New Virginia businesses benefit from the state's central location on the East Coast, with easy access to major metro areas. In fact, the so-called Old Dominion is frequently named among the top U.S. states for new businesses. If you're inspired to start a Virginia-based company, you can sail through the process with our easy-to-follow guide.
When you stick to these 6 steps, you'll be prepared to select a structure for your new business, begin accepting credit and debit card payments from your customers, and complete the paperwork you need to operate legally in Virginia. Along the way, we'll help you connect with the right resources at the state and local levels.
6 Steps to Start a Business in Virginia
The State Corporation Commission (SCC) provides information and resources for Virginia business owners. The state also offers the Business One Stop portal for forms, filing requirements and assistance.
1. Sign Up to Pay State and Federal Taxes
Sole proprietors, limited liability companies, and some Virginia partnerships report income and expenses to the IRS on your individual income tax return. If you created another business entity or hired employees, you'll need to register for a free Employer Identification Number (EIN) with the IRS.
You may also need to register to pay state taxes with one or more of these agencies:
- The Department of Taxation, if you will hire employees and/or sell products or food
- The Virginia Employment Commission, for unemployment tax withholding if you have employees
- The Virginia Worker’s Compensation Commission, to arrange and pay for workers' compensation insurance coverage if you have at least three employees
The state requires you to have an EIN number from the IRS to pay state taxes unless you started a "pass-through" tax entity that's reported on your own return.
2. Find the Right Business Name
Your next challenge will be selecting a unique name for your new Virginia company. You can search the SCC database to make sure your choice isn't taken by a different business in the state. Searching the U.S. Patent and Trademark Office website prevents you from infringing on another company's trademark. At this point, you might also want to make sure the domain name you want for your business is available.
You'll also need to meet naming requirements for your selected business entity. For example, if you start a limited liability company you should add Limited Liability Company, LLC or L.L.C. to your registered business name, and Corporation or Corp. if you form a Virginia corporation.
When you find the right name, you can reserve it with the SCC for 120 days. You can also renew this reservation more than once if you experience delays. Start your reservation with the Application for Reservation or Renewal of a Reservation of a Business Entity Name.
3. Select a Legal Structure for Your Virginia Business
Each of these common Virginia business entities has its own tax treatment, legal structure, and registration requirements. The SCC manages the online portal for business registration. If you submit your application online, you may receive same-day approval. You can also print and mail the necessary paperwork.
If you're a solo business owner, you can start your sole proprietorship without a state registration in Virginia as long as you'll use your own legal name. If you plan to use a different name, you can submit the Certificate of Assumed or Fictitious Name form to the county where you operate. This form allows you to choose a "doing business as" name for your business. The filing fee is $10.
You form a general partnership simply by creating a for-profit business in partnership with at least one other person. All the partners contribute to the business operations and take a portion of its profits and losses. They also have legal responsibility for the company's financial obligations and debts.
To start a general partnership in Virginia, you'll complete the Statement of Partnership Authority form. The filing fee for this business structure is $25.
Limited Partnerships and Registered Limited Liability Partnerships
Limited partnerships (LP) are similar to general partnerships, but they may limit your personal liability for business lawsuits and other obligations. In Virginia, each LP must have one or more limited partners and one or more general partners. The general partners assume personal liability while limited partners do not.
Registered limited liability partnerships (LLP) limit personal liability for all partners. Otherwise, they share the same structure as a standard general partnership.
To create an LP or LLP in Virginia, fill out and submit the Certificate of Limited Partnership along with a filing fee of $100.
Limited Liability Company (LLC)
An LLC consists of several owners, called members, who divide the company's profits and losses. You can manage your LLC as a member or hire outside managers for your operating needs. LLCs limit your personal liability for business debts and legal judgments. That means the court can't claim assets like your home or vehicle if someone sues your company and wins. Most LLCs have pass-through taxation.
To form a Virginia LLC, you'll need to submit the Articles of Organization and pay a $100 fee. This document asks for:
- The name of your business
- The principal office, which must be a mailing address in Virginia (not a post office box)
- The name and address of your registered agent, a person or business with a Virginia mailing address who agrees to accept legal documents for your LLC
- The signatures of all LLC members, along with their names, titles and contact information
When you create a corporation, you form a separate legal entity and appoint a board of directors that in turn elects officers to run the business. Virginia recognizes two types of corporations:
- Stock corporations, owned by shareholders who each receive a portion of the company's issued shares
- Nonstock corporations, owned by members and usually formed for nonprofit purposes like clubs or charities
To start either a stock or nonstock corporation in Virginia, complete the state's Articles of Incorporation form online or in person and submit a $25 filing fee. You'll also have to pay a charter fee of $50 for a nonstock corporation. If you plan to offer stock, the charter fee varies from $75 to $2,525 depending on the total number of issued shares.
4. Look Into Licenses and Insurance
Although Virginia doesn't require a license to do business in the state, you'll likely need a local license. You can find out more about the requirements in your city or county from the Commissioners of the Revenue Association of Virginia.
The Department of Professional and Occupational Regulation offers more information about professional licensing agencies in Virginia. You need an industrial license to open certain types of businesses, including but not limited to food service and beauty establishments.
Insurance can protect your financial investment in your business. You may want to consider one or more of these common types of commercial coverage:
- General liability insurance
- Commercial property insurance
- Auto insurance for business vehicles
- Workers' compensation insurance
- Expanded liability coverage
- Health, disability and life insurance for owners and/or employees
5. Partner with a Payment Service Provider
When you sign up for our services, we'll set up your personalized Pay Dashboard. You can select from various payment methods depending on your preferences.
Our payment software integrates effortlessly with your business website, even if you don't know how to code and have limited IT experience. In fact, you don't even need a website to use Pay.com. Just send our secure Pay Links to instantly connect clients to a personalized checkout page where they can complete transactions.
6. Select Your Business Location
Finding the right place for your Virginia business can have a big impact on your success.
For example, is your storefront easy for customers to find, with ample access to foot traffic? If you're opening a home-based business, does your operation comply with local zoning laws? Can you access tax credits for creating jobs or opening a business in targeted economic development areas?
Answering these questions can help inform your search for the ideal site in the state.
The Bottom Line: Starting a Business in Virginia
Virginia has plenty to offer new business owners, from a stellar location to generous tax incentives. When you're ready to start from scratch or relocate to the state, these six steps will get you started as you enter the Virginia small business landscape. Either way, you'll find access to an expansive workforce along with grants and programs to help your business grow.
Completing the proper process will help your business avoid snags that can result in costly fines and even delay your ability to open in the state. You can use this guide to navigate the process from choosing a name to opening your first location.
Even before you have an online or physical location in place, you can begin taking credit card payments for your products and services by signing up with Pay.com.