLC, check with local county and city agencies to ensure your LLC complies with municipal zoning codes and has secured any required permits or certifications they may need. Depending on the nature of your business and its location, ensure you are complying with federal, state, and local government regulations.
The U.S. Small Business Administration (SBA) publishes a guide that outlines all federal business licenses and permits that may apply to your business. To learn about what professional licenses may be required by the state, contact the Virginia Department of Professional and Occupational Regulations.
Establish Business Accounts
With your LLC’s EIN and other legal documents, establish banking accounts and credit cards that clearly separate business expenses, income, and assets from the personal finances of its owners. Not only does this protect the business and its owners, but it also simplifies filing taxes.
Annual Registration Deadlines
Unlike other states, Virginia does not require LLCs to file annual renewal reports, but it does mandate they pay an annual $50 registration fee to the VCSS. The registration fee is due the first day of the second month before the month in which the company was founded. In other words, 10 months into your inaugural year in business, the renewal registration fee is due. From thereon, it is due every year on that date. LLC’s that miss the deadline pay a $25 late fee.
Pay the annual fee online at the VSCC’s e-file web page: https://sccefile.scc.virginia.gov/ or by mail.
This is an important procedure because LLCs that do not pay their annual renewal registration after three months will be automatically dissolved by the state. Failing to follow through on this simple bureaucratic procedure inadvertently costs Virginia businesses unnecessary expenses every year in re-registering their LLCs. It also exposes owners to personal liability until the LLC is re-registered.
Most Virginia LLCs file the same tax return with the state as they file with the IRS. Virginia LLCs are classified as “pass-through” tax entities and, as such, do not pay income tax directly to the state, although individuals in the LLC do pay personal income taxes. Multi-member Virginia LLCs with taxable income derived within the state must file a partnership return (Form 502) for informational purposes.
For a comprehensive state-by-state listing of LLC tax obligations, consult the SBA’s webpage.
For Virginia state tax purposes, it is a good idea to register your LLC with the Department of Taxation through the VATAX online service, or by filing Form R-1
Obtain A Certificate of Fact of Existence
Among the most important assets in maintaining your LLC in Virginia is securing a Certificate of Good Standing that verifies the business entity was properly formed and has been maintained in solvent and reputable fashion. This is a valuable document to have in seeking loans from banks, expanding your business beyond Virginia, or in receiving permits, licenses, and certifications vital to your LLC’s success. Certificates of Good Standing are available through the Virginia Secretary of State’s office for $6.
Get Liability & Workers’ Comp Insurance
Opening a business means making decisions about a wide range of insurance coverage, including general liability (GL), business owners’ policies, and depending on the size and location of the business, medical insurance. If you provide professional services, a professional liability insurance policy is a worthwhile investment. If you are a sole proprietor, purchasing insurance can be relatively inexpensive, as little as several hundred dollars annually for most of the types of coverage necessary.
Generally, Virginia requires any business with two or more employees to purchase workers’ compensation insurance or become self-insured. There are many exceptions and exemptions depending on your LLC’s size and the nature of its business spelled out on the Virginia Workers' Compensation Commission’s webpage and on this Q&A sheet.
Negotiate an Operating Agreement
It is a good idea for any LLC with more than one member to have an Operating Agreement. Although the state does not mandate them for LLCs, Virginia recognizes Operating Agreements as legally-binding governing documents.
Without an Operating Agreement, LLC owners could be personally subject to default designations for Virginia LLCs. In addition, most banks will expect that your LLC will have an Operating Agreement to ensure you are properly prepared and running your business in a professional manner.
Without these negotiated agreements on file with your registered agent, courts often limit an LLC’s legal capacity to enforce certain rights against other parties because those parties were never put on notice that you were preserving those rights.
Not discussing important issues among co-owners can lead to costly legal battles that far exceed the cost of hiring a business attorney at the beginning to draft pivotal LLC Operating Agreement in a correct fashion.
How to Form a Virginia LLC Without an Attorney
If you want to start a small business, you can form a new LLC in Virginia without hiring an attorney. It will save the expense of attorney’s fees. A single-owner LLC would normally cost $1,250 in attorney’s fees, plus the filing fee. So, you are saving more than $1,000 in fees by doing it yourself, but you also will not have the counsel of an experienced business attorney and will be exposed to many other risks. By forming an LLC without the advice of an attorney, you accept those risks, and you’re on your own.
LLCs with more than one member are strongly advised to hire a Virginia LLC attorney to provide business tax planning, legal guidance, and a full package of LLC legal documents. An attorney can advise you on “best practices” for handling disagreements, tax issues, exit strategies, and how much an owner will be paid for being bought out of the business. Not discussing these important issues can become points of contention because business owners may have different expectations or understandings.
The benefits and security in hiring an attorney are not limited to multi-member LLCs, but those operated by a sole owner and to anyone working in their own business full-time, who has invested significant assets into their business, or wants a solid legal foundation for their company.
If you need help determining how to proceed in forming a business in Virginia, you can post your legal needs on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.