How to form an LLC in Virginia in 6 easy steps
In the 1600s, Virginia became the first colony in the “New World,” infusing the region with an entrepreneurial spirit that still exists today. If you’re a Virginia entrepreneur who’s trying to find an outlet for your next big idea, you might find it by starting your own LLC.
The decision to start an LLC can be one of the most rewarding decisions you’ll ever make. If you’re looking for a business structure that provides the flexibility of a sole proprietorship with the benefits of a corporation, then an LLC will be right up your alley. The following is step-by-step navigation through the LLC formation process so that you’re prepped on the initial documents you’ll need and are knowledgeable in what it takes to run your new Virginia business successfully.
1. Check if your business name is available
Step one on your LLC formation voyage is to choose a name for your business. The name of your Virginia LLC should elicit a positive emotional response from your potential clients and should be one that is equally memorable so that you’re maximizing your company’s mindshare potential for your specific industry.
As you think about potential names for your LLC, keep in mind the naming guidelines the state of Virginia will need you to follow. First and foremost, the name itself will need to be different from any preexisting business name in Virginia. You’ll also need to include the phrase “limited liability company” or its abbreviation “LLC” or “L.L.C.” and exclude certain words like “State Department,” “FBI,” and “Treasury” because they could confuse your LLC with a government agency. Other words—like Attorney,” “University,” and “Bank”—are restricted words, meaning you can only use them if certain licensed professionals are part of your LLC and you intend to fill out additional paperwork.
To verify that your desired business name meets all Virginia naming requirements, check out the Virginia State Corporation Commission (SCC)’s website for a complete list of naming rules and regulations. You’ll then want to conduct a business name search—also on the State Corporation Commission's website—and if your desired name is available, you’re clear to move forward. You can also register the corresponding domain name for your LLC so that you’re ready to rock when it comes time to launch your own website.
Suppose you’re unsure which name you want to roll with or are torn between a few different LLC name options. In that case, you can reserve a business name for up to 120 business days by submitting Form SCC631 to the Virginia State Corporation Commission, along with a $10 filing fee. The form can be submitted either by mail or online via the State Corporation Commission Clerk’s Information System.
Another option for your Virginia LLC name is to choose a trade name—or DBA (Doing Business As)—a fictitious name that allows you to conduct business under a different name from the one you’re registering for your LLC. This is useful if you’re trying to launch multiple companies under one banner.
2. Claim your name
With your chosen LLC name in your pocket, you’ll next want to appoint a registered agent to handle the governmental correspondence and legal documents for your business. Your registered agent can either be an individual or a company, such as a registered agent service.
If your registered agent is an individual, they must be a resident of Virginia (and have a physical street address, no P.O. Box), practice law in Virginia, or be part of your LLC’s owner or management team. If you meet those requirements, you, as the LLC owner, can act as the registered agent for your LLC. Meanwhile, if your registered agent is a corporation, the registered agent service must be authorized to conduct business in Virginia.
One of the first tasks your newly minted registered agent can help you with is filing your LLC Articles of Organization—Form LLC-1011—with the Virginia State Corporations Commission. You can file Articles of Organization by mail or online at the Virginia New Entity Formation website, along with a $100 non-refundable filing fee. The following information needs to be included on the form: The name of your LLC, the address of your LLC, the name and address of your registered agent, and the signatures of all of your LLC’s organizers.
Suppose you operate an existing LLC in another state but now want to conduct business in Virginia. In that case, you’ll need to fill out a Foreign LLC form, which allows an LLC to operate as a single entity across many states. The Foreign LLC form–Form LLC1052—can either be submitted online or by mail to the Clerk’s Office at the State Corporation Commission, along with a $100 non-refundable filing fee.
3. Write your operating agreement
For the next step in your LLC formation process, you’ll want to draft an operating agreement. While an operating agreement isn’t required in Virginia, it’s still recommended you create one given the benefits it can provide your LLC.
An operating agreement is a document outlining your LLC's ownership and operating procedures and the rights and responsibilities of each LLC owner and member. Think of the LLC operating agreement as a blueprint for your organization’s day-to-day functions and a roadmap for how you envision your LLC running in the future.
Your operating agreement also helps establish your LLC as a separate business entity from your personal assets. Without an operating agreement, you might encounter legal snafus should your LLC ever become embroiled in a lawsuit. Additionally, the vision you had for your LLC would be subject to Virginia state LLC laws instead of what would have been outlined in your operating agreement.
Contained within your operating agreement should be the following information: The name of your LLC, the service your LLC provides, the name and address of each LLC owner and manager, the principal office and office address for your LLC, whether your LLC is single-member or multi-member, the process for bringing on new business owners, the process for electing a new LLC manager, ownership transfers when a partner leaves the LLC or is deceased, the procedure for scheduling meetings, the guidelines for dissolving the company, and an outline of the financial contributions, profit share, voting rights, and stake in the LLC for each owner.
If you’re feeling overwhelmed by the intricacies of the operating agreement, your Virginia registered agent or business attorney can help you craft a document that meets the needs of your specific LLC following the rules and regulations of Virginia LLC law. When finished, be sure to distribute your operating agreement to all LLC members for them to review and sign, and then file away the agreement with your other important LLC documents.
4. File your Statement of Information
After you’ve knocked out your operating agreement, you’ll then need to submit a Virginia LLC annual registration fee to the Virginia State Corporate Commission for a non-refundable $50 filing fee. This is different from a Statement of Information or annual report, which you are not required to file in the state of Virginia.
The annual registration fee is due on the last day of the month you registered your LLC in Virginia. For example, if you registered your LLC on March 20th, your annual registration fee will be due by March 31st each year.
But watch out. If you miss your filing deadline, you’ll be on the hook for a $25 late fee. Even worse, if your annual registration fee is three months overdue, the state of Virginia will dissolve your LLC, so you must pay your annual registration fee on time to avoid any headaches down the line.
5. Pay your taxes
Paying taxes isn’t something you’ll be doing at the onset of forming your LLC, but it is something you’ll be doing by year’s end and each ensuing year for as long as you own and operate your LLC. Suppose your LLC is being taxed as a C corporation or S corporation. In that case, you’ll need to apply for a Federal Employer Identification Number—or EIN—through the Internal Revenue Service to pay your taxes and for other tax purposes.
Your Federal Employer Identification Number—also known as a Federal Tax Identification Number—acts like a Social Security Number for your LLC and is how the IRS monitors your business’s financial activities and income tax reporting. Obtaining your Federal Employer Identification Number is free, and you can by mail or online via the IRS website.
Applying for a Federal Employer Identification Number also allows you to open your LLC's credit card or bank account. To do so, you’ll need:
- Your Federal Employer Identification Number
- Your Articles of Organization
- Your driver’s license
A business bank account is essential to running a successful LLC because it helps keep your business transactions separate from your personal transactions, making it harder to mix them. A business bank account and business credit card also help keep all of your LLC transactions in one place, making it easier to organize and compile all of your important financial documents for your tax returns. Should you ever be involved in a lawsuit or be taken to court, having a business bank account—in addition to your operating agreement—can also help mitigate any case against you by demonstrating that your LLC is its own separate entity and is unaffiliated with your personal assets.
6. Wrap up other regulation and sales tax requirements
Woohoo! You’re well on your way to running a successful LLC in the state of Virginia. This is no ordinary feat, and you should feel very pleased about your work thus far. As you finalize the LLC formation process and set your sights on the future, you’ll want to explore which Virginia state business licenses and permits are necessary for your specific operation.
Virginia does not have a universal business license, but certain businesses in select industries might require one. For example, home inspectors, real estate agents, and engineers must obtain a state license. Other companies might require local licenses, which you can secure from your zoning or commissioner's office. Consult the clerk in the city where your LLC is located for more information on which licenses and permits may apply to your business. You can also consult Virginia’s Business OneStop website or The U.S. Small Business Administration (SBA) website to further understand any local license or permit requirements and answer any licensing FAQs.
After nailing down the licenses and permits necessary to operate your specific LLC, you’ll next want to identify the particular types of taxes you’ll be on the hook for by year’s end. For example, all Virginia LLCs are required to pay federal self-employment taxes. If you’ve elected to be taxed as a C corporation, you’ll need to pay Virginia corporate tax in addition to federal corporate tax.
If you have employees, you’ll need to withhold payroll taxes from their wages and pay unemployment taxes to the Virginia Employment Commission. Paying the Federal Unemployment Tax Act tax—also known as the FUTA tax—helps reduce your federal tax responsibility if you pay it on time. All new employees will need to be reported to the Virginia New Hire Reporting Center within 20 days of hiring or rehiring.
You’ll want to evaluate two other taxes to see if they’re relevant to your LLC’s operations: the license tax and sales tax. The license tax is determined by your total sales and is required in certain Virginia cities. If you’re going to collect sales tax, you’ll need to register with the Virginia Department of Taxation (DOT) and report your sales volume quarterly or monthly to the state. Ultimately, you should consult your business accountant or tax professional to help you determine which licenses, permits, taxes, and state fees apply to your LLC so that nothing slips through the cracks.
The last housekeeping item you’ll want to explore before launching your LLC is small business insurance. Small business insurance keeps you and your business legally protected from the unexpected, which helps put your mind at ease knowing you can spend more time growing your LLC and less time navigating potential legal headaches. While there are many insurance options for your LLC, the following are three of the most common types of insurance that could address most of your LLC’s needs:
- General Liability Insurance: This general policy offers a wide range of liability protection from potential lawsuits to you and your LLC.
- Professional Liability Insurance: Professional service providers such as consultants or accountants are the primary beneficiaries of this policy since it helps cover against different types of business errors and malpractice.
- Workers’ Compensation Insurance: Provides coverage to your employees in the event of illnesses, on-the-job injuries, or even death. If you employ three or more employees in Virginia, you'll be required to purchase workers' compensation insurance.
You may also want to consult your business accountant for advice on the other types of business insurance that might be relevant to your specific LLC’s operation. They can also ensure your LLC remains compliant with all federal tax and state tax laws and filing requirements.
Get LLC insurance in minutes by following these steps
Choosing the right business insurance for your LLC can be an overwhelming process, but it doesn’t have to be. That’s where Huckleberry can help.
Huckleberry is a quick and easy solution for all your business insurance needs, making purchasing business insurance simple. Here’s how you can get started:
- Go to Huckleberry.com and choose the “Instant Estimate” option. We’ll then provide you with quotes for LLC insurance and other types of coverage designed to meet the needs of your specific LLC.
- Input the type of work your LLC is involved in, which helps Huckleberry customize your insurance options.
- Answer a few basic questions about the nature of your company, helping Huckleberry tailor its insurance option results to only those that can directly benefit your LLC.
- After a few short minutes, you’ll receive a quote containing customized small business insurance options.
- The Huckleberry workers’ comp calculator provides an accurate cost estimate for workers’ comp.
Round of applause! You’ve just established your very own Virginia limited liability company! Before you start promoting your business across the commonwealth, don’t forget first to snag a quality business insurance policy to keep you, your assets, and the future of your LLC safe and protected.
For all things business insurance, Huckleberry has you covered. In less time than it takes to kayak the Potomac, Huckleberry can provide you with a multitude of insurance quotes and policy options that will protect your LLC now and in the years to come.