How to start a business in West Virginia in 8 steps
After being awarded an 800+ acre Virgin Hyperloop project, West Virginia is turning many business heads. The project solidifies what locals have known for a long time: West Virginia is the home of loyal, hard-working, and tough mountain people committed to making the future of the state extraordinary.
They’re already achieving it. Over 99% of businesses here are small, and they employ 50% of residents. Ready to join their ranks? Small businesses typically take 3 to 5 years to get off the ground. Ask yourself 5 questions to determine if you’re prepared for the commitment that a small business takes. If you’re sure these country roads will lead to your dream, dive into these 8 steps to start making it a reality.
1) Think about the type of business you want to start
West Virginia business has historically gone by one name: coal. But today, there’s a diversifying economy out there led by advances in biotech, chemicals, metals, manufacturing, and tourism. Your background and the local market will lead to your ideal small business. You likely have some business ideas already.
Next, check out competing companies in your city. Ask yourself some questions about how they are successful and how you can offer more value in the market:
- Who is their target demographic, and who goes unserved?
- How do your competitors differentiate from one another?
- Do competitors benefit from a physical location in the community?
- What can you offer that improves on existing products or services?
- What is a competitive price in this market?
Take a look at what companies are in your area as well as other cities in West Virginia. This research can help you build a niche for yourself in the marketplace. For example, you may find that one whitewater rafting tour company relies on its storefront in a touristy town. Still, none are advertising in the regional outdoor magazine, which caters to their ideal customer demographic.
Before opening your doors, write down the value you add and make your unique selling position your central mission.
The West Virginia Small Business Development Center (WVSBDC) can help you incorporate your selling position into a business plan. The Small Business Administration also offers mentoring and help with all the parts of your business plan, from operating agreements and bylaws to finding business resources in the state.
2) Set up your legal structure
Starting a business is full of exciting tasks, but few owners think business formation is one of them. But it’s the legal details that can help drive your success in the long term. One area to focus on should be the best way to structure your new business. Business owners have many choices and should talk to an attorney if they have questions about which will serve them best in the future. Every business entity comes with advantages, disadvantages, and different federal and state tax structures.
You’ll want to consider:
- How many people own the business?
- How does the business make decisions?
- How is management structured?
- Do you need liability protection to protect your personal assets?
- What should happen if you need to transfer ownership?
- What is the best tax structure for the business?
Some choices are:
- Sole proprietorship: This small business is the easiest to form. There’s no paperwork to file, and you may already be a sole proprietor. You simply do business with clients and file taxes on your earnings using your Social Security Number in this kind of business. You’re the owner, but your business has no legal separation from your private assets. If your business is sued, you may be liable for judgments.
- General Partnership: This is another business form that needs no registration. It’s a sole proprietorship that includes two co-owners. You might form one with a contract between owners, and both parties are liable for business debts.
- Limited Liability Company (LLC): This is a popular business structure for small businesses. It offers two distinct advantages. First, West Virginia LLC owners are legally separate from their venture and protected from personal liability for business debts. Second, it allows flexibility in how businesses are taxed. You’ll file formation documents, including Articles of Organization with the West Virginia Secretary of State to form your company using this structure. If you don’t live in West Virginia, you will also need a registered agent with a West Virginia address to conduct all communication with the Secretary of State.
- Corporation: Corporations are formed by filing Articles of Incorporation, which creates a business entity owned by shareholders. There are C-Corporations and S-Corporations, so compare options if your plans include going public.
West Virginia’s One Stop Business Portal comes with links to the Small Business Association (SBA), Small Business Development Center (SBDC), and Division of Labor. All offer small business mentoring that can help you decide on a structure that works for you. You may even find your organization would thrive with another form, like a nonprofit or association.
Researching your choices upfront means your business will be on a path that matches your goals and management structure.
3) Name and register your business
Mountaineer Marblecakes? Gorge-ous Gumdrops? For many entrepreneurs, naming their business is the most satisfying part of getting started. Before you break out the puns, there are some rules to keep in mind.
First, check out the West Virginia Business Organization Search since your startup will need to be distinct from other companies operating in West Virginia. Searching for federal trademarks can also help uncover other entities with the names you’re considering. Finally, search for your domain and social media accounts to make sure they’re available.
Sole proprietorships often use branded business names, too. If you’re doing business as (DBA) a brand name other than your given name, you will register the name online with the West Virginia Secretary of State. A “trade name,” as it’s called in West Virginia, can give your customers confidence you are professional. It also lets you open a bank account using your business name.
4) Apply for business licenses and permits
West Virginia requires a West Virginia business registration certificate which you can get at the West Virginia State Tax Department online after paying the filing fee. It is sometimes called a “seller’s permit,” and you won’t need to renew it once you’ve registered.
Other counties and municipalities have their own rules. In Charleston, new businesses must register for a license if they are located in or do business in the city. The registration is a prerequisite for inspection and approval for occupancy from the city’s zoning commission. You’ll register with the city for Business and Occupation Privilege Tax (B&O Tax), and finally, register to pay a $3 weekly City Service Fee. Your county and municipality may have different rules.
There may be professional licenses your business needs from the West Virginia Association of Licensing Boards. See a complete list and register your business correctly if you’re operating in one of these industries.
Your last stop is registering with the Internal Revenue Service for an Employer Identification Number (EIN). You’ll file for free, get a unique number, and use it to pay federal taxes and handle your business finances. Even sole proprietorships and partnerships will need one to hire their first employees.
5) Choose a location
Some businesses thrive being a central meeting place where customers can find them. A coffee shop on Capitol Street in Charleston might bring in morning foot traffic as workers get their morning jolt of caffeine and meet to talk to friends and neighbors. Restaurants, salons, bakeries, and bars likewise can benefit from a central location.
If your business model means you’ll stake out a spot in town, it’s time to start shopping for the perfect storefront. Before you sign that lease, consider these elements:
- Zoning Laws: Is your location already zoned for commerce?
- Costs: Can you estimate how the price of a central property will offset the need for extra marketing? A lease is one of the most significant expenses a new business will face, especially in an expensive neighborhood.
- Amenities: Does the location cater to locals or tourists? Does it have easily accessible parking? Security? A loading zone?
- Home Occupancy: Some catering and salon businesses operate out of the owner’s home. Will your business qualify? West Virginia has loosened its cottage food regulations in the last three years, cheering many bakers who can now save on renting commercial kitchen space.
Your needs will vary based on industry, but you’ll want to pinch pennies when it comes to taking the plunge on a considerable expense like your dream space.
6) Open a business bank account and prepare for future taxes
With an EIN and a registered business, you can begin to build the accounting scaffold that will support your business as it grows. Open a bank account and keep your business expenses and income in one place. It will help you see your cash flow more clearly. You can also use the account to pay business bills on time or apply for a business credit card and use it, both of which will improve your credit so you can qualify for larger loans and lines of credit.
An accountant or software system can help you keep track of required company documents and financial reports when tax time rolls around. Although an LLC is a pass-through entity, where profits pass through the business and are filed by its members, West Virginia’s secretary of state does require LLCs to file an annual report. You can submit paperwork through the state’s business portal by June 30 each year.
An LLC can also choose to pay taxes like a corporation, filing with the West Virginia State Tax Department and the IRS.
7) Purchase business insurance
While the paperwork can feel like a winding West Virginia highway, you’re nearing the end of your journey. It’s time to celebrate the hard work you’ve put into your business by protecting it with small business insurance. Almost all businesses need some kind of coverage, but your needs will differ based on your industry. Here are some general coverages to get you started:
- Workers’ compensation insurance: If you hire a single employee, you’ll be required to buy this coverage. It protects your business and workers. If someone is injured or gets sick on the job, it can help with medical expenses and lost wages.
- General liability insurance: This basic coverage is fundamental for most businesses. It protects your company in the event you are sued for property damage or even personal injury. General liability coverage pays to cover legal expenses, witnesses, and settlements.
- Business interruption insurance: Businesses can’t survive long with their doors closed. If a natural disaster forces you to close your doors, this insurance can cover wages, taxes, and even a temporary lease until you’re able to return to normal.
- Business property insurance: Most businesses rely on specialized equipment, expensive electronics, and other necessary property to keep running. This coverage can help replace it in a disaster.
General liability, business interruption, and business property coverage can come rolled up in a Business Owner’s Policy (BOP). You can add extra coverages as needed, depending on your type of business.
8) Create a marketing plan, hire employees, and more
After taking care of the essential startup paperwork, it’s time to develop your marketing plan and grow your customers. Refer to your unique selling position and see where you can offer amenities that aren’t found elsewhere, get great referrals, and collect Yelp reviews from happy clients.
Some marketing ideas to get you started include:
- Paid advertising online
- Claiming your Google My Business page
- Using SEO on your website
- Advertising in the local newspaper or sponsoring a local team
- Incentivizing word of mouth advertising
- Wrapping company cars with your unique selling position
- Partnering with complementary businesses
- Attending small business networking sessions and helping others
As the customers roll in, you’ll start hiring employees. That’s when you’ll need workers’ compensation insurance in West Virginia. It will protect your business and new employees from workplace accidents and is required for most employers. You’ll also want to set up your new employees for tax withholding. In the end, you’ll be building a team that can help with marketing, growing your business while you focus on what you do best.
Owning your own business in West Virginia? It’s almost heaven. You can set your own hours and make your own decisions. When you need more support, look to Huckleberry and get a small business quote to support your journey in minutes.