Starting your own business is no easy task. In order to get your operation off the ground, you will need to do a significant amount of research and make a sizable financial investment. The rewards, of course, can far outweigh the sacrifices required. Before you hire a staff or commit to signing a lease on office space, however, you may want to learn more about forming an LLC. There are several different ways to structure a business, each one offering its own particular drawbacks and advantages. By understanding what is required for forming an LLC in Virginia, you can be better positioned to make a decision that is right for you and your business.
An LLC is officially known as a “Limited Liability Company.” It is a mode for structuring your business as a separate entity. LLCs are very popular among business owners for a couple of reasons. For one, they establish the concept of “limited liability.” What that means is that your personal finances and assets are shielded in the event that your business is sued or goes bankrupt.
Another benefit to creating an LLC is that it is a “pass-through” entity in the eyes of the Internal Revenue Service (IRS). What that means is that the profits of the business are not taxed, rather they “pass through” to the members of the LLC, who then pay taxes on their income. If an LLC sounds like it may be a fit for your business, read on to learn how you can create one in the state of Virginia.
Select a name
Your first order of business is to choose a name for your enterprise. Your business’s name will be registered with the Virginia State Corporation Commission (VSCC) and must be completely unique from the other organizations in the registry.
Obtain the appropriate business licenses
Depending on your industry, there may be licenses and permits that your business will need to obtain in order to operate legally. For example, a bar is required to have a liquor license to serve alcoholic beverages. Restaurants can also call for specific permits. It is a good idea to acquaint yourself with the zoning regulations in your local jurisdiction.
Designate a registered agent
When you form an LLC in Virginia, you are required to appoint what is known as a “registered agent.” This individual will be tasked with receiving service of process documents. In other words, they will handle the receipt of all legal correspondence on behalf of your business. This individual’s information should be included in your articles of organization.
Submit your articles of organization
With your business’s name, registered agent, and licenses in place, it is time to submit your articles of organization to the VSCC. This document will call for some relevant information about you and your business. Coupled with the requisite fee, you can mail your completed articles of organization to the appropriate state office for processing.
Understand state employer requirements
Each state has their own requirements for employers operating within their jurisdiction. In Virgina, you will be required to report all new hires to the state’s New Hire Reporting Center within 20 days of bringing them on-board. You will also need to purchase workers’ compensation insurance and pay your unemployment taxes. Additionally, you will need to withhold payroll taxes for your employees to meet state taxation requirements.
Draft an operating agreement
Creating an operating agreement can help your business function more efficiently on a day-to-day level. This document, though not required by state law, should outline important operational matters for your business. Specifically, your management structure and profit-sharing arrangement, as well as a meeting schedule should be detailed for a clearer understanding.
Know your federal tax requirements
You will want to make sure that your business is aligned with federal tax requirements. Provided you have more than one employee, you will need to obtain an Employer Identification Number (EIN) from the IRS. You will also need to withhold for Social Security and Medicare taxes. It may be wise to consult with a seasoned tax attorney when creating your LLC.
Working with the Corporation Center in Forming an LLC
If you have a firm grasp of what is needed to create a limited liability company, it is time to move forward with submitting your articles of organization. Once you have assembled all of the necessary information and completed the required forms, you can mail them to the appropriate Virginia state office. If, however, that seems like an inefficiency you would prefer to eliminate, there is a simpler way.
At the Corporation Center, we help Virginia business owners submit the documentation they need online. Using our streamlined web forms, you can fill out and submit your articles of organization in just a matter of minutes. To learn more, contact us today.