Starting a new business is an exciting undertaking. By deciding to form an LLC (limited liability company), you’re making the important choice to protect your personal assets. With an LLC, you also get to enjoy flexibility in terms of ownership and profit. These benefits are enticing, but the process of forming an LLC might seem overwhelming when you’re just getting started.
The good news? Creating an LLC in Virginia is actually fairly simple. I’ve broken it down into 6 easy-to-follow steps below. Follow along and you’ll have your LLC set up in no time.
6 Steps to Start an LLC in Virginia
When you form an LLC in Virginia, you’ll register with the Virginia SCC (State Corporation Commission). The SCC is a state agency that sets the requirements for LLCs and handles all filings related to business entities.
1. Decide on a Business Name
The first thing you’ll need to do when creating an LLC is to choose a name. Even if you already have a name in mind, you should take some time to make sure it meets the SCC’s name requirements.
The name must be distinguishable from other registered businesses in Virginia. If another business is already using your name, you’ll need to come up with something else. This ensures that you don’t cause any confusion between your business, the general public, customers, and other businesses.
Your business name must also include one of the following words or phrases: “Limited Liability Company,” “Limited Company,” “LLC.,” “L.L.C.,” “LC.,” or “L.C.” You’ll need to avoid misleading words, like “bank” or “architecture” if your business isn’t engaged in those industries. Lastly, if you’re looking to create a business offering professional services, like a law firm, you’ll need to form a PLLC (professional limited liability company).
2. Reserve Your Business Name
You can check that your business name is available by searching for it on the SCC name search website. If there’s another business entity in Virginia with the same name, the site will notify you so you can choose a different name. If your name is available, you might consider reserving it.
To reserve the name, you can file Form SCC631 online with the SCC Clerk’s Information System or by mail. Either way, there’s a $10 fee and the state will reserve your business name for up to 120 days. This is optional, but it does give you time to complete the other steps to forming your LLC without worrying about another business taking your name.
3. Appoint a Registered Agent
All LLCs in Virginia must have a designated registered agent, which is an individual or company that accepts official documents, including legal paperwork, on behalf of your business. If you choose an individual to act as your registered agent, they must be a Virginia resident. They must also be a part of the LLC’s management, whether as a member or manager.
Alternatively, you may appoint a lawyer as your registered agent. Or, you can opt to hire a company that provides registered agent services. The company must have the authorization to do business in Virginia.
4. Apply for Virginia Business Licenses and Permits
Virginia does not require that all businesses in the state get a business license, but you may need one depending on your industry. For example, Virginia requires that all engineers get a business license. Similarly, establishments looking to sell alcohol will need an ABC license.
Different agencies regulate and issue these permits, depending on the industry. Be sure to check with the agency that controls the industry you’re in.
Additionally, you’ll need to register with the Virginia Department of Taxation if you’re planning on selling taxable services or products. This will allow you to collect sales tax from your customers and then report that tax to the state each month or quarter.
You may need additional licenses or permits depending on the location of your business in Virginia. Be sure to check with your local commissioner’s office to get more details on the licensing requirements in your area.
5. File Articles of Organization
With your business name and registered agent chosen, as well as licenses in hand, you’re ready to file the paperwork that will form your LLC - the articles of organization. In Virginia, this is Form LLC-1011. You’ll need to file the form with the Virginia SCC online or by mail, along with a $100 filing fee.
It’s a simple one-page form. To fill it out, you’ll enter your business name and address, as well as the name and address of your registered agent. Lastly, you’ll include the name and signature of the person filling out the form.
After submitting your form, the SCC will take up to two weeks to review and process it. Once approved, the SCC will send you a certificate of organization in the mail. At this point, you’ve officially created an LLC!
6. Draft an Operating Agreement
As an optional final step, you may also want to create an LLC operating agreement. The state of Virginia does not require that you have an operating agreement, but it can be helpful when it comes to managing your business on a daily basis. Plus, it further establishes your LLC as separate from your personal assets, which can be helpful in the case of any legal action.
The operating agreement outlines the obligations, duties, powers, liabilities, and rights of each of the members of the LLC. It should also include a description of the LLC’s products and services, a meeting schedule, and procedures for adding business partners and managers.
All members of the LLC need to review and sign the operating agreement. It can then serve as a guideline anytime there are concerns about how to run the business.
The Next Steps After Forming an LLC in Virginia
After officially forming an LLC, there are several important steps you should take to form a functional business in Virginia. Here’s a quick overview of what comes next.
1. Get an EIN
You may choose to get an EIN (Employer Identification Number) from the IRS (Internal Revenue Service). The IRS requires all LLCs with employees or multiple members to get an EIN. You’ll also need an EIN if you want the government to tax your business as a corporation instead of as a pass-through entity.
If you have a single-member LLC with no employees, you may not need an EIN. Even so, you may want to get an EIN to simplify taxes or get a business bank account. Check out our guide on getting an EIN for a step-by-step breakdown.
2. Set Up a Payment System
Now that your LLC is fully formed, you’ll want to start earning money as soon as possible. To do that, you need to set up a payment system. Pay.com provides you with everything you need to get started right away. After a quick onboarding process, you can set up a customized checkout page on your website.
You can use Pay.com even if you don’t have a website. Send customers a payment request directly via email or text message. Or, accept payments over the phone by manually entering your customer’s details into the Pay Dashboard.
In addition, Pay.com has a variety of payment methods to choose from so your customers can pay you with whichever method they prefer.
3. Get a Business Bank Account
You’ll also benefit from opening a separate bank account for your business, as well as by getting a business credit card. This helps to further the separation between your business and personal assets. Plus, it can make taxes much easier.
It’s easy to open business bank accounts and credit cards. You can complete the entire process online. Read our blog post on opening financial accounts for detailed instructions.
4. Comply with Employer Obligations
The state of Virginia has a few requirements you’ll need to meet if you have employees. First, you must report all new employees to the Virginia New Hire Reporting Center. You have 20 days after hiring or rehiring people to notify the office. You’ll also need to get workers' compensation insurance if you employ three or more part-time or full-time employees.
If your payroll is over $1,500 per quarter or if you have employees for more than 20 weeks per year, you’ll also need to pay state unemployment taxes. You’ll pay the taxes and file quarterly tax reports with the Virginia Employment Commission.
Lastly, you’ll also need to pay employer taxes. This involves withholding payroll taxes for your employees and filing your own payroll tax returns.
5. Pay Business Taxes
Aside from the employer tax obligations discussed above, your LLC will also need to pay taxes. LLCs are pass-through entities, so the government doesn’t actually tax your LLC. Instead, you and any other members of the LLC will pay taxes on your personal tax return(s). Each member or owner will pay both state and federal taxes depending on their share of the profits.
You may also elect to have the government tax your LLC as a corporation by filing some additional paperwork. This could provide you with some tax benefits, but you should talk with your accountant before proceeding.
The Bottom Line
Starting an LLC is a wise choice. While it might seem overwhelming at first, the process is straightforward - just be sure to take your time to ensure you get it all done right. By taking these steps now, you can focus your energy on building a successful business later on. Plus, you’ll enjoy the legal protections and flexibility an LLC has to offer.
Once your LLC is in place, be sure to set up a payment system you trust. With Pay.com, you can offer a variety of payment methods and provide secure transactions for your customers. Plus, you can get set up fast with a quick onboarding process. Don’t wait till the last minute – click here to get started now.