How to Form a Virginia LLC in 10 Steps
LLCs or Limited Liability Companies are typical structures of business. A benefit of forming an LLC is that It will reduce exposure to company activity liability for the owners. LLCs can have one person as an owner or multiple people as owners. Unlike corporations, LLCs don’t file individual tax returns, and all LLC profits will be passed through to each LLC member.
It is a fairly straightforward process to form an LLC. You’ll need to follow the steps below.
1. Choose Your Company Name.
Your new LLC will need to have a new name. This will need to be a name that no other company has a right to use. We would be happy to run your name search or reserve your name at SunDoc for nominal fee. At the minimum, your new name should be free to use within Virginia.
2. Understand the LLC Organizer Requirement.
An organizer is the person or company that drafts your LLC. By preparing on-line with us, SunDoc Filings will be your organizer. If you choose to prepare and upload your filing with SunDoc, you can name your own organizer
3. Designate a Registered Agent.
You’ll need a registered agent in addition to an organizer as well. It’s a requirement of your Articles of Organization (jump to #6 for more information). Also, take a look at our article, Registered Agent Service to learn why all companies must have registered agents.
4. Decide Your Ownership and Management Structure.
In your Articles of Organization, you’ll have to state whether your LLC will be managed by managers or members. You’ll also need to state whether it will be managed by all members, by multiple managers, or by a single manager.
5. Create an Operating Agreement.
In the state of Virginia, you don’t need to have an Operating Agreement if you are an LLC. Instead, according to default laws, an implied operating agreement will be created. Still, it’s up to you to make sure that this default operating agreement meets all of your business’s needs.
Will you have a manager-managed LLC? According to Virginia law, the only way to have a manager-managed LLC be valid is to declare that your LLC is going to be manager-managed in both an Operating Agreement and in the Articles of Organization for your LLC.
Your Operating Agreement will do many things to organize and operate your business. It manages working capital; creates governance for your LLC; and handles money matters, liability matters, voting issues, and fiduciary constraints. An Operating Agreement will also manage the payout of your LLC profits.
Many companies will turn to an attorney at this time for consultation on creating a useful Operating Agreement.
6. File the Articles of Organization.
According to Virginia law, you’ll need to provide essential details about your LLC in a document called the Articles of Organization. This is a one-page document, and its acceptance by the Virginia Secretary of State will mark the official creation of your new company.
When filing your Articles of Organization, there are several pieces of information you’ll need. First, you must have a chosen name not taken by another company. You will also need a company address as well as the names of your registered agent and LLC organizer.
Keep in mind that the state of Virginia does not require a publication in a newspaper of record or that you document the names of your members.
7. Obtain an Employer Identification Number and Open a Business Bank Account.
Congratulations! You are now registered as a Virginia LLC. If you have more than a single member, you will need to file for an Employer Identification Number (EIN) with the IRS. This is true whether or not you have any employees. SunDoc can file for you, or you are free to file with the IRS on your own.
You’ll also need an EIN in order to open a business bank account. If you've been paying business expenses out of a personal account up until now, this is a good time to set up your company's fiscal management. Make sure you keep all receipts for reimbursement no matter the account you’ve used for payments. At this point you may also want to find an accountant for help with business matters.
8. Pay Virginia State Taxes.
Every year, your company will be required to pay an annual tax to the Franchise Tax Board of Virginia. This includes your first year in business. The fee is not an actual income tax. It’s simply a fee that you must pay in order to do business in Virginia. Remember that if you sell goods in Virginia, you will also be required to collect sales tax. More state tax information can be found on the State of Virginia’s tax web site.
9. Determine Necessary Licenses and Permits.
Most Virginia companies are required to have one or more business licenses or permits to operate at the city or county level. Use Virginia's one-stop resource CalGOLD to find the requirements for your business. It’s important to check CalGOLD even if you think your business is exempt. You may be surprised to discover what’s required. Operating without the proper license or permit can result in expensive fines.
10. File an Annual Report.
Virginia LLCs are not required to file an Annual Report with the Secretary of State.
Important Notice: It is beyond the scope of this article to discuss your potential insurance needs, or matters relating to employees. You should consult an attorney or accountant with any questions about legal or financial matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.
For additional learning, please visit Virginia LLC FAQs.
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