How to Start an LLC in Virginia

Limited liability companies have been recognized and protected under the law in Virginia since 1991. LLCs combine the structure of a corporation and a partnership/sole proprietorship, allowing business owners to avoid double taxation. Unsurprisingly, business owners favor this tax-efficient and compliant means to minimize profits and reduce the risk of business debts, liabilities, and bankruptcy. 

Chapters 12 and 13 of the Code of Virginia, titled The Virginia Limited Liability Company Act, sets out the definition and procedure for the formation, management, administration and dissolution of LLCs in the state. Here is a step-by-step overview of the requirements and process for starting an LLC in Virginia. 

What is an LLC?

A limited liability company (LLC) is a business structure that exists as a separate legal entity from the company’s owners. It combines the characteristics of a corporation and a partnership or sole proprietorship. The hybrid business structure allows LLCs to benefit from the liability protection of a corporation and the tax advantage and flexibility of a partnership. This works because the owner(s) is not responsible for the debts and liabilities incurred by the company and cannot be personally sued. 

Additionally, LLCs help owners avoid double taxation. Usually, the state taxes a company on its profit and the dividends of all its members. Instead, the state regards LLCs as “pass-through entities” for taxation purposes. Pass-through taxation means that the profits and losses of the business are passed through the company to the owners, who report these on their personal tax returns. The owners of an LLC are called members. In Virgin, an LLC can be a small business with one owner (single-member LLC). In Virginia, an LLC can have one or multiple owners or members. Also, in Virginia, not all members in a multi-member LLC are required to participate in management (for example, limited partnerships). 

The Virginia Limited Liability Company Act sets out the requirements and provisions for forming LLCs in the state. Section 13.1-1003 of the act lists the filing requirements for LLCs, while section 13.1-1008 and 1009 defines the purpose and powers of an LLC in the state. To form an LLC in Virginia, interested persons must choose a registered agent and file articles of organization with the Virginia State Corporation Commission (SCC). The Virginia LLC Act regulates the name selection process and the amendment and restatement of articles of organization, change of principal office, registered office, etc.

Per Section 13.1-1012 of the Virginia LLC Act, a limited liability company name shall contain the words “limited company” or “limited liability company” or their abbreviations “L.C.,” “LC,” “L.L.C.,” or “LLC.” The LLC name shall not contain any word, abbreviation, or combination of characters that states or implies the limited liability company is a corporation, a limited partnership, a registered limited liability partnership, or a protected series of a limited liability company. 

Furthermore, the law in Virginia is that an LLC name has to be unique. It cannot be similar to an existing business name filed with the Virginia State Corporation Commission. If this is so, the article of incorporation will be rejected. Applicants or their attorneys should conduct an LLC name search to prevent this. 

The Virginia SCC has two online search tools applicants may use to find existing businesses registered in the state. Applicants can search online using the Virginia SCC Business Entity Search or Name Availability Search database. They may also contact the Virginia Corporation Commission Office for name assistance with the contact information provided below:

Office of the Virginia Corporation Commission 

Phone: (804) 371-9733 

Email: sccinfo@scc.virginia.gov

Monday to Friday, 8:15 AM – 5:00 PM, Eastern Time

The Virginia SCC only has records of LLCs filed in the state. If a business owner wants a unique name throughout the United States, limiting their search to Virginia may not suffice. In this case, trying third-party or other state-specific search tools is advisable. If the applicant has coined a unique name, they can apply for a business entity name reservation, and the Virginia SCC will reserve it for 120 days. This service costs $10 and is renewable. Applicants should also make sure the name they intend to register is not a registered trademark of another brand. 

Step 2: Choosing an LLC Registered Agent in Virginia

Section 13.1-1015 of the Virginia LLC Act requires all domestic and foreign limited liability companies to appoint and maintain a registered agent. The registered agent is to receive all legal and tax documents and government correspondence on behalf of the LLC. 

A registered agent must be a resident of the state and have a physical business address in Virginia. The following category of people can be registered agents for an LLC. 

How Do I Change the Registered Agent for my LLC in Virginia?

To change a registered agent in Virginia, the company must file a Statement of Change of Registered Agent form with the Virginia State Corporation Commission. This process may be done online or via mail. Visit the online filing portal, file a Registered Agent Change, and fill in details of the current and new registered agent. Mail the form to the State Corporate Commission. The clerk’s office will reply in 6-9 business days.

Office of the Clerk

State Corporation Commission

P.O. Box 1197

Richmond, VA 23218-1197

Step 3: LLC Filing Requirements in Virginia

To file or form an LLC in Virginia, the company must satisfy some of the following requirements: 

For companies that were formed in other states but want to be legally recognized to operate in Virginia, such companies should:

LLC Articles of Organization in Virginia 

Virginia Articles of Organization is defined in the LLC Act as all documents that make up the articles of organization of a limited liability company. It is part of the legal documents used to register a limited liability company (LLC) at the state level. It also defines the law guiding the relationship between all members of an LLC and the LLC itself, including members’ legal rights, roles, duties as trustees, potential risks, and other official factors. Articles of organization are a prerequisite to establishing LLCs. It creates a public record with the Virginia SCC of the company’s information, including the business name, owner, registered address, and agent information. 

LLC Operating Agreement in Virginia 

An operating agreement in Virginia means a legal agreement reached by the members in writing to regulate or establish the affairs of the limited liability company, the conduct of its business, and the relations of its members. It is a legally binding document that lays down the rules guiding the voting process, profit and loss distribution, management, and dissolution of an LLC. Essentially, it is the body of rules and regulations for the company’s administration. 

Virginia LLC Statement of Information

A statement of Information may also be called an annual report in Virginia. It is an up-to-date report on the LLC, including information on the registered agent, management, officers, members, and managers’ addresses and names. An annual report informs the state of changes like the registered agent information. 

Do You Need a Virginia Address for an LLC?

The law in Virginia requires LLCs to have a physical office address within the state. The address must be available during ordinary business hours to sign and receive legal, tax, and government documents and correspondence. Plus, it must be in the Articles of Organizations filed with the Virginia SCC. 

If the LLC has a physical office or store where it operates, this can serve as its registered address. Where the LLC does not have a physical location in Virginia or is a foreign establishment, it can hire a commercial registered agent. Registered agents can use their physical address as the registered address for the company on behalf of the business. This way, the LLC can remain compliant with state regulations and receive all documents and mail on time. 

How to Get a Virtual Address for an LLC in Virginia

Commercial registered agents in Virginia offer various services, including virtual address solutions. Simply research and find a registered agent that provides the services needed, compare costs and choose the one that best suits the business needs. Virtual address solutions often include an excellent physical business address for correspondence, mail handling and forwarding, virtual receptionists, physical office space on an as-needed basis, video conferencing software, shared calendars, courier services, compliance assistance, website, and SEO services. A virtual address stands in as the business’s physical address in the state. 

Step 4: How to File for an LLC in Virginia

Applicants can file for an LLC via mail or in person to the Virginia State Corporation Commission (SCC).

For individuals filing via mail, send the Articles of Organization along with a $100 filing fee to the office of the Clerk. Payments should be made by check payable to the State Corporation Commission. This process may take 7-14 working days or more from the day the clerk’s office receives the document and the filing fee is received. 

Mailing Address: 

Clerk’s Office

State Corporation Commission

P.O. Box 1197

Richmond, VA 23218-1197

For in-person filings, applicants can make payment by cash, credit card,, or check. This process is typically faster than mailing the documents. If all documents are in order, the company may receive the Certificate of Authorization on the same day. Applicants should deliver their papers to:

State Corporation Commission

Clerk’s Office, First Floor

1300 East Main Street

Richmond, VA 23219

Phone: (804) 371-9733

How to Create an LLC Online in Virginia

Filing Articles of Organization and other documents for forming an LLC online is more convenient and reduces the risk of clerical error. 

Can You Have Multiple Businesses Under One LLC in Virginia?

Yes, you can have multiple businesses under one LLC in Virginia. The Code of Virginia permits companies to register under a trade or fictitious name (DBAs) with the SCC. Business owners can manage multiple business ventures under a single business entity. However, there must be operational and financial separation between the business. Also, they must not violate licenses and other regulatory requirements. 

How Long Does it Take to Set Up an LLC in Virginia?

The processing time for setting up an LLC in Virginia depends on the method of filing and the accuracy of the documents and information provided. For online filing, it takes between two to five business days to get confirmation and approval. 

In-person filings are much faster. If all the documents are complete and accurate, an individual may receive their Certificate of Organization on the same day. Mail-in filings have a much longer processing time. It may take anywhere between seven to 14 days or longer. 

Step 5: How to Get an EIN for an LLC in Virginia

An EIN is a unique, nine-digit employee identification number. It is also called a Federal Tax Identification Number. It is assigned by the Inland Revenue Service (IRS) to business entities. Applying for an EIN for an LLC in Virginia is free. It is advisable to wait until the SCC approves the LLC application before applying for an EIN. 

Virginia residents can apply for an EIN online on the IRA website if they have a Social Security Number or Individual Taxpayer Identification Number. Resident applicants may also apply via mail or fax using Form SS-4, although this option is much slower. 

Internal Revenue Service

Attn:  EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

For non-residents and those who do not have a physical business address, there is no online option. Such persons can only apply via fax or mail. Mail or fax the SS-4 form to:

Internal Revenue Service

Attn:  EIN International Operation

Cincinnati, OH  45999

Fax: (855) 215-1627 (within the U.S.)

Fax: (304) 707-9471 (outside the U.S.) 

Step 6: Do LLCs Pay Taxes in  Virginia?

Yes. LLCs pay Tax in Virginia. LLCs in Virginia pay Annual Income Tax Returns, Business Tax, Employer Tax, and Retail Sales and Tax. Tax laws in the state are regularly updated, and inquiries should contact the Virginia Department of Taxation (DOP) for recent tax updates. 

How Are LLCs Taxed in Virginia?

The Virginia Department of Taxation (DOP) requires all establishments eligible to pay annual income tax on April 15th for calendar year filers. For fiscal-year filers, the 15th day of the 4th month following the close of its taxable year. Finally, for non-profits, the 15th day of the 6th month following the close of its taxable year. If the deadline falls on a weekend or holiday, the establishment has until the following weekday to file their taxes. 

The current annual income tax rate schedule for Virginia is as follows:

Other Tax Considerations for an LLC include:

LLCs are taxed according to the tax status the company elects for its business. For pass-through entities, the Virginia DOP will tax multiple-member LLCs as a partnership and single-member LLCs as a sole proprietorship. A Virginia LLC may also elect to be taxed as an S or C-corporation. An S corporation is also a pass-through entity, but a C corporation pays double taxes. The IRS has detailed requirements for LLCs interested in transitioning to an S corporation or C-corp.  

Tax Benefits of an LLC in Virginia

Do You Have to Renew LLC Every Year in Virginia?

In Virginia, liability companies pay an annual registration fee to the State Corporation Commission every year. Virginia LLCs are to pay $50 at the end of their formation anniversary month. Annual payments begin a year after the state registers a company. There is a penalty for defaulters. Failure to pay the fee by the due date attracts a $25 penalty fee. Also, this can make a business lose good standing with the state.

How Much Does It Cost To Start an LLC in Virginia

The Virginia Limited Liability Company Act 1991 requires all limited liability companies to file with the Virginia State Corporation Commission to be authorized to operate in the state. Part of this process requires an individual to file Articles of Organization and hire a registered agent. 

Starting an LLC may cost the above amounts or less, depending on the business needs. Business owners may also spend additional costs on setting up their websites, physical business space, etc. Plus, all businesses registered with the Virginia State Corporation Commission pay a $50 annual registration fee. 

Can You Form an LLC In Virginia For Free?

No, it is not possible to form an LLC for free in Virginia. However, it is possible to reduce the cost burden. Individuals seeking low-cost options can:

How to Start an LLC in Virginia For Free/At Minimal Cost

The Virginia State Corporation Commission does not provide fee waivers or discounts for LLC formation. LLCs in Virginia pay a one-time filing fee of $100 and subsequent $50 annual fees. Other extra costs include tax and registered agents’ fees. Registered agents in Virginia cost about $50-$300 yearly. Business owners who want to run an LLC at minimal costs can opt for registered agents who charge between $50 and $100. They can also agree on a payment plan with the agent. Alternatively, the LLC can appoint a member as its registered agent to eliminate that expense. Also, rather than hiring an attorney, individuals can file their Articles of Organization online. 

What Businesses Should Consider Forming an LLC in Virginia?

The hybrid structure of an LLC is favorable for small businesses and startups as well as medium- or higher-risk businesses. Business owners who wish to protect their personal assets and those who want lower tax rates prefer to establish LLCs. For multi-member LLCs, the structure helps define responsibility, debt, and liability protection among partners.  

What are the Benefits of An LLC in Virginia?

How Does an LLC Work in Virginia

A limited liability company is formed by filing the Articles of Organization with the Virginia SCC. The SCC is the state body that regulates business entities. LCCs exist as separate legal entities from the owners. This structure ensures that the members are not personally liable for company debts and liabilities. Also, if the company becomes bankrupt or is the respondent to a legal suit, the company is liable and not the owner. 

In Virginia, LLCs use operation agreements to determine how the company will vote, allocate assets and losses, the ownership, management, and structure of the organization, and how it is to be dissolved. LLCs can file for taxes as a corporation or a sole proprietorship. Most LLCs opt to be taxed as a partnership or sole proprietorship to avoid double taxation. An LLC may operate as a single-member or multiple-member LLC. It is owned by a single person. Although, for Virginia tax purposes, single-member LLCs do not qualify as pass-through entities. 

LLCs may either be member-managed or manager-managed. It is member-managed, where members serve as managers of the company. This is often the case in single or small multi-member companies. An LLC is manager-managed, where someone is appointed or hired to run the affairs of the company. LLCs are a popular way of acquiring real estate and managing franchise networks. 

LLC vs. S Corporation in Virginia

S corporations pass taxation through the company to its shareholders. This business entity subscribes to a tax classification that passes its taxable income, gains, losses, deductions, and credits directly to its shareholders. This class of taxation is under Subchapter S of the Internal Revenue Code. It is only available to small businesses with at most 100 shareholders. 

S corps and LLCs are both limited liability corporations. An S corporation is a separate legal entity from its shareholders. They both pass through taxation. The tax passes through the corporation to the members and shareholders. While LLCs are created and regulated by state law, The Inland Revenue Service creates S corporations and are subject to federal laws. Also, there is no limit to the number of people who can own an LLC. An S corporation, on the other hand, is limited to 100 shareholders. 

S corporations have strict corporate formalities and are managed by officers or a board of directors. Yet, it has its advantages over LLCs. S corps get funding and investors more than LLCs. Financial institutions prefer to invest in corporations because they are better suited for business development. S corporations have more professionals on board who can navigate and develop strategy and capital for business growth. 

LLC vs. Sole Proprietorship in Virginia 

A sole proprietorship is a business owned and controlled by one individual. It is an unregistered business with a sole owner who pays personal income tax on the profits amassed from the company. In a sole proprietorship, there are no partners. 

In Virginia, sole proprietorships do not need to be registered to operate. The owner is not separate from the business. The owner bears all profits and losses alone. LLCs have more administrative requirements and formalities compared to sole proprietorships. 

Sole proprietorships are low-cost and low-risk. The owner has complete administrative control of the business. To run an LLC in Virginia, the company must file with the state, pay a $100 filing fee and annual fees and appoint a registered agent. However, an LLC protects the owner and members’ personal assets. There’s also room for flexibility in management. However, both business types are suitable in Virginia.

LLC vs. Corporation in Virginia 

A C-corporation is an independent company where the company is a separate legal entity from the owners. The owners of a C-corporation are called shareholders. Shareholders, directors, and officers manage a C-corporation. But unlike a C-corp, an LLC is a more flexible business entity. It is not subject to multiple corporate formalities. An owner of an LLC is called a member. 

Typically, a C-corp was a form of taxation often used by corporations, not a business entity. The C-corp is named after the subchapter C of the  Internal Revenue Code, which explains this form of taxation. A corporation is called a C-corp if it uses this taxation style. Unlike LLCs, C-corps use a double taxation style. The corporation’s profits and shareholders’ dividends are subject to taxation. 

LLCs and corporations have their similarities. They are both limited liability companies, enjoy longevity in business, and have favorable tax options. However, C-corporations have the upper hand over LLCs. It is easier for corporations to get investors and financing. Investors prefer to buy shares in a company over owning membership interests. 

Business License vs. LLC in Virginia 

In Virginia, a business license and an LLC have separate functions. A business license is a permit granted by a government authority approving their right to operate within a specific industry or jurisdiction. An LLC, on the other hand, is a business entity. An LLC can be established without a license, but an individual cannot have a business license without a company. 

Do I Need a Business License if I Have an LLC in Virginia?

A business license is not a general requirement to form an LLC in Virginia. However, section 8.1-3700 of the Code of Virginia states that certain businesses must obtain a business license, also known as a Business, Professional, and Occupational License (BPOL) tax. An LLC may require a business license depending on the type of profession and its location. Some cities in Virginia make it mandatory for all new businesses to register for a business license at least 30 days before the start of the company. Standard licenses an LLC might need include: 

How to Dissolve an LLC in Virginia?

An LLC may be dissolved voluntarily or due to other factors like internal disagreement, financial problems, mismanagement, etc. Usually, the operating agreement contains the procedure for the dissolution of the company. 

The LLC will cease to exist once the business owner or its attorney files the  Articles of Cancellations.