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Virginia Business License Basics

Virginia Business License Basics

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Virginia Business License Basics

Starting a small business in Virginia often means registering with several federal, state, and local agencies. Let’s review common Virginia business license registrations so your business starts off right.

Related: Guide to starting a business in Virginia

Setting Up the Business

Before you can apply for business licenses, you should first establish the business structure. This decision impacts your legal responsibilities, taxes, and how much personal liability you might face. Here’s a brief explanation of each type of entity:

Sole proprietorship: This is the simplest form of business structure, where one person owns and runs everything. There’s no separation between the owner and the business, meaning the owner is personally responsible for all debts and legal actions against the business. Taxes are straightforward as the owner reports business income on their personal tax return.

General partnership: Similar to a sole proprietorship, but with two or more people running the business. Partners share profits and losses, and like sole proprietors, they are personally responsible for the business’s debts and legal issues. Partnerships also don’t pay taxes as a separate entity; instead, each partner includes their share of profits or losses in their personal tax filings.

Corporation: A corporation is a more complex entity that is separate from its owners, providing personal liability protection. Owners, known as shareholders, are not personally responsible for the corporation’s debts or legal problems. Corporations can raise money by selling stock and are taxed separately from their owners. This entity requires more requirements, like having board meetings and record-keeping.

Limited Liability Company (LLC): An LLC blends elements of sole proprietorships, partnerships, and corporations. Owners (members) have limited personal liability for business debts and actions. Like sole proprietorships and partnerships, an LLC can pass income directly to owners to avoid double taxation, a common issue with corporations. This structure offers flexibility in management and less strict requirements than a corporation.

What Licenses Do Virginia Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Virginia may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.

General Business License

There is no general state of Virginia business license; however, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and the business’s activities. Below are a few cities that have licensing requirements. 

  • Virginia Beach: All businesses operating in the city limits of Virginia Beach, even home-based businesses, are required to file a business license application with the Virginia Commissioner of Revenue Office.
  • Norfolk: All businesses and professional operations must purchase a business license before starting in Norfolk. The cost of a business license is based on the estimated annual revenues of the business. Businesses under $100,000 will be assessed a minimum business license fee of $50. Businesses over $100,000 will have a tax rate based on the type of business activities (contractors, retail, repair/personal/business services, financial/real estate/professional services, and wholesale businesses)
  • Fairfax: All businesses operating in the City of Fairfax will apply with the Commissioner of the Revenue for an annual license.  In addition, a business license tax is due annually and is usually based on the gross receipts of the business. Companies operating in Fairfax County are also subject to the Business, Professional and Occupational License (BPOL) Tax.  The BPOL applies to certain businesses with annual gross receipts or purchases of over $100,000.
  • Chesapeake: The Chesapeake Commissioner of the Revenue, assesses business license taxes on any business activity conducted in the city limits of Chesapeake. All businesses must purchase a license before starting operations.
  • Richmond: Before starting a business or conducting business activities in Richmond, a New Business License Application will need to be filed.  The cost of a business license varies depending on the business’s gross receipts and the type of activities performed by the business.
  • Newport News: Within 30 days of starting a business, a Business, Professional, and Occupational License (BPOL) will need to be applied for through the Commissioner of Revenue.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Fictitious Trade Name Registration

While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a name that is different from the full name of the owner(s) to register for a Fictitious Trade Name (also known as a Doing Business As or DBA) with the Clerk of the Circuit Court in each county or city where business is to be conducted.

Building & Zoning Permits

  • Zoning: Depending on the location of the business, it’s important to verify whether the business needs an occupancy permit or has zoning approval to operate the particular type of business. Depending on city requirements, home-based businesses may need to apply for a home occupation permit.
  • Building Permit: If a facility is being constructed or renovated, a building permit may be needed from the city or county building and planning department.
  • Signage Permit: Some municipalities require a permit before adding signage.

Employer Identification Number (EIN)

Many businesses will need to register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of a Social Security Number for an individual. Corporations, Limited Liability Companies, partnerships, and sole proprietorships with employees will all need to register for one. Sole Proprietorships without employees can use the owner’s Social Security Number.

There is no cost for an EIN, and it only takes a few minutes to get.

Learn how to apply for an EIN

Business Tax Account 

Most businesses will need to register with the Virginia Department of Taxation to receive a Virginia Tax Account Number.  As a part of the registration process, businesses selling products at retail and/or offering certain services will register for a Sales Tax Certificate.

Sales Tax Certificate of Exemption

Businesses purchasing merchandise to resell will usually want to obtain a Virginia Sales Tax Certificate of Exemption (also called a Resale Certificate) to not pay sales tax for merchandise being resold to customers.

Professional License

A variety of professions in the state are regulated and need to be registered before offering certain services.  A few common professions that require licensing in Virginia include; home inspectors, landscapers, nail technicians, tattooists, and many more.   Additional information, fees, and licensing requirements for professions are available from the Virginia Department of Professional and Occupational Regulation (DPOR).

In addition to professional licenses, businesses in various industries, such as food establishmentsdaycaressalvage yards, and many others, require licensing.

Contractor License

The DPOR Board for Contractors licenses businesses that construct, remove, repair, or improve facilities on property owned by others. 

Next Steps

These are some of the most common business licenses a new business in Virginia will need to register for. While it’s a good start, there are so many different licenses that may be needed, be sure to double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Virginia Business License Basics

Virginia Business License Basics

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