West Virginia is one of the best states in which to form a corporation. Some of the reasons to incorporate in West Virginia include eliminated business franchise tax, reduced corporate net income tax as well as no new business taxes in over two decades.
The following step-by-step guide will show you how to set up a corporation in West Virginia.
1. Select a name for your corporation
Forming a corporation in West Virginia begins with deciding on a business name. This is the first step in the process. Additionally, your West Virginia corporation name must be unique and comply with the state’s naming requirements.
General corporate name guidelines
Bear the following naming guidelines in mind when deciding on your West Virginia corporation name:
- Your West Virginia corporation name must not include any phrase or word which suggests that the corporation is formed for any other purpose other than what’s contained in your company’s Articles of Incorporation
- Your West Virginia corporation name cannot use words such as banking or insurance unless your business activities include insurance or banking
- Additionally, the words engineer or engineering should only be used if your corporation is practicing professional engineering or one of the principles is a registered West Virginia professional engineer
- Your West Virginia corporation name must contain one of the following words: company, corporation, limited, or incorporated. Alternatively, it should include an abbreviation of any of these words
- When it comes to certain professions, there are specific requirements and restrictions. So ensure that you look up professional corporations prior to deciding on a business name if you intend to form a professional corporation
- Your West Virginia corporation name cannot include “911”
- Ensure that your West Virginia corporation name is significantly different from other existing business names in the state of West Virginia. Also, ensure that it is significantly different and distinguishable from West Virginia reserved names
The West Virginia state statute contains important naming requirements and guidelines to guide you in your decision.
Once you’ve decided on an ideal and unique West Virginia corporation name, it’s time to start thinking about protecting your new business and also making it stand out from the competition. In order to do this, you’ll need to trademark your West Virginia corporation name.
Additionally, a trademark ensures that customers are never confused about who they’re doing business with. If you’d like to go ahead and trademark your West Virginia corporation name, there are several ways to do so.
The first option is to trademark your business name via the US Patent and Trademark Office. This is called a federal trademark and will give your business name nationwide protection.
Next, you may trademark your West Virginia corporation name with the West Virginia Secretary of State. This will provide your business name with statewide protection.
Alternatively, you may trademark your West Virginia corporation name on both the federal and state level.
An entity name is simply a business’s legal or registered name. This is the name that is stipulated in all your corporation’s formation documents and is also the name that the state uses to identify your business.
DBA (Doing-business-as) name
A DBA is short for (doing business as) name. In the state of West Virginia, it is referred to as a trade name. A trade name allows a business to operate under a different name from its entity name.
While the DBA does not offer any type of protection for your personal assets, it’s still a good idea if you plan on conducting business under any other name aside from your entity name.
When you register your West Virginia corporation name as a trade name or DBA, you are essentially letting other business owners know that the name is no longer available for their use.
The first step in registering a trade name in West Virginia is visiting the West Virginia Secretary of State’s website and conducting a DBA name search.
Once you’ve determined that the DBA name is indeed available, you may go ahead and file a trade name registration online with the West Virginia One-stop Business Portal.
2. Nominate a registered agent
Your West Virginia corporation needs a registered agent. In the state of West Virginia, a registered agent is called an agent of process. These individuals are required by law for any formal business in the state.
An agent of process is tasked with receiving legal documentation and official paperwork from the state on your corporation’s behalf.
Your West Virginia agent of process may be an individual or business entity. However, if you plan on nominating an individual, then the agent must meet a few key requirements such as:
- The West Virginia agent of process must be of the legal age
- The West Virginia agent of process must consent to the appointment
- The West Virginia agent of process must maintain availability during business hours
- The West Virginia agent of process must have a physical address in the state where business activities are conducted
You may nominate yourself as your corporation’s own registered agent. However, you need to consider the fact that you’ll need to remain available at the office address during normal business hours.
For this reason, it is recommended that you nominate another member of your corporation to serve as the agent of process.
3. Appoint initial directors at the organizational meeting
Prior to filing your corporation’s Articles of Incorporation, you’ll need to call an organizational meeting.
During this organizational meeting, a few tasks will need to be completed, such as determining your corporation’s share structure, selecting a board of directors, creating, approving, and ratifying bylaws, as well as executing an incorporator’s statement.
When it comes to appointing initial directors, your corporation will need at least one director to oversee the operations of the company until you call the first shareholder meeting.
The corporate director is tasked with adopting, amending, and repealing corporate bylaws as well as electing, supervising, and removing corporate officers.
4. File Articles of Incorporation
Until you file the Articles of Incorporation, your West Virginia corporation is not officially or legally formed. This document officially creates your corporation and therefore needs to cover some basic information such as:
- The name, and street address of your West Virginia corporation
- The purpose of your West Virginia corporation
- The email address and website of your corporation [if applicable]
- The address and name of the agent of process
- The number of authorized shares your West Virginia corporation is permitted to issue
- The names and addresses of the corporation’s incorporators
- The number of acres of land in the state that the corporation already holds or is expected to hold
Once you have all of the relevant information at hand, go ahead and compile the Articles of Incorporation online West Virginia One Stop Business Portal. Alternatively, download Form CD-1 and have it mailed to the Secretary of State’s office.
Please note that this form only is only intended for starting a corporation with one share class. Alternatively, in the event that your corporation needs a multiple share class structure, you may compose your own articles.
5. Create and approve bylaws
Every business in the state, irrespective of business structure or business type, will need to compile corporate bylaws. This is because the bylaws is a document that officially outlines the processes, procedures as well as rules for how the corporation is going to be governed.
Essentially, it’s more or less a Constitution for your company and clarifies the priorities for members of the corporation. Therefore, the bylaws will need to supplement what is contained in state law and the Articles of Incorporation.
When creating your bylaws, ensure that you use the bylaws temples to help you out and include relevant information such as:
- The process of governing the corporation
- The roles and responsible inches of corporate directors and corporate offices
- The process of storing corporate records
- How annual meetings and the annual shareholder meeting will be held
- The process for electing officers and directors
- How voting procedures will be conducted
- How company disputes will be handled and resolved
- The date of the annual shareholder meeting
- The process of adding and amending bylaws
- The process of negotiating corporation contracts
While the bylaws do not need to be submitted to the West Virginia Secretary of State, it does need to be kept on file in a safe place for reference as and when needed.
6. Select a share structure
A share of stock is a component of ownership of the corporation. Each share of stock acts as a percentage of ownership of the corporation.
So if your corporation issues one share of stock or decides to issue stock to a stockholder in the form of one share, then a hundred percent of the corporation is owned by that individual. Shares may be organized into classes.
Every class, titled a shared class, contains a different set of privileges and rights. West Virginia corporations may have multiple classes. Additionally, each of those classes may hold any sum of shares.
7. Obtain an EIN
An EIN is short for Employer Identification Number. Essentially, it is a tax identification number issued by the Internal Revenue Service, or the federal government. It’s mainly used to identify business entities in the state and also keeps track of tax reporting.
The EIN is more or less a Social Security number but is designated for your corporation. Some of the reasons why you need an EIN is because firstly, it is required by law.
However, it’s also useful and will need to be provided when opening up a business bank account, submitting paperwork for federal and state tax purposes, as well as hiring company employees.
In order to obtain an EIN, you need to apply on the IRS website, where you’ll receive your EIN immediately. There is no charge for the application, and the EIN is 100% free.
Alternatively, if you prefer to download the EIN Application Form, you may do so, and then have it mailed to the Internal Revenue Service at the following address:
Internal Revenue Service
Cincinnati, OH 45999
When filing the Articles of Incorporation online on the West Virginia One-stop Business Portal, your EIN is included in the registration process.
8. File West Virginia state taxes
Your West Virginia corporation may need to pay one or more corporate taxes depending on the type of business you’ve formed:
- Corporate income tax: West Virginia does have a corporate income tax, fixed at a flat rate of 6.5% of your corporation’s taxable income.
- Employer taxes: If you have employees, then you’ll need to pay employer taxes.
- Sales and use tax: Any corporation in the state of West Virginia selling certain goods and services to customers will need to collect and pay sales tax. So you have to register with the State Tax Department in order to do this.
9. West Virginia business licenses and permits
Depending on the type of West Virginia business you’ve created, may need to secure certain licenses and permits before legally operating the state:
- General business license: All businesses in the state of West Virginia, irrespective of the type of business, will need to acquire a statewide or general business license to operate in the state legally. The license must be obtained via the West Virginia Tax Department.
- Occupational license and permits: If you’re offering services such as contractors, builders, etc., then you may need to acquire an occupational license before offering your services in the state legally. However, this depends on the exact nature of your business; therefore, you’ll need to check with the Division of Labor to find out which license you need.
- Professional licenses: If you’ve formed a professional corporation and are offering services such as attorneys, psychologists, and acupuncturists, then you’ll need to secure a professional license to legally offer your services in West Virginia.
10. Annual report requirements in West Virginia
Annual reports are required for all West Virginia corporations. The annual reports must be filed with the Secretary of State by no later than the 1st of July each year. It is recommended that you complete the annual report online via the West Virginia One-stop Business Portal.
Refer to the secretary of state’s step-by-step instructions to help you complete the annual report online.
11. Costs of starting a corporation in West Virginia
The filing fees below apply to all West Virginia corporations:
- Name reservation: $15
- DBA name: $25
- Articles of Incorporation: $100
- Annual report: $25
- West Virginia Certificate of Good Standing: $10
Next steps after forming a corporation
Now that your West Virginia corporation is formed, it’s time to start thinking about protecting your businesses and personal assets:
West Virginia business bank account
It is recommended that you open a West Virginia business bank account. To do so, you’LL need to submit your formation documents and EIN to the bank. Having a designated account for your West Virginia corporation ensures that you separate personal and business finances. It also simplifies accounting and tax filing processes.
Once you’ve opened a business bank account, consider also opening a business credit card to help build your business’s credit score. It will assist you in getting high lines of credit and loans when you need them.
A C corporation is the default or standard business structure for a corporation under the IRS rules. C corporations or C corps also experience double taxation. S corporations have elected a special tax status and therefore enjoy certain tax privileges.
C corporations which are also considered separate legal entities, can make a profit, be held legally liable, and be taxed as well. However, corporations do offer the strongest personal liability protection to their owners.
Every new business structure, irrespective of whether it is a large or small business, comes with advantages and disadvantages. Sole proprietorships are much easier and more affordable to form than corporations. However, they do not give you the personal liability protection that you receive from forming a corporation.
Whether you form a nonprofit corporation or an LLC will depend on your goals. If you want to make a profit for owners, then an LLC is your best option. However, if you want to generate profits to benefit the public, then a nonprofit corporation is the way to go.
A Certificate of Incorporation is essentially a legal document that the state government issues after filing the Articles of Incorporation. Essentially it is evidence or proof that your company is officially and legally formed under state law.