An LLC, or Limited Liability Company, is a type of business entity that provides limited liability to its owners. This means that the personal assets of the LLC’s owners are protected in the event that the business is sued. An LLC can be set up with just a few simple steps, and it can be operated like any other type of business.
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, that helps to protect the business owner’s personal assets.
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.
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Steps to Form a Virginia LLC
This guide will provide you with the information you need to start an LLC in Virginia. The process is relatively simple, and I’ll guide you through the process and answer some common questions along the way.
Step 1: Choose a Name for the LLC
The first step in forming a 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 Virginia. The Virginia State Corporation Commission makes it easy to search and verify if your LLC name is available. Here is more information on how to do a Virginia LLC name search.
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
– Limited Company
A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
If there is an LLC name that you want to use, but you are not ready to register the LLC, the Reservation of a Business Entity Name Form SCC631 can be filed with the Commonwealth of Virginia State Corporation Commission to 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 fictitious name (sometimes referred to as a trade name, assumed name, DBA, or Doing Business As name). To register a fictitious name, the Certificate of Assumed or Fictitious Name will need to be filed with the Commonwealth of Virginia State Corporation Commission.
Before settling on a name, you may want to do a domain name search (also referred to as a URL) search to see if there is a domain available to match your business name.
Step 2: Appoint a Virginia Registered Agent
Every LLC in Virginia is required to have a registered agent. A registered agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.
The basic requirements to be a registered agent in Virginia include:
– The agent must be a 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 Virginia.
Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when running the business from home or while still employed. Hiring a commercial registered agent service like Northwest Registered Agent will help keep the owner’s names from being listed on the state’s website.
Step 3: File the Virginia Articles of Organization
The paperwork to officially create an LLC in Virginia is called the Articles of Organization. To submit the paperwork, either file online through the Virginia State Corporation Commission’s website. If you prefer to fill out and mail the application, download the Articles of Organization (Form LLC-1011).
What To Do After Forming A Virginia LLC
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 Virginia LLC Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, LLC member responsibilities, how profits and losses are distributed, how new members are added, and more.
Most states do 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
If the LLC will hire employees or is owned by more than one member, an EIN is required.
The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) 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.
If an Employer Identification Number isn’t required, the LLC can use either the owner’s social security number or register for an EIN.
Related: How to Apply for an EIN
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 Virginia Certificate of Good Standing to prove the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
In addition to forming the LLC, there will likely be various business licenses and permits needed before starting the business. Some common registrations include:
- Business License – Some cities require businesses to obtain licensing before starting.
- Professional License – Certain services, such as barbershops, accountants, salons, and others, must be licensed.
- Sales Tax Certificate – To sell products and certain services, registration with the Virginia Department of Taxation will be necessary.
File Virginia LLC Annual Registrations
Instead of an annual report, LLCs are required to file an annual registration with the Virginia State Corporation Commission. The annual registration fee is $50 and is due each year on the last day of the month the LLC was formed. For example, if the LLC were formed on November 15th, 2022, the first annual registration would be due on November 30th, 2023.
If the Annual Registrations aren’t paid by the due date, the Virginia Corporations Commission will assess a fine to the LLC and eventually dissolution if it is not paid.
Virginia LLC FAQs
How much does it cost to start an LLC in Virginia?
The Virginia State Corporation Commission filing fee to start an LLC in Virginia is $100.
How long does it take to start an LLC in Virginia?
LLCs in Virginia that are formed online through the Virginia State Corporation Commission’s website are processed immediately, while mailed-in forms can take up to two weeks.
Is there a yearly fee for an LLC in Virginia?
Each year, an annual report and $50 state filing fee must be sent to the Virginia State Corporation Commission.
Where do you check if your Virginia LLC name is available?
You can check if your Virginia LLC name is available by searching the Virginia State Corporation Commission’s business entity registry.
If you find that your desired name is already in use, you can try variations on the spelling or choose a different name altogether, but no two names can match.
Can you be your own Registered Agent in Virginia?
Yes! Actually, anyone can act as a Registered Agent, provided they are at least 18 years old, reside in the state of Virginia, and are generally available to receive documents during normal business hours.
Does an LLC need a business license in Virginia?
It’s sometimes thought that the LLC and business license are the same in Virginia, but they aren’t. An LLC is referred to as a business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to operate legally.
Most businesses in Virginia will need to register with a variety of government agencies. Virginia business license requirements are based on what the business does or where it is located in the state, not on the type of entity.
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 operate physically in Virginia. Physically operating means having a presence, such as having an office or hiring an employee.
Related: What is a foreign LLC?
What is a Series LLC?
A traditional LLC is the most common form of LLC, however, some states, such as Virginia, allow for the creation of a Series LLC. A series LLC is comprised of a parent LLC with one or more individual series within the umbrella of the LLC. The individual series are protected from liabilities and losses suffered by the other individual series and the holding company.
Read more: What is a Series LLC?
What is a Professional Limited Liability Company?
Businesses that require occupational licensing in Virginia, such as accountants, architects, veterinarians, etc., can register a Professional LLC (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.