How to Start a Business in Virginia
Want to start a business in Virginia? Well, you’re in luck, because Virginia is for business lovers. Small companies will appreciate the state’s small business support and development programs, while large companies can take advantage of the most educated workforce in the southern US. Starting a business in Virginia is as simple as selling something—bang, you’re a sole proprietor. But to find out how to register your business, safeguard your assets, and meet Virginia’s legal requirements, check out our step-by-step guide to starting a business in Virginia.
Ready to Start a Business in Virginia?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get Virginia Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Pay Virginia Annual Registration Fee
Build Your Business Website
Apply for Trademarks
1. Pick a Business Structure
New business owners often begin as sole proprietors or members of general partnerships. These business structures are easy to form because you don’t need to register your company with the state. All you’ve got to do is sell some handmade jewelry or coach a few entrepreneurs, and just like that, you’re operational.
Unfortunately, sole proprietorships and general partnerships do not offer any legal separation between you and your business, meaning that you have no liability protection. You are personally responsible for any lawsuits or debts incurred by your business, which puts all of your assets at risk (including vehicles, real estate, and any money in your personal bank accounts).
To get liability protection, you’ll need to form a separate business entity that you register with the state. This will shield your personal assets from potential business damages. Two common entity types that offer liability protection are limited liability companies, known as LLCs, and corporations.
Virginia Limited Liability Company (LLC)
LLCs are great if you want a more flexible business structure. An LLC will allow you to decide how your business is managed, and you’ll be able to choose from several tax classifications. LLCs are a popular choice among small businesses, but businesses of all sizes can take advantage of the versatility and strong liability protection LLCs offer. Establish your Virginia LLC by submitting Articles of Organization with the Virginia State Corporation Commission.
Like an LLC, a corporation will provide you with excellent liability protection. However, a corporation is much more rigidly structured, so you and any fellow business owners must follow specific rules regarding business management. These rules can make your corporation more accountable to investors and reduce the prospect of internal conflicts. Form your Virginia corporation by filing Articles of Incorporation with the Virginia State Corporation Commission.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about a Virginia nonprofit?
Do you want to start a Virginia nonprofit corporation? In Virginia, you can form a non-stock corporation, in which no dividends or income are distributed to management or members beyond reasonable compensation for their work. Non-stock corporations include organizations formed for charitable, civic, educational, and religious purposes. For example, a rescue squad or a 4-H club might be run as a non-stock corporation. Establish your Virginia nonprofit by filing Articles of Incorporation of a Virginia Non-Stock Corporation with the Virginia State Corporation Commission.
Want to learn more? Check out our Nonprofit Guide.
2. Name Your Business
Naming your business in Virginia can be a deceptively simple process and varies depending on your business structure. If your business isn’t registered with the state as a separate entity like an LLC or corporation, your legal business name is your own name (or, in the case of a general partnership, your name and the names of your partners). To do business under a different name—say, “Jacob’s Donuts” instead of “Jacob Chan”—you’ll need to use a DBA.
LLCs and corporations must follow naming rules laid out by Virginia’s statutes. Your name must:
- Use an appropriate phrase or abbreviation, such as “LLC” for an LLC or “Corp” for a corporation.
- Not use words or phrases that imply your business is a different type of entity—for example, you can’t use “Inc.” in an LLC’s name.
- Not use words that imply your business does work that it does not—for example, you can’t use the word “bank” if your business is not a bank.
- Not use words whose use is restricted by Virginia statues, as listed in VA Code § 13.1-630 for corporations and VA Code § 13.1-1012 for LLCs.
- Be unique among registered businesses in the Commonwealth of Virginia.
Find out if your desired name is available in Virginia by searching the Virginia State Corporation Commission’s Name Check Availability database.
Can I reserve a business name in Virginia?
Yes. File an application with the Virginia State Corporation Commission, and you can reserve a name for 120 days for $10. You can renew your reservation for 120 days as long as you do so within the 45-day window before your reservation expires. If you don’t renew or register your reserved name before your 120 days lapse, you will lose the exclusive right to use that business name. You can file online, by mail, or in person.
What is a DBA or Fictitious Name?
A DBA, or “Doing Business As,” is any name your business uses that isn’t its legal name. In Virginia, this is called a fictitious name. In Virginia, fictitious names do not need to be distinguishable upon the record and do not have any wording restrictions. So, if you’re running a corporation but don’t want to include an entity identifier like “Inc.” or “Corp.” in your fictitious name, you don’t have to. You can file to use a fictitious name through the Virginia State Corporation Commission.
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
You won’t need to file any paperwork as a sole proprietor or part of a general partnership, although you can choose to file a Statement of Partnership Authority if you wish.
If you’re forming a Virginia LLC or corporation, you’ll have to register with the Virginia Corporation Commission. Doing this will make your business official in the eyes of the law.
- To form a Virginia LLC, file Articles of Organization of a Virginia Limited Liability Company
- To form a Virginia corporation, file Articles of Incorporation of a Virginia Stock Corporation
In your articles, you’ll need to list a Virginia Registered Agent, who’ll be responsible for receiving your legal correspondence. You can file your articles online, by mail, or in person with the Virginia Corporation Commission.
Note: The information provided in your articles will be made part of the public record. The names and addresses of all those listed in your articles will be posted online through the State Corporation Commission Clerk’s Information System Business Entity Search.
What is a registered agent?
A registered agent is a person or company you elect to accept legal mail for your business. According to state law, your registered agent must have a physical address in Virginia where they are available to receive service of process and other legal correspondence during regular business hours. While you can serve as your own registered agent, it’s not always possible—for example, what if you’re a motivational speaker and spend a lot of time on the road? Many business owners choose to hire a registered agent service for convenience, reliability, and privacy.
How can I keep my information off the public record?
The way to keep your information off the public record is to keep as much private information as possible off of public documents. One way to do this is to appoint a registered agent so that you can list their address on your articles instead of your own. (By the way: we do that!)
4. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the Virginia Corporation Commission. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.
Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.
Here are the major internal documents you need to organize for LLCs and corporations:
Virginia LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft a Virginia LLC Operating Agreement template that you can use as a solid foundation.
Virginia Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by law in Virginia (see VA Code § 13.1-624).
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted an Virginia Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about Virginia nonprofit bylaws.
5. Get Virginia Business Licenses
There’s no required general business license in Virginia. However, it’s very likely that you’ll need some type of license or permit depending on where your business is located and what kind of work you do.
Virginia State Business License
Virginia doesn’t have a state-wide business license. However, your business will probably still need a license of some kind. Many industries require their own licenses or permits, and so do many local jurisdictions. Those providing professional services, like teachers, health professionals, and tradespeople, also need professional licenses to perform their work legally.
Professional Business Licenses
Does your business offer services that require specialized training and certification to perform? If so, you’ll need to get a professional or occupational license from the licensing authority in your state. Title 23 of Virginia’s Administrative Code provides a full list of professional services, from architecture to zoology. The state’s Department of Professional and Occupational Regulation also mandates licenses for occupations such as cosmetology, tattoo artistry, and even professional wrestling.
Local Business Licenses
Many local jurisdictions require business licenses for all businesses, and others require licenses for certain types of businesses. Virginia Beach, for example, requires all businesses operating within city limits to have a business license. Norfolk requires licenses only for some businesses, such as salons, contractors, and restaurants.
Learn more about How to Get a Business License.
How do I get a Virginia business license?
To discover if your industry requires a state license and what you’ll need to do to get one, you can visit Virginia’s online business licensing resource. License issuing and requirements vary by industry. If you’re getting a horse racing permit, you’ll need to apply with the Virginia Racing Commission. Getting a liquor license, however, will require you to go through the Virginia Alcoholic Beverage Control Authority.
How much does it cost to get a Virginia state business license?
Depending on your business, licensing costs will vary. For example, there is no cost for a horse racing license beyond a $30 fingerprint processing fee for new applicants, and the license is valid for three years. A mixed beverage liquor license for a restaurant with up to 150 seats is $1,495 and must renewed annually.
How do I get a professional license in Virginia?
Professional and occupational licenses are issued by the board that regulates your field in Virginia. You can find licensing requirements using licensing section of The Commonwealth of Virginia’s website. The licensing process varies by field and can include education and examination requirements in addition to filing an application. For instance, funeral directors applying with the Virginia Board of Funeral Directors and Embalmers must have a mortuary school degree, pass state and national tests, and pay a $325 application fee.
How do I get a local business license?
Each city and county in Virginia has different requirements for the businesses operating within their bounds. In Richmond, all business need a license and the cost varies according to how much a business makes in gross taxable receipts annually. Similarly, Cumberland county also requires all business to have either an operational or a business license, depending on business income level.
6. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
Hiring employees or independent contractors? You’ll have to set up payroll in Virginia. Here’s what you’ll need to do:
- get an EIN
- determine whether you’re hiring employees or independent contractors
- prepare the forms your employees will fill out
- choose a payroll service or software
- decide on a payroll schedule
- notify the state of your new hires using the Virginia New Hire Reporting Center
- get a Virginia Employment Commission (VEC) account number if you’ll be liable for Unemployment Insurance (you’re liable if you have a quarterly payroll of $1,500 or more or will had an employee for 20 weeks or more during a calendar year)
- find your Employer UI Contribution Rate through the VEC
Setting up payroll can feel overwhelming. To reduce the complexity, use a solid payroll service or software that will automatically withhold payroll taxes, file state and federal returns on your behalf, and pay your employees (by check or direct deposit).
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn everything you need to know about hiring independent contractors.
How do I get a Virginia Employment Commission Account Number?
To get your Virginia Employment Commission (VEC) number, register using the Virginia Tax Online Services for Businesses portal. If you are unable to file online, you can also submit a Report to Determine Liability with the VEC. After registering, you’ll be able to find your Unemployment Insurance (UI) contribution rate, which will be necessary to set up payroll.
7. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.
Is business insurance necessary? For some industries, certain types of insurance are required. For example, you’ll need motor vehicle insurance if you run a trucking company. Whether or not you purchase additional insurance is up to your discretion. Supplemental insurance can help protect your financial investment in your business in case of disaster or legal action. Basically, you can decide how much risk you’re willing to take.
Here’s an overview of the two more commonly purchased types of business insurance:
Workers’ Compensation Insurance
If you have or two more employees—including subcontractors—Virginia law requires that you purchase workers’ compensation insurance. This type of insurance compensates workers for lost wages or medical bills if they are injured on the job, so it’s a way of protecting your employees from undue hardship. The cost of purchasing insurance will vary depending on the type of work you do, your payroll, and your business’s experience and loss history.
Virginia doesn’t offer coverage through a state fund, so you must obtain workers’ compensation insurance through an agent or carrier. There are four ways to get insured in Virginia:
- Through a commercial insurer
- As an authorized self-insurer
- As part of a licensed group self-insurance association
- As part of a registered professional employer organization
If you fail to maintain your workers’ compensation insurance, you could face steep financial penalties and even criminal prosecution.
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers’ compensation insurance in Virginia?
Employers are not required to cover themselves in Virginia, but you can elect to cover yourself or other business owners voluntarily. Some health insurance plans will deny claims for business-related injuries, so it’s good to have your bases covered if you get injured at work.
It’s important to note that executive officers of corporations and LLC managers are classified as employees. This means that if you co-own and manage an LLC with two other people, you’ll need to get workers’ compensation insurance, even if you don’t consider each other “employees.”
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
As a business owner in Virginia, you’ll need to pay federal, state, and local taxes. With so many moving parts, much sure to carefully review the tax requirements in your jurisdiction to avoid making any tax errors.
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. For federal income taxes, you’ll need to pay the 15.3% federal self-employment tax rate. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-corp instead.
- Corporations. Corporations are taxed as C-corps by default. This means that corporations pay the 21% federal corporate tax rate on federal taxes.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-corps, but LLCs can also apply for C-corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in Virginia, the corporate tax rate is 6%). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-corp tax election.
Virginia State Business Taxes
In addition to federal taxes, you’ll need to pay state taxes in Virginia.
For LLC owners, this means paying Virginia state income tax. Virginia income tax rates vary by income level as follows:
|Virginia Taxable Income||Tax Calculation|
|$0 – $3,000||2%|
|$3,001 – $5,000||$60 + 3% of your excess over $3,000|
|$5,001 – $17,000||$120 + 5% of your excess over $5,000|
|$17,001 and over||$720 + 5.75% of your excess over $17,000|
Corporations must pay Virginia corporation income tax, which is a flat 6%. It’s important to know that Virginia requires any corporation with an expected taxable income of over $1,000 during the taxable year to make a declaration of estimated income tax.
Depending on your industry, you may also have to pay other miscellaneous state taxes, such the forest products tax or the insurance premiums license tax.
Local Virginia Business Taxes
After federal and state taxes, you may still need to pay local taxes at the county or municipal level. In Fairfax county, for example, you’ll need to pay a business personal property tax. Richmond collects taxes from businesses involved in specific industries or the sale of certain products, including a lodging tax and a cigarette tax. Check county and city websites to find out what local taxes apply your business.
9. Pay Virginia Annual Registration Fee
In Virginia, all LLCs and corporations are required to pay an annual registration fee to the State Corporation Commission. This fee is due on the last day of the month your business entity was registered with the state. For LLCs, the fee is $50. Corporations must pay an amount based on the number of the company’s authorized shares, which ranges from $100 for 1-5,000 shares to $1,700 for over 270,000 shares. All annual registration fees can be paid online through the Commission’s Clerk’s Information System.
Corporations are also required to file an annual report, which ensures that the state’s records on your corporation remain up-to-date. On your annual report, you can update your principal address along with the names and addresses of your directors and officers. There is no fee to file your annual report, which is due the last day of the month your corporation registered with the state. Your report can be submitted online using the Commission’s Clerk’s Information System.
For corporations, read more about How to File a Virginia Annual Report.
What if I don’t pay my annual registration fee in Virginia?
If you don’t pay your annual registration fee in Virginia, you’ll get hit with late fees, and your business registration may even be terminated by the state.
The penalty for late annual registration fees is $25 for LLCs. For corporations, the late fee is either 10% of the annual fee or $10, whichever is higher.
If an LLC has not paid its annual registration fee by the last day of the third month following the due date, the business will be terminated. The same goes for corporations, but on the last day of the fourth month following the due date.
What if I don’t file my annual report in Virginia?
LLCs aren’t required to file an annual report. However, it’s a different story for corporations, and not filing your annual report can have very serious consequences. If you miss your due date, your business will no longer be in good standing. The State Corporation Commission will update its records to reflect your delinquent status. If you haven’t filed your annual report five months after your due date, your corporation’s registration with the state will be terminated.
10. Build Your Business Website
If you want Virginians to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“email@example.com”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the Commonwealth of Virginia or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Virginia is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Virginia.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register for a trademark in Virginia?
If you’d like to register a trademark in Virginia, file an Application for Registration of a Trademark or Service Mark with the State Corporation Commission. Your application will need to include an example of your trademark in use (for example, on a product or advertisement), a description of how your business uses the mark, and the date you began using it. The filing fee is $30.
Note that registering your trademark in Virginia doesn’t protect your trademark in other states.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.