West Virginia Business License Basics

Starting a business in West Virginia begins with an idea, but making that idea a reality involves officially registering your company.

Every business has different needs, and this guide provides a detailed overview of how to set up a business properly in West Virginia. We’ll walk you through each step, from selecting your business structure to obtaining the necessary licenses, so you can quickly move forward and bring your business to life.

Related: Starting A Business In West Virginia Checklist

Step 1: Business Structure

Our first step is to formally form the company, which involves selecting a business structure (also called a legal structure or business entity). A business structure is how a business is set up to conduct business. Choosing the right business entity is important because it can affect your taxes, legal liability, and ability to raise capital. There are four common types of business entities to choose from: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

Related: Comparison of Business Structures

A sole proprietorship is the most basic form of business entity. One person owns and operates it, and there is no legal distinction between the owner and the business. The owner is personally responsible for all business debts and liabilities.

Pros

• Easiest to establish and maintain, with minimal paperwork and legal requirements.
• Complete control over the business and decision-making.
• Pass-through taxation, which means that profits are taxed as personal income.

Cons

• Unlimited personal liability, putting the owner’s personal assets at risk.
• Limited fundraising options, as selling ownership in the business isn’t possible.
• Business continuity is dependent on the owner.

Related: How to Start a Sole Proprietorship in West Virginia

A general partnership is similar to a sole proprietorship but has two or more owners. Each partner contributes to the business and shares in the profits and losses. Partners are personally responsible for all debts and liabilities of the partnership.

Pros

• Relatively easy to establish and maintain.
• Shared decision-making and responsibilities can lead to better business outcomes.
• Pass-through taxation, which means that profits are taxed as personal income for each partner.

Cons

• Unlimited personal liability for each partner.
• Potential for disagreements and conflicts among partners.
• Business continuity may be jeopardized if a partner leaves or dies.

A corporation is a separate legal entity from its owners, and one person or many people can own it. The owners are called shareholders, and they elect a board of directors to manage the corporation (who may just be the owner(s). The corporation is responsible for its own debts and liabilities, though a bank will likely require a personal guarantee from the shareholders to secure a small business loan.

Pros

• Liability protection for shareholders.
• Easier to raise capital through the sale of stocks.
• Business continuity is not affected by the death or departure of shareholders.

Cons

• More complex and expensive to establish and maintain, with specific legal and regulatory requirements to follow.
• Potential for double taxation, as both corporate profits and shareholder dividends may be taxed.

Related: How to Form a West Virginia Corporation

A Limited Liability Company (LLC) is a hybrid between a corporation and a sole proprietorship/partnership. It provides limited liability protection to its owners (called members) while allowing them to be managed like a sole proprietorship or a partnership.

Pros

• Limited liability protection for members (owners).
• Greatest flexibility in how the business is taxed.
• Flexibility in management structure.

Cons

• More paperwork and legal requirements than a sole proprietorship or general partnership.
• Potentially higher costs to establish and maintain compared to simpler business structures.

Related:  How to Form a West Virginia LLC

Step 2: Business Name

After choosing a business structure, many businesses in West Virginia will need to move on to selecting a business name, which is called a West Virginia Trade Name.

For sole proprietors and general partnerships, this step often involves registering a “doing business as” (DBA) name, also known as a Trade Name in West Virginia. These business structures can operate under the owner’s legal name by default without needing to register. However, registering a Trade Name allows these businesses to operate under a different name.

For example, a sole proprietor named Jane Smith, who runs a kayak rental business in Fayetteville, might choose to register the Trade Name “New River Adventures” instead of operating as “Jane Smith.”

Before registering a Trade Name, sole proprietors and general partnerships (corporations and LLCs too) must first do a West Virginia business name search.

Corporations and LLCs won’t usually register for a Trade Name since they create a unique entity name during formation. Some may choose to do so if they want to operate multiple businesses under one legal entity, maintaining the liability protection of their corporate structure.

Step 3: Federal Employer Identification Number 

The Federal Employer Identification Number (FEIN), also known as an Employer Identification Number (EIN), is a unique nine-digit identifier assigned by the Internal Revenue Service (IRS) to businesses. Many companies require this number for various purposes.

You’ll need an EIN if:

• Your business has employees
• Your business operates as a corporation, partnership, or multi-member LLC

The owner’s Social Security number is often used for sole proprietorships or single-member LLCs without employees. However, these businesses may still opt for an EIN to avoid using personal identification on tax forms.

Obtaining an EIN is a straightforward and cost-free process. The most efficient method is to apply online through the IRS website, which typically takes only a short time to complete. For those who prefer traditional methods, applications can be submitted by mail or fax using Form SS-4, though these options generally take longer to process.

How to Apply for a FEIN

Step 4: Professional & Industry Licensing

Many occupations in West Virginia require professional licenses before certain services are offered. The West Virginia Association of Licensing Boards oversees the licensing process for most professions, a few of which include:

• Accountants
• Cosmetologists
• Landscapers
• Massage therapists
• Architects
• Attorneys
• Chiropractors
• Dentists
• Engineers
• Real estate agents

Each profession has its own licensing board with specific requirements, fees, and renewal processes. For detailed information, visit the West Virginia Association of Licensing Boards website.

Instead of professional licensing, some industries require industry-specific licensing. A few of these include:

• Contractors: For building projects valued over $2,500, contractors must obtain a license from the West Virginia Division of Labor.
• Food Establishments: Regulated by the West Virginia Department of Health and Human Resources
• Daycares: Licensed through the West Virginia Department of Health and Human Resources
• Alcohol Sales: Permits issued by the West Virginia Alcohol Beverage Control Administration
• Insurance Agencies: Licensed by the West Virginia Offices of the Insurance Commissioner

Before starting operations, research your industry to ensure all necessary licensing requirements are being met.

Step 5: Business Registration Certificate

The Business Registration Certificate, often called a West Virginia Sales Tax Permit, is a requirement for anyone conducting business in West Virginia. It serves as the state’s official recognition of your business and is necessary for various tax purposes, including sales tax collection.

Who needs to register: Any person or entity engaging in business activity within West Virginia must obtain this certificate. The state defines business activity broadly and covers:

• All purposeful revenue-generating activities
• Activities aimed at direct or indirect gain or economic benefit
• Activities of the state and its political subdivisions involving the sale of tangible personal property
• Service rendering that competes or may compete with another person’s activities

The Business Registration Certificate (Form WV/BUS-APP) can be filed with the WV State Tax Department.

Step 6: Certificate of Exemption

The West Virginia Certificate of Exemption, also known as a resale certificate, allows businesses to purchase inventory without paying sales tax on their inventory purchases. Instead, these businesses collect sales tax from the end consumer when the product is sold.

Who needs one:

• Retailers purchasing inventory for resale
• Wholesalers acquiring goods to sell to other businesses
• Manufacturers buying materials to create products for sale
• Service providers purchasing supplies used directly in their services

To obtain this certificate, businesses must register with the West Virginia State Tax Department (see the step above).

Step 7: Business Licenses

While West Virginia does not require a state-wide business license, many cities and towns in the state have their own local licensing requirements. Here’s an overview of common local business licenses in West Virginia:

• General Business License: Some cities require a general business license for all businesses operating within their jurisdiction. For example, the City of Charleston requires a Business & Occupation (B&O) Tax Certificate issued by the City Collector’s Office.
• Contractor License: Some municipalities require additional licensing for contractors. For instance, the City of Huntington requires contractors to obtain a Business License from the City Clerk’s Office in addition to state-level licensing.
• Food Service License: Food service establishments often require special licensing. In Morgantown, food businesses must obtain a Food Service Establishment Permit from the Monongalia County Health Department.
• Other Specific Licenses: Some cities may require specific licenses for certain business types. For example, the City of Wheeling requires a separate license issued by the City Clerk’s Office for businesses selling alcohol.

It’s important to note that licensing requirements can vary significantly between cities in West Virginia. Business owners should always check with their local city or town government to ensure compliance with all applicable licensing requirements.

Step 8: Local Building & Zoning Permits

When setting up a business location in West Virginia, it’s important to understand and comply with local building and zoning regulations before finalizing a property purchase or lease. Some items to consider:

Zoning Regulations: Zoning laws determine how properties in specific areas can be used. Check with your local planning or zoning department to confirm that your intended business use is allowed in your chosen location.

Home-Based Businesses: If you’re planning to run a business from your home, be aware that some areas have specific regulations for home-based businesses. These may limit factors such as customer traffic, signage, or the types of businesses allowed in residential areas.

Building Permits: Most construction projects, renovations, or significant changes to a building require a permit. This includes both new constructions and modifications to existing structures.

Certificate of Occupancy: Many municipalities in West Virginia require a Certificate of Occupancy before a business can begin operations in a building.

To navigate these requirements, you’ll typically work with your local government’s planning, zoning, or building department. Each municipality may have slightly different processes and requirements, so it’s advisable to contact your local office directly.