In the United States, only 50% of businesses are LLCs? And out of those LLCs, only a fraction are actively engaged in their business. This is likely because starting an LLC can be complicated and time-consuming. However, with the right resources and information, it can be! In this article, we'll walk you through starting an LLC in Virginia--from choosing your business name to filing your paperwork. So whether you're just starting or looking for a refresher course, read on for some information you’ll need to get your new business up and running.
Choose a Business Name
The first step in starting your LLC is choosing a business name. This may seem like a small detail, but it's one of the most crucial decisions you'll make for your business. Your business name will be how customers and clients identify your company, so you want to choose something memorable and reflective of your brand.
Here are some ideas to look at when choosing your business name:
- Your business should be easy to spell and pronounce
- It should be relevant to your industry or product
- It shouldn't be too similar to other businesses in your industry
- It should be short and to the point
- It should be available as a username or handle on social media
- It should be available as a domain name (more on that later)
Once you have decided on a name for your business, it is time to see if the domain name corresponding to that choice is available. This step is important because you want potential customers to be able to navigate directly to your website with ease. The availability of a given domain name can be checked using the .inc's domain checker.
If the exact match of your chosen business name is unavailable, you may need to get creative. For example, try adding LLC or Corp to the end of your name, or use a .inc instead of a .com. Once you've found an available domain name, you're can move on to the next step.
Register Your Business Name with the State
The next step in starting your LLC is registering your business name with the state. This is also known as filing a "fictitious name" or "doing business as (DBA)" registration.
Virginia allows you to register your business name online through the Secretary of State's website. The filing fee is $100, and it takes about 10 minutes to complete the process.
Choose a Registered Agent
An LLC needs a registered agent. Somebody or some business has agreed to receive any legal documents for your LLC. They must be reachable at a physical address during common business hours in Virginia.
You can act as your registered agent, but we recommend using a professional service as they can help keep your personal information private and help you stay compliant with state requirements.
File the Certificate of Formation
The next step in starting your LLC is to file the Certificate of Formation, also known as the Articles of Organization. This document is used to create your LLC in Virginia officially.
You can file the Certificate of Formation online through the Secretary of State's website. The filing fee is $100, and it takes about 10 minutes to complete the process.
Create an Operating Agreement
An operating agreement outlines your LLC's ownership and management structure. It's not required by law, but we recommend creating one for your LLC.
Operating agreements can help prevent disputes among LLC members and make it clear how your LLC will be run. This can be helpful if you ever need to prove to a court or government agency that your LLC is a separate legal entity.
You can find templates for operating agreements online or work with an attorney to create one.
Get an Employer Identification Number (EIN)
Applying for an EIN is a simple process that takes only 15 minutes on the IRS website. Plus, EINs are free. If your LLC has more than a single owner, you'll need to get an EIN to identify your business for tax purposes.
Open a Business Bank Account
The logical next step after forming an LLC is to open a business bank account. Maintaining distinct records of your personal and business finances is critical for several reasons, not the least of which are taxes.
When looking for a business bank account, shop around and compare fees, features, and customer service. Once you've found the right bank for your business, you can open an account online or in person.
Get Business Insurance
You'll need workers' comp insurance if you have any employees. This is required by law in Virginia and will protect your employees if injured on the job.
You may also want to get other types of insurance for your LLC, such as general liability insurance or property insurance. This is not required by law, but it can help protect your business in case of a mishap, accident, or lawsuit.
Comply with Other Tax and Regulatory Requirements
There are a few other taxes and regulatory requirements that you'll need to comply with when you start your LLC. These include getting a business license, registering for state and local taxes, and applying for any permits or approvals that may be required for your business.
The best way to find out what requirements apply to your business is to contact the Virginia Department of Revenue or the Small Business Administration.
Stay Compliant with Annual Reporting Requirements
Once your LLC is up and running, you'll need to file an annual report with the Virginia Secretary of State. This is due by March 1st of each year, and the filing fee is $100.
You'll also need to pay an annual tax of $150 to the Department of Revenue. This is due by April 15th of each year.
LLC In Virginia FAQs
What is an LLC?
When you file articles of organization with the Virginia Secretary of State, you are creating an LLC. This type of business is beneficial because it offers limited liability protection to its owners, similar to a corporation.
How much does it cost to start an LLC in Virginia?
The fee for the Certificate of Formation is $100. You'll also need to pay an annual tax of $150.
Do I need a Business License to Start an LLC in Virginia?
You may need a business license, depending on the type of business you're operating. The ideal way to find out if you need a license is to contact the Virginia Department of Revenue or the Small Business Administration.
What are the benefits of starting an LLC in Virginia?
LLCs offer limited liability protection to their owners. This means that the owners are not personally (as an individual) liable for the debts and liabilities of the LLC.
LLCs also have a flexible management structure, making it relatively easy to set up and operate.
What are the disadvantages of starting an LLC in Virginia?
The main disadvantage of starting an LLC is that you'll be required to pay taxes on your business income. In addition, LLCs are also subject to specific regulations, such as the requirement to file an annual report.
Is an LLC the right choice for my business?
An LLC may be the right choice for your business if you want limited liability protection and a flexible management structure. However, it would help if you considered your options before deciding.
Starting an LLC in Virginia is a relatively simple process, and it can provide your business with some significant advantages. Follow all the steps outlined above to ensure that your LLC complies with state law. And if you have any questions, be sure to contact an attorney or accountant for help.