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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Forming an LLC in Virginia follows a standard process without unusual requirements placed on LLC founders. To avoid a misstep in the filing process, follow these steps to start an LLC in Virginia, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Virginia step-by-step
1. Select a name for your Virginia LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the Commonwealth of Virginia:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the Virginia State Corporations Commission.
- An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”, “L.L.C.”, “LC”, or “L.C.”
Check name availability
Confirm that your LLC name is available in Virginia by performing a search using the Virginia Business Entity Search.
Reserve your LLC name with the Virginia State Corporations Commission
It’s a good idea to reserve your business name with the Corporations Commission to prevent another business from using it before you can legally organize your business in the state.
File an Application for Reservation or for Renewal of Reservation of a Business Entity Name by mail (there is no online option) to reserve a name for up to 120 days. The filing fee is $10.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Virginia requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Virginia OR if the individual or business is based out-of-state, they must have a business office in Virginia.
3. File Articles of Organization
An LLC is formed in Virginia through the filing of Articles of Organization with the Virginia State Corporations Commission.
You can file the articles online using the Virginia New Entity Formation website or by postal mail. The filing fee is $100.
The Articles of Organization must provide the following information:
- LLC’s name and principal office address
- Registered agent name and mailing address
- The signatures of LLC organizers
Foreign LLC registration
An LLC formed in a state other than Virginia that intends to do business in the state must register with the Virginia State Corporations Commission.
Complete these steps to do business in Virginia as a foreign LLC:
- Comply with Virginia LLC naming rules and confirm that the LLC’s name is available using the Virginia Business Entity Search.
- Appoint a Virginia registered agent.
- File an Application for a Certificate of Registration to Transact Business in Virginia as a Foreign Limited Liability Company with the Virginia State Corporations Commission online or by postal mail. The filing fee is $100.
- Your LLC must include an authenticated copy of its original Articles of Organization (or similar document) that is less than a year old with the application.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Virginia, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Virginia LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
Pay an Annual Registration Fee
All LLCs active in Virginia must pay an annual registration fee of $50 each year during the anniversary month of the LLC’s registration or authorization to do business in the state. LLCs that do not pay on time must pay an additional $25 penalty fee.
Register with the Virginia Department of Taxation
LLCs active in Virginia, including foreign LLCs doing business in the state, may be required to register with the Department of Taxation to fulfill a number of state tax requirements. This includes LLCs that collect sales tax on retail goods and services and LLCs that have employees.
You can register with the Department of Taxation online using the VATAX online application.
Obtain business licenses and permits
LLCs doing business in Virginia may be required to obtain one or more state or local business licenses, permits, or certifications depending on their type of business and location.
Visit the Virginia Business OneStop website to learn more about state business licensing requirements. For information on local licensing requirements, contact a city or county clerk in the area where your LLC is based.
Virginia LLC checklist
A Virginia LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the Virginia State Corporations Commission.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”, “L.L.C.”, “LC”, or “L.C.”
Formational documents and filing fees:
- Application for Reservation or for Renewal of Reservation of a Business Entity Name (optional) – $10 filing fee
- Articles of Organization – $100 filing fee
- Application for a Certificate of Registration to Transact Business in Virginia as a Foreign Limited Liability Company – $100 filing fee
- An LLC is created in Virginia through the filing of Articles of Organization with the Virginia State Corporations Commission.
Additional legal obligations:
- Pay an Annual Registration Fee – Required for all LLCs doing business in Virginia
- Register with the Virginia Department of Taxation – Required for certain LLCs doing business in Virginia depending on business type
- Obtain business licenses and permits – Required for certain LLCs doing business in Virginia depending on business type and location