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If you want to run your own business and protect yourself in the process, you might consider starting an LLC in Virginia. But the process can look intimidating, especially when you think about business regulations, taxes, and hiring. Here are seven steps to follow that make starting your LLC simple.
Why Starting an LLC in Virginia is Worth It
An LLC is a great way for business owners to protect themselves and their assets. It guards your business against claims like lawsuits that would otherwise harm your business and lose you money and personal assets.
Aside from legal benefits, an LLC has tax benefits for your business. It combines your business income with your individual tax return.
That means you don’t need to file separately for your business like you would with most other types of businesses. It also helps you avoid double taxation, where you get taxed on your net income and again on your individual income.
Aside from concrete perks like these, an LLC is a step up from a basic sole proprietorship, showing those who purchase your products or services that you’re legitimate and registered. When customers see you as legitimate, it can lead to greater trust from customers and clients who otherwise may have passed you up for your competitor.
Virginia is a good state for LLCs for a few reasons, including low filing costs, ease of reserving a business name, and no business license requirements for starting an LLC. We’ll look more closely at these benefits throughout this article.
The Investment Needed to Start an LLC in Virginia
Before you start your LLC, you should know it won’t happen overnight. You’ve got to put together paperwork, take care of legalities and licensing, and pay the appropriate fees.
Most of your investment will be time. You’ll likely need a few weeks to draft your agreements and file articles of organization. You don’t need to work with a lawyer to create your LLC, but you may want to in order to ensure that all your legal documents include everything they should.
In Virginia, starting an LLC is pretty affordable. It only takes around $100 to file your articles of organization and reserving your LLC name costs $10. However, if you work with a lawyer, that cost goes up significantly—hundreds to thousands of dollars.
If you have everything you need prepared before you start the process, you can speed things up a little. Still, drafting and submitting your documents will take time. Once you’ve created your LLC, you’ll still need to figure out taxes and fees.
Incfile can help you start your LLC and keep growing once you’ve got everything set up. The software lets you organize and submit all LLC documents, including articles of organization.
It takes you through the steps of creating an LLC and makes all the most intimidating parts of the process manageable. It even works according to the laws in Virginia to ensure that you’re always in compliance.
7 Steps to Start an LLC in Virginia
If you’re thinking of starting an LLC in Virginia, follow these steps to prepare. We’ll help you make sure you’ve got everything you need to make the process more efficient and low stress for you.
Step 1—Name Your LLC
You’ll need the name of your LLC for every step after this one, so it’s a good idea to come up with it first. Your business name must be different from any other business in Virginia. When you create your business name, make sure it’s not too similar to another business that already exists, or it will get rejected.
When you name your business, it must have Limited Liability Company or LLC in the name. The abbreviations can vary, so if you write Limited Company or L.C., that’s fine. Certain companies, like law firms, must have a professional limited liability company, and the same naming rules apply to them.
There are certain words you can’t use in your business name at all without being involved in that type of business, including:
- Land surveying
When you’re creating your business name, you can search your chosen name or list of potential names on the SCC name search website. If yours is available, you can reserve it for a $10 fee for up to 120 days in Virginia, which is a much lower cost for a longer time than most other states.
You can fill out the online form to reserve your business name or submit a paper Form SCC631.
Reserving the name isn’t mandatory, but it does prevent anyone else from taking it while you’re still setting things up.
If you want to do business under a name other than your LLC, you’ll need to file a fictitious business name.
A fictitious business name allows you to operate in a way that doesn’t say “LLC” in the name that your customers see. For example, Gray & Mann LLC might want to operate as Gray’s Contracting. Gray’s Contracting would be the fictitious business name while Gray & Mann LLC is the registered LLC name.
Step 2—Appoint a Registered Agent
A registered agent is a requirement for your LLC. In Virginia, the registered agent is called the registered office.
The registered office receives your official documents, including legal papers, on behalf of your business. Virginia’s regulations are more specific than most states’ when it comes to who can serve as a registered agent.
In Virginia, you can only be a registered agent if you’re part of business management or practice law in Virginia. The registered agent must also be a Virginia resident.
You can make a company that does business in Virginia your registered agent. For example, you can find a company that specifically does business as a registered agent to become yours.
Incfile can help you here. Incfile acts as a registered agent as well as a useful resource for every step of creating your LLC.
You can use them to receive and forward your official mail and legal documents. They even offer free registered agent service for a year.
Incfile can help you prepare all the necessary documents for your LLC. It has tools you can use when it comes time to file taxes. It even helps you with business banking, getting your EIN, and gives you templates to use for contracts.
The platform is easy to understand and navigate, and it works according to Virginia regulations. It’s also affordable for small businesses. When you get Incfile, you pay a one-time fee to have access to everything it has to offer.
Incfile has three packages you can choose from:
- Silver: $100
- Gold: $249
- Platinum: $399
Those prices are specific to LLCs in Virginia.
If you have another type of business or operate in another state, prices may be different. Either way, having Incfile as a resource is affordable for most small businesses, and once you buy it, you have access to it forever.
Step 3—Obtain a Business License
Virginia doesn’t have a general business license requirement the way some other states do. But depending on your industry, you might need one.
In Virginia, businesses like engineers, accountants, lawyers, cosmetologists, and architects all need this specific license. You should look into other licensing requirements in your area.
Each city has its own regulations, so make sure you research them before you start creating your LLC.
Depending on what you sell, you may also have to register with the Virginia Department of Taxation. That way, you can collect sales tax.
Step 4—File Articles of Organization
The articles of organization might sound fancy, but they’re fairly simple. They include documents that officially file your LLC with the Virginia State Corporations Commission.
Most of the time, you can file them online if you want to be efficient. Otherwise, you’ll need Form LLC-1011, which you fill out with the following information:
- LLC name and address
- LLC’s registered agent name and address
- LLC’s principal office address
- LLC organizer signatures
If you don’t live in Virginia but you want to run your business there, you’ll need to file as a foreign entity. In that case, you’d also need a separate form—the LLC-1052—to apply for a certificate of registration. That costs an additional $100 on top of the regular LLC registration fees.
Incfile has everything you need to file your articles of organization. This feature comes with all packages as a basic requirement for creating an LLC. It shows you the specific requirements for your state and business so that you have the correct information and submit it when you need to.
Step 5—Create an Operating Agreement
An operating agreement isn’t a legal requirement for an LLC in Virginia. Once you’ve filed your articles of organization, you’ve technically already created your LLC. However, an operating agreement helps your LLC run smoothly.
Your operating agreement outlines how your business works on a daily basis. It includes the owner’s role in the company, which becomes especially helpful if you have more than one owner. That way, you have less confusion when it comes to who handles what within the company.
You should include details like:
- Each owner’s name and address
- Who manages the physical company
- Financial contributions to the company
- Owner’s stake and voting rights
- How you want to take on new business partners
- Ownership transfer processes
- A meeting schedule
- The process for dissolving the company
While you may not need to use every single detail in the operating agreement, unexpected events happen in business all the time. For example, you may not intend to dissolve your company, but if you can’t sustain the company anymore, you may need to. In this case, it’s a good idea to have that information laid out from the start, so you’re not scrambling at the end.
A business attorney can help you draft your operating agreement. That way, you’ll know the information in it is unbiased and fair for all owners.
Incfile comes with an operating agreement that you can use and change for your business’s unique purposes. It also has contract templates that allow you to create additional agreements as necessary for your business.
With contract examples, you have everything you need to understand the process of drafting official documents for your business. It’s still a good idea to work with a lawyer, but if you can afford to or you want to go it alone, Incfile gives you a great foundation to work from.
Step 6—Understand Employer Regulations
Not all LLCs have employees, but if yours does, that means you’ll need to know how to report and pay taxes on them.
In Virginia, you need to report any new hire to the Virginia New Hire Reporting Center within 20 days. It doesn’t just apply to full-time employees either. If you have a landscaping company that hires seasonal employees, for instance, you have to report them, too, as well as any part-time employees.
You’ll also need to consider employee taxes and unemployment taxes. For employee taxes, you withhold a certain amount from your employees’ pay that goes toward payroll taxes.
If you have employees for more than 20 weeks out of the year or pay more than $1,500 per quarter, you’ll need to pay unemployment taxes. These taxes ensure that if an employee is out of work for reasons beyond their control, they can still get paid.
Along those same lines, you’ll need to pay worker’s compensation insurance if you have more than three employees.
Step 7—Get an EIN and Pay Taxes
To pay taxes and other business fees, you’ll need an employer identification number (EIN). You’ll need this number if you have more than one person who owns or operates your LLC, even if they aren’t an employee.
You don’t have to pay for an EIN, and you get one easily on the IRS website. Incfile comes with an EIN for your business when you use the platform, making it easier for you to get one.
There are also a few different ways the IRS can tax your LLC. Depending on how you file your paperwork, you can be taxed as a C-corporation or an S-corporation. The difference here is that C-corps get taxed as corporate businesses whereas S-corps get taxed with personal income taxes.
Incfile comes with IRS Form-2553. If you plan to file as a C-corp or S-corp, you’ll need to fill out that form. Incfile makes it so you have all the resources you need in one place, so you don’t have to navigate the IRS website to find them.
Keep in mind that Virginia imposes a yearly license tax based on your business’s gross income; there’s also a yearly $50 license fee for Virginia businesses. If you miss the deadline for this fee, you’ll have to pay a $25 penalty.
The process doesn’t stop once you create your LLC. You’ve still got work to do when it comes to building and maintaining your business.
To keep growing your LLC, focus on marketing. Once you get customers coming back, you’re well on your way to meeting your next goals.
You can also look into business process software that helps you stay competitive and keep up with industry trends. As long as you’ve got a solid foundation for your LLC, you can create the business you’ve been dreaming of!