How to Start an LLC in Virginia: A Step-By-Step Guide
With more than 766,000 small businesses operating in Virginia, it’s no surprise that more and more individuals are starting businesses in the Old Dominion state. If you’re wondering how to start an LLC in Virginia, this guide is for you.
We’ll explain the types of LLCs, the benefits of owning one, the setup process and the documents you’ll need to start an LLC in Virginia. We’ve even thrown in some extra tips and FAQs to help you roll that momentum into nurturing your successful startup. To form an LLC in Virginia, you will need to:
- Select a name for your LLC
- Appoint a registered agent
- File your articles of organization
- Draft the operating agreement
- Obtain an EIN or FEIN
- Obtain licenses and permits
- Register your LLC with the Virginia License and Taxation Department
Benefits of a Virginia LLC
A limited liability company (LLC) is a type of business organization. There are many benefits to starting an LLC. Still, the one that entices most people to choose this structure is the protection it gives owners (or “members”) against personal liability while allowing greater management flexibility.
An LLC can also lessen its members’ tax burden by allowing them to take advantage of “pass-through taxation.” The LLC avoids corporate taxes because any tax liabilities from its profits or expenses “pass through” to its members, who claim them on their personal income tax returns.
Flexible Management Options
Learning how to start an LLC in Virginia is not complicated, but you should first understand your management options. You can manage your Virginia LLC as a single-member, member-managed or manager-managed entity.
- Single-member LLC. One owner (member) oversees all company decisions and daily operations; although this owner can delegate some day-to-day operations to a manager, they remain entirely legally responsible
- Manager-managed LLC. An elected or professional manager handles daily operations while the members retain all legal ownership rights
- Member-managed LLC. A select group of members collectively run the business on behalf of the other members
Learn How to Start an LLC in Virginia
Now that we’ve explained some of the benefits and background of choosing this business structure, it’s time to discuss how to start an LLC. In Virginia, the process for starting an LLC involves seven essential steps.
1. Select a Name for Your Virginia LLC
Choosing an appropriate business name is one of the first and ultimately most significant steps in starting your LLC. Virginia requires you to follow specific naming guidelines and requirements. Among other considerations, you must make sure that the chosen name:
- Isn’t trademarked by another company
- Is available on the SCC Clerk’s Information System (i.e., not in use by another company in Virginia)
- Uses the words Limited Liability Company, Limited Company, LLC, L.C.C., LC or L.C. in the name
- Does not use any prohibited words, like bank, trust, engineer or architecture (these are reserved for specialized professional LLCs, which have additional requirements)
- Does not use any words that relate to or imply an association with any government entity, like National, Federal or Reserve
Inside Scoop: Since building your online brand presence is a vital part of learning how to start an LLC in Virginia, you may want to select a domain name that closely matches your chosen business name. Save yourself future headaches by making sure an acceptable domain address is available before starting an LLC in Virginia.
2. Appoint a Registered Agent
Virginia law requires you to designate an individual or an entity to act as the registered agent for your LLC. This is a person or company that is available to accept legal or tax documents on behalf of your business, including service of process if your business is ever sued.
Your registered agent must:
- Be a Virginia resident
- Have a Virginia physical business address
- Be available during normal business hours
An individual registered agent must also be an attorney who is a member of the Virginia State Bar if they are not a member or manager of your LLC. However, you may also use a third-party business such as a law firm or a service company.
Inside Scoop: Hiring a company that provides professional registered agent services may seem unnecessary, but it ensures that you receive notice and delivery of important paperwork — like tax documents, official government communications and notices of legal action — without delay.
3. File Your Articles of Organization
One of the most significant documents that needs to be filed when you’re applying for your LLC is the articles of organization. This document contains essential information as to the name and address of the LLC, your designated registered agent, the type of management structure and your stated business purpose.
Your articles of organization can be filed online or sent via mail to the State Corporation Commission in Richmond, Virginia. The filing fee, which is usually $100, can also be paid online or in person.
Inside Scoop: A section of the form asks you to designate an “industry code” that describes the type of business your Virginia LLC will conduct. Non-professional LLCs have four options: general, insurance agency, mortgage company or church/religious denomination. Most LLCs should select “general.”
4. Draft the Operating Agreement
Although it’s not required by law, it’s a good idea to create an operating agreement in addition to the articles of organization. This document can help manage your LLC’s organization and establish procedures to resolve future disagreements between members.
An operating agreement is used to:
- Regulate or establish the affairs of the LLC
- Control the conduct of the business
- Manage the relationships between its members
When learning how to start an LLC in Virginia, you may have questions about the difference between the operating agreement and the articles of organization.
Operating Agreement
- Clearly outlines the LLC’s structure and any rules
- Helps to resolve internal disputes between members
- Instructs the members how the LLC should be run
Articles of Organization
- Notifies the state that the LLC will be formed
- Provides general information about its purpose, members and contact information
Inside Scoop: The operating agreement is the primary management document for your LLC. If you’re starting a new business or adding additional members, it’s a great idea to consult with an attorney for help drafting an agreement that protects everyone’s rights.
5. Obtain an EIN or FEIN
If you’re registering a new Virginia LLC, you’ll need a federal employer identification number (FEIN or EIN). This nine-digit number allows your LLC to:
- Open a business bank account
- Pay your federal or state taxes
- File tax returns
- Hire employees or contractors
The EIN application can be submitted online on the IRS website or by faxing or mailing this form to the Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999.
Inside Scoop: You don’t need an EIN or FEIN for a single-member Virginia LLC, but it can help you more easily keep your personal finances separate from business matters.
6. Obtain Licenses and Permits
As you figure out how to start an LLC in Virginia, remember that you may also need to obtain licenses and permits specific to your business. Some examples of regulated businesses are architects, auctioneers, opticians, real estate brokers, lawyers, accountants, barbers and cosmetologists.
The type of license or permit needed and how you obtain it depends on the type of LLC you operate. Many different agencies regulate the wide range of industries and small businesses that operate in the Commonwealth.
For instance, a business that engages in commercial fishing needs to contact the National Oceanic and Atmospheric Administration Fisheries Service. In contrast, a radio and broadcasting business would require a permit or license from the Federal Communications Commission.
To determine what type of federal or state regulations apply to your LLC, visit the U.S. Small Business Administration or contact the Virginia Department of Professional and Occupational Regulation.
Inside Scoop: Depending on your profession, the time it takes to apply for, certify and approve your application for a license may be significantly longer than the time it takes to start your Virginia LLC. It’s best to start that application process as soon as possible.
7. Register Your LLC: Virginia License and Taxation Department
After you’ve obtained any necessary licenses and permits, register your LLC with the Virginia Employment Commission (and the Virginia Department of Taxation if you plan to hire employees).
Once you register, you can start doing business in Virginia. LLCs will receive a Virginia Tax account number for each applicable tax type, a sales tax certificate of registration (if you must collect retail sales or use tax) and documents to help you understand your filing requirements.
Inside Scoop: Creating an online business services account when you register allows you to easily file and pay taxes, communicate with the state tax authorities and make any changes to your tax account.
FAQs About How to Start an LLC in Virginia
How much does it cost to start an LLC in Virginia?
In most cases, the filing fee to begin a new Virginia LLC is $100. Each year, you must file an annual report, due on the last day of the month your business was registered or formed, and pay an annual filing fee of $50.
Should you set up a separate bank account for an LLC?
Although state and federal laws don’t require you to set up a bank account for your LLC, it’s often wise to do so. Establishing separate accounts keeps business funds separate from members’ assets and will help members maintain limited liability protection.
Is it easy to get a business loan for a Virginia LLC?
Most banks require LLC members to have a good credit score to get approved for a loan. Additionally, your LLC must meet lender requirements and have strong financials and limited debt to be approved. If you’re interested in exploring funding and loan options, some good resources include:
- The U.S. Small Business Administration connects small businesses with approved lenders and oversees microloans
- The Virginia Small Business Financing Authority (VSBFA) offers programs to provide small businesses with financing for economic growth and expansion, including the SSBCI Cash Collateral Program and the SWaM Business Microloan Fund
- Locally-based banks and credit unions, such as Atlantic Union, Virginia Credit Union and Virginia Community Capital
- U.S. Department of Veterans Affairs small business assistance programs for eligible veterans and service members
What is the average Virginia LLC filing time?
You can fill out and submit your LLC application in a few hours if you have the necessary paperwork. It typically takes a few weeks for your application to be approved if you send it by mail. The approval process is much faster with an online application and can be even less if you pay an expedited charge.
How much does a registered agent cost in Virginia?
The price for a professional registered agent typically costs between $49 to $300 per year.
What is a foreign LLC and do I need one?
If you started your LLC in another state and want to do business in Virginia, you must register as a foreign LLC. Virginia has several state requirements for foreign businesses before they can start operating in the Commonwealth. To begin doing business in Virginia as this type of LLC, you’ll have to submit form LLC-1052 along with a $100 filing fee.
Want Help? Hire an Online Business Formation Firm
You know a lot about how to start an LLC in Virginia now, but an experienced business formation company can help make the process much easier for you. It will complete all the necessary paperwork and ensure that all your documents are filed in a timely manner.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
