How to Start an LLC in Virginia (Step-by-Step Guide)

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 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.

1. Select a name for your Virginia LLC

Check name availability

Confirm that your LLC name is available in Virginia by performing a search using the Virginia Business Entity Search.

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the Commonwealth of Virginia:

1. An LLC’s name must be distinguishable from the names of existing business entities on file with the Virginia State Corporations Commission.
2. 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.”

Need help coming up with a business name? Check out our free business name generator.

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, also known as Form LLC-1011.

The Articles of Organization must provide the following information:

• LLC’s name and principal office address
• Registered agent name and mailing address (this cannot be a P.O. box)
• The signatures of LLC organizers
• Business structure (member-managed vs. manager-managed)

You can file the articles online using the Virginia New Entity Formation website or by postal mail. The filing fee is $100.

4. Create 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:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. 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 business’s social security number 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 legal obligations

Once an LLC is registered, its members must fulfill 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. You can pay the annual registration fee online at the Corporations Commission website or by mail.

Obtain business licenses and permits

In Virginia, LLCs are not required to obtain a general business license, but there are specific licensing considerations based on the industry, location, and business activities.

• Occupational licenses: Different professions and sectors require industry-specific licenses. For instance, barbers must have cosmetology licenses, while food and beverage licenses are mandatory for restaurants. The state’s Department of Professional and Occupational Regulation (DPOR) regulates these licenses and permits, and it is crucial for business owners to research the requirements that apply to their particular industry thoroughly.
• Local licenses: In addition, cities and counties in Virginia may have their own set of licenses for businesses operating within their jurisdiction, including permits for business operations, zoning, and signage. Therefore, it is important to consult with local government offices or check their websites for specific guidelines.

Visit the Virginia Business OneStop website to learn more about state business licensing requirements. For information on local licensing requirements, contact a city clerk’s office or county clerk’s information systems in the area where your LLC is based.

Understand state taxes

• In Virginia, Limited Liability Companies (LLCs) are initially considered as pass-through entities for income tax purposes. This means that the LLC itself is not directly taxed by the state. Instead, the profits and losses are reported on the individual members’ personal tax returns. In this case, the owner would need to account for things like self-employment taxes and other payments on their own behalf.
• When it comes to sales tax, LLCs involved in retail sales of tangible personal property in Virginia must obtain a Sales Tax Certificate of Registration and collect a 6% sales tax, along with any applicable local taxes. Sales of services and intangible goods typically do not incur sales tax, although certain industries may have exceptions.
• The Business Transaction and Use Tax (BTUT) applies to specific business activities in Virginia, such as services provided in the state and the rental or leasing of tangible personal property.
• Local taxes may also be a factor for LLCs, as some cities and counties in Virginia impose their own taxes. Additionally, certain industries, such as hospitality or fuel, may have specific taxes that apply based on the nature of the business.

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 a Virginia State Tax Account Number

LLCs must obtain a Virginia State Tax Account Number to conduct business in the state. This number is given when you apply for a Sales Tax Certificate of Registration (Form ST-4), which acts as a seller’s permit. There is no fee to obtain this license, but it is required before you can sell taxable goods and services.

You can obtain the number through the Department of Taxation online.

Understand BOI reporting

The Beneficial Ownership Information (BOI) Reporting Rule requires various US companies to reveal their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This federal law covers a wide range of legal entities in the US, such as LLCs, corporations, and trusts, with exceptions for publicly traded companies and inactive businesses.

Companies must disclose information regarding beneficial owners – individuals with significant control over the company through direct or indirect ownership of 25% or more of shares or by other means – and those involved in the company’s establishment.

Filing deadlines

• The deadline for filing the initial report is January 1, 2025, for companies formed before January 1, 2024.
• For companies formed after this date, the report must be filed within 90 days of creation or registration, which will change to 30 days in 2025.

Learn more about BOI reporting.

Post LLC tasks

Set up business bank accounts 

Creating a business bank account is an essential step for any LLC, as it establishes a clear separation between personal and business finances. This differentiation is crucial not only for simplifying bookkeeping and tax preparation but also for maintaining the limited liability protection that is characteristic of the LLC structure. By distinguishing between personal and business transactions, LLC owners can effectively protect their personal assets from business liabilities.

Various platforms, such as Found, Relay, and Mercury, offer specialized services tailored to the needs of small businesses and startups. These digital-first banking solutions are designed specifically for modern entrepreneurs and include features traditional banks may not offer. They provide tools for easy account management, financial tracking, and integration with business software, streamlining operations and allowing businesses to focus on growth and development.

Obtain a Certificate of Good Standing

In the state of Virginia, the term “Certificate of Good Standing” is not commonly used for all types of businesses. However, the state does offer similar documentation to confirm a business’s active status. For LLCs, this document is referred to as a Certificate of Fact of Existence/Registration, while corporations have a Certificate of Good Standing.

• Why you need one: Despite the different names, these certificates serve the same purpose of verifying the legitimacy and current registration of businesses in the state.
• How to get one: The most efficient method to obtain a certificate is through an online application, but options for fax, mail, email, and in-person requests are also available. The standard processing fee is $20, with an expedited service option for $50, which guarantees a turnaround time of less than a day, excluding any time in the mail.

Build a website 

Creating a website is now a must-do for an LLC looking to establish and grow its online presence. As the first way customers will find you, domain names are an essential step to take early on.

While every LLC owner knows a website is necessary, you might not know where to start. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Costs to set up an LLC in Virginia

Average cost to set up an LLC in Virginia: $150-$350

As you open your new business, it’s important to plan for set-up costs. Here’s a quick look at three fees you can expect to pay:

• Incorporation fees: The primary cost associated with setting up your Virginia LLC is the state fee when you file LLC Articles of Organization. This is $100 for online filings and $165 if you opt for a paper option like mail or in person. If you choose to create a Series LLC, there is an additional $50 cost. One unique note is that Virginia does not offer expedited processing for a fee.
• Annual Registration filing fees: In Virginia, LLCs must file an Annual Registration. (In other states, it’s referred to as an Annual Report). This report provides updated information to the state and costs $50 to submit electronically.
• Registered agent service fees (optional): LLC owners can hire a commercial registered agent rather than serving in the role themselves or appointing someone they know. To obtain this service, expect to pay between $50 to $200 a year. Using a commercial service provides confidentiality and peace of mind, knowing that someone is always available to receive information. This fee is optional.

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:

1. Comply with Virginia LLC naming rules and confirm that the LLC’s name is available using the Virginia Business Entity Search.
2. Appoint a Virginia registered agent.
3. 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.