Virginia LLC Guide | A Comprehensive Write-up for Beginners
When talking about LLC, what really comes to your mind? You might have heard about LLC but you don’t really understand the concept of how it’s been operated.
A limited liability company (LLC) is a business entity that offers certain legal protections and rights to its owners. An LLC is either a corporation or a sole proprietorship/partnership.
Do you know that forming an LLC is the simplest way of structuring your business to protect your personal assets in case your business is sued?
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An LLC can be owned by one or more people, who are known as LLC “members”. An LLC with one owner is known as a single-member LLC, and an LLC with more than one owner is known as a multi-member LLC.
What Do You Understand By a Single-Member LLC?
A single-member LLC is a business with only one owner that is not taxed separately from their business. Like a sole proprietorship, a single-member LLC is taxed as a disregarded entity by default.
Because the government ignores disregarded entities, they undergo “pass-through taxation.” This means all profits or losses from the business pass through the business directly to you, the business owner.
You, in turn, are responsible for paying income and employment taxes on your earnings via your personal tax return.
At this point, what do you think about multi-member LLC?
Multi-member LLCs are taxed as partnerships and do not file or pay taxes as the LLC. Instead, the profits and losses are the responsibility of each member; they will pay taxes on their share of the profits and losses by filling out Schedule E (Form 1040) and attaching it to their personal tax return.
Understanding the basic principles of Virginia LLC is the best thing to do before planning to start. It’s important to know what an LLC is and whether or not it is a viable business structure for your company.
1. Virginia LLC Information
Forming LLCs in Virginia is affordable and easy. Unlike other states, the State of Virginia has some unique LLC requirements.
Interested parties must register with the Virginia State Corporation Commission by filing the necessary forms, paying the necessary fees and meeting all naming and formation requirements.
The specifications required of a Virginia LLC are:
LLCs are required to complete and submit the Articles of Organization with the State Corporation Commission. This is done online or by mail. The Articles of Organization must include the following pertinent information:
- LLC name, address and county or city where LLC office exists
- Registered agent’s name and address
- Organizer’s name, phone number, signature, and date
LLCs are required to submit signed original Articles of Organization to the Clerk of State Corporation Commission, accompanied by the necessary fees.
- Forms Submission and Fees
LLC registrants are required to complete and submit Articles of Organization with the Clerk of the State Corporation Commission. There is a filing fee that must be paid upon submission of the documents.
Documents to be expedited the next day are charged an additional expediting fee. For same-day processing, there is an expediting fee.
- Timeline for Filing Documents
The usual processing time for filing is between three to five business days. For expedited services, you can choose between same-day and next-day services, which have additional corresponding fees.
- Basic Naming Requirements
LLC naming requirements can be confusing. However, the easiest way to ensure that your LLC name will be approved is to make it distinguishable from those of other LLCs and to include specific words required of LLCs.
You may opt to have a preferred name checked for availability before filing your LLC formation documents with the State Corporation Commission.
2. Cost to Form an LLC in Virginia
To start an LLC in Virginia, you must file Articles of Organization with the State Corporation Commission. You can file the document by mail. The online filing option is temporarily unavailable.
The Articles of Organization cost $100 to file. Once filed with the state, this document formally creates your Virginia LLC.
3. How to Start LLC in Virginia
Knowing the basic registration process and cost of fees before starting your LLC in Virginia is mandatory so that you won’t regret your actions.
- Choose a Suitable Name for your Business
The LLC name must end with “Limited Liability Company,” “Limited Company,” “Ltd. Co.,” “LC,” “LLC” or “L.L.C.” The name cannot use words in parentheses. The name shall not contain any prohibited word or phrase implying the company is organized for any purpose other than that stated in the Articles of Organization.
The name may not be confusingly similar to that of any domestic or foreign qualified LLC.
Names may be reserved for up to 120 days. You may file a name reservation application with the State Corporation Commission by submitting a completed request form and required fee via mail.
Do not forget to include the name to be reserved as well as the applicant’s name, address, phone number and signature. You may also have a preferred name checked for availability by accessing the State Corporation Commission’s website.
- Get an Employer Identification Number (EIN)
If there are two or more members in your LLC, your company will need to obtain an EIN from the IRS, for tax purposes.
- Understand the LLC’s Legal Obligations.
LLCs in Virginia are required to pay an annual registration fee on or before the last day of the month in which the LLC was formed, in all subsequent years following the year of formation.
A notice via mail will be sent to the registered agent every year to remind your LLC of the annual registration fee payment.
The registration process may be done online, by mail or in person. There is a penalty fee for payments made after the date stipulated in the notice sent by mail.
Please note that continuing legal obligations may include, but are not limited to, state taxes, annual reports and so on. It is your responsibility to know what these continuing legal obligations are in order for your LLC to remain in good standing with the state.
- Create an Operating Agreement.
Although LLCs in Virginia are not required to have a limited liability company operating agreement, it is wise to have one in place with other members should your LLC have more than one member.
The State of Virginia recognizes limited liability company operating agreements as governing documents.
4. Virginia LLC Annual Fee
It’s better to know the annual fee of how the State Corporation Commission in Virginia charged. This alone will make you budget for everything at a time which will help reduce the stress of thinking much.
The State Corporation Commission charges Virginia LLCs an Annual Registration Fee of $50.
5. Where to Get Tax ID Number in Virginia
An Employer Identification Number (EIN), also called a Tax Identification Number, is a nine-digit number that identifies a business entity. It is for tax filing purposes and acts as a Social Security number for business entities.
You need one if you have employees, have a partnership or corporation, withhold taxes on income and have a Keogh plan.
You can get an EIN from the Internal Revenue Service and it is free. The IRS provides several application methods. You can complete each in less than 20 minutes. The amount of time necessary to receive your EIN depends on the application method you select.
6. How to Set up a Single Member LLC in Virginia
For an individual starting a business in Virginia, it is important to understand the regulations concerning limited liability companies before committing to the business structure.
The state regulations for single-member LLCs are the same as those pertaining to multi-member LLCs. However, owners should be especially cautious about actions that may lead to personal liability for the business.
An LLC provides limited liability to the owners of business: If the business is sued or otherwise owes money, the owners are typically not responsible for paying the debt from their own personal funds. In Virginia, an LLC may be owned and operated by one individual.
While a single-member LLC may operate similarly to a sole proprietorship, the appeal of registering the business as an LLC is often to protect the owner’s personal assets from any claims that may be brought against the business.
7. Why do I Need a Registered Agent in Virginia
Most likely you came across the term registered agent while filing documents to form a new Virginia business or register an out-of-state business to do business in Virginia.
Depending on what form you are filing, it might have shown one of these synonyms for the appointment: registered office, resident agent, statutory agent, or agent for service of process.
Every Virginia and foreign business entity authorized to transact business in Virginia is required by law to continuously maintain in the Commonwealth a registered office and a registered agent.
This includes LLCs, corporations, limited partnerships, limited liability partnerships, and nonprofits.
I believe this informative article has answered most of your frequently asked question about Virginia LLC? If you still have any questions or contributions you can drop a comment below.