With a history stretching back to before the founding of the United States and bordering the nation’s capital, Virginia continues to be both culturally and economically relevant today. Forming your LLC here makes you a part of that, but getting started can be tough. There’s a lot of information out there, but not all of it helps.
We’re here to give you just the details you need to form your Virginia LLC. It’s not as hard as you might expect, but you do need to be careful and avoid some of the more common pitfalls in the process. Just follow our steps and tips, and you’ll be up and running before you know it.
In this article, you’ll find all the information you need to start an LLC in Virginia, including:
- Tips on drafting and filing the documents you need for your Virginia LLC formation
- Guidelines for staying within state and federal law
- The actual laws and rules you need to follow
Step 1: Name your Virginia LLC
Before you can jump into business, you need to think of a good name for your LLC. Virginia Code section 13.1-1012 covers the basics you need for giving your company a proper name.
Words You Have to Use
First, your company has to have the words “limited liability company” or “limited company” in its name. Abbreviations, like “LLC,” are also fine.
Virginia law also requires that your LLC name have enough words in it to be distinguishable from the name of any other business operating in Virginia. You also have to steer clear of any names that have been reserved for use, even if the companies that have them are not technically in business yet.
Let’s say you are opening a bookstore and you want to call the LLC “Spider Books, LLC.” You run a name search on the website, though, and see a company has already taken the name “Spider Books, Inc.”
Even though they are different types of entities, those names are too similar. If you change your LLC name to “Richmond Spider Books, LLC,” you’ll probably have a much better chance of approval.
Words You Can’t Use
The law also forbids you from using certain words in your company’s name. First, you can’t have any words in your company name that imply your LLC is a different kind of company than it is. So, no “incorporated,” “partnership,” or similar words.
Second, section 13.1-1012(B)(2) forbids your LLC from using “[a]ny word or phrase the use of which is prohibited by law for such company.” This is just a catch-all for a lot of rules also in effect in other states that reflect common sense.
In general, you can’t give your company a name that people will confuse with a government entity (e.g., “Fairfax Police, LLC”). You also can’t name your LLC something implying a business that you are not qualified for.
For example, if you use the term “barber” in your company name, you should be licensed by the Virginia Board for Barbers and Cosmetology. And if you use the words “lawyer,” you should be a licensed attorney with the State Bar.
The big rule is this: if you need a license to do your job, double-check with the State Corporation Commission to make sure your company name complies with the law.
Research the LLC Name You Want
It’s easy to figure out if the name you want for your LLC is available. The Virginia State Corporation Commission (SCC) offers a free Business Entity Search you can use to search for specific names or words in the names of any companies doing business in the state.
The website also has an expanded Advanced Search function if you want to nail down particular entities or documents. With these tools at your disposal, there is no reason that you can’t conduct several searches to make sure that no entities are using your desired name, or other names like it, in the state.
Virginia DBA: Using a Fictitious Business Name
As you can see, it’s not that hard to find a good name for your LLC. Even so, it’s a big state, and it’s been around a long time. You may not be able to get the exact LLC name you want. If that’s the case, it's not a huge deal. You just need to get an assumed name or DBA (“doing business as”) name to use for your LLC.
This is a very common procedure, and it’s not hard to do. Virginia Code sections 59.1-69 and 59.1-70 require you to file a certificate for your assumed name with the SCC. That certificate should set forth:
- Your name and relationship to your LLC
- The name of your LLC
- The DBA you want
- Your company’s SCC-issued identification number, which you should have received when you filed your articles or organization
The SCC provides a form DBA certificate on its website. There is a filing fee of $10 for the certificate.
Step 2: Appoint a Registered Agent for your LLC
Virginia Code section 13.1-1015 requires all LLCs to have a registered office and a registered agent in the state. A registered agent is someone who receives correspondence and service of process for the LLC, then passes it on to you.
Service of process is a legal term for business letters or legal papers. In other words, your agent is there for the state or the public to communicate with you.
Registered agents are vital if your LLC is sued. When that happens, the person suing your LLC should serve your Virginia registered agent under Virginia Code section 13.1-1018. If they can’t find your agent, they’ll serve the SCC.
The SCC will try to get the lawsuit papers to you, but it might not do so in enough time to allow you to respond, and you could lose the lawsuit by default judgment. (A default judgment happens when you lose because you didn’t answer.) Therefore, a registered agent is vital for the health of your company.
Virginia has some pretty strict rules about who can be a registered agent. Under Virginia Code section 13.1-1015, you can be your company’s agent, or you can hire someone else, like an attorney or registered agent company.
Some business owners try to save money and be the registered agents for their LLCs. We don’t recommend this approach. Hiring a resident agent company lets the LLC use that company’s address as the registered office. That way, the agent handles your important letters and service of process for you.
Being a resident agent might sound easy — perhaps too easy to pay someone else to do. You may be tempted to be your LLC’s agent yourself for a few simple reasons:
- It’s cheap: You’re not paying someone for something you can do yourself.
- It’s simple: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important papers personally.
Those points are all correct. But there are also a lot of reasons not to do it yourself:
- No privacy: Your name and address will be published on the SCC’s website.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: Agents must be open for service during all business hours. They don’t get time off.
- Business interruptions: If your agency address is the same as your business address, your clients may be interrupted by people serving lawsuits. That could be embarrassing or hurt your reputation.
- It’s your fault if you miss something: You always have to make sure your agency address is correct and up to date. If you make a mistake or miss something, that’s on you.
Registered agent companies are an easy way to avoid these issues. They aren’t pricey, either. They often cost around $100 per year. Their name and address, not yours, are listed on the Internet. Depend on your agent to make sure you don’t miss anything. That way, you can focus on your business.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
A company can also help if your LLC will work in multiple states and you need to register as a foreign LLC. Just find a company that does business in all those states, pay them a single fee for multiple agents and offices, then let them worry about the details.
Step 3: File Your Virginia LLC Articles of Organization
With a good name and a registered agent chosen, it’s time to form your LLC. You do this by filing articles of organization. Virginia doesn’t require a ton of details in this legal document, so it won’t take long.
Don’t make the mistake, though, of thinking that the articles are not important. Until you file your articles, your LLC doesn’t exist and can’t do anything. Take the time and double-check to make sure that it’s done right.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my Virginia Articles of Organization?
Virginia Code section 13.1-1011 tells you what you need to include in your articles of organization:
- Your LLC’s name
- The address for your LLC’s registered office
- The name of your registered agent
- Your LLC’s principal office, which may not be the same as its registered office (and probably won’t be, if you hired a registered agent company)
The SCC will review your articles, and if they meet the legal requirements and your state fees have been paid, it will issue a certificate of organization forming your company.
If you just want to file a basic document, Virginia provides a fill-in-the-blank form you can use.
Virginia LLC Filing Fee
The filing fee for articles of organization is $100. You can file online at the SCC’s website or via mail to the SCC’s office in Richmond. However you pay, there are no additional processing fees for paying by credit card or eCheck.
Virginia LLC Processing Time
It can take 2-3 business days to process an LLC’s articles or organization. While that is not as long as it takes in some other states, you might want to get started right away. If that’s the case, the SCC does offer expedited processing if you file online.
There are two tiers of expedited service:
- Next-day service ($100): The SCC must receive your articles by 2:00 p.m. to have them processed by 4:00 p.m. the next business day.
- Same-day service ($200): The SCC must receive your articles by 10:00 a.m., and it will process them by 4:00 p.m. that same day.
Step 4: Draft your Virginia LLC Operating Agreement
Operating agreements are contracts between you and the other members of your LLC.
Virginia doesn’t force your LLC to have one, but you’ll want to have it. A contract stating the rules of your company will help you in a lot of different situations. When you need to change something about the company or something unexpected happens, having the rules close at hand will make things go more smoothly.
Your operating agreement should list all key facts about LLC. If your LLC has multiple members (LLC owners), you each probably have unique jobs. The operating agreement says what’s expected of each person.
Virginia Code section 13.1-1023 tells you what can be included in an operating agreement. The statute lists a few broad categories:
- The affairs of an LLC and how it does business
- Rights and duties of members of the LLC
- Rights and duties or third parties that deal with the LLC (e.g., customers, vendors, etc.)
The law’s text itself doesn’t quite give you an idea of the scope these things cover. Operating agreements address important questions that you should answer as soon as you can. Operating agreements often dictate the following items:
- They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
- They say what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
- They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
- They say how new members can join the company. They also have rules about how exiting members can leave.
- They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
- They say whether members or managers are in charge. They also say how to hire and fire managers.
- They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
- They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.
Virginia’s statute does not mandate that operating agreements be in writing. We strongly urge you to write them out anyway. The whole point of having an operating agreement is that it sets down the rules for your LLC, especially if something bad happens.
Having the LLC’s rules agreed to in advance won’t do you any good if there is no written record of those rules to which you can refer. Virginia law does allow you to put rules regarding your LLC in your articles of organization. In this case, you will need to file for an amendment to your articles every time you would like to change your LLC’s rules.
Therefore, we recommend that you put your LLC’s rules in an operating agreement instead of the articles of organization.
Finally, you don’t file your operating agreement with the SCC. It’s a private contract that you keep at your company’s office. You can amend and tailor it to fit your LLC’s needs without further oversight by the state.
Step 5: Get an EIN (Employer Identification Number) for Your Virginia LLC
The IRS tracks tax documents for people using their social security numbers. LLCs aren’t people, but they do often need unique numbers for their tax documents as well. For those companies, the government uses EINs as a way to track some companies’ tax information.
Not all LLCs need an EIN. To see whether your LLC needs an EIN, ask yourself these three questions:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If the answer to any of the above questions is yes, you will need an EIN. When you apply for a bank account for your LLC (see below), you’ll probably need an EIN then, as well.
The good news is that it’s not hard at all to get an EIN. The IRS has a detailed website on the topic and allows you to apply online. The whole application process takes about five minutes. Alternatively, you can also file IRS form SS-4 via mail or fax.
Because it’s so simple, you should never pay anyone to get an EIN for you unless they are throwing it in as an added benefit to a bigger service package.
First Tasks After Registering your Virginia LLC
Now that you’ve completed the basic steps, your company is formed. You’re not quite ready to go yet, though. There are still a couple of items you must take care of before you can truly begin.
Open a Business Bank Account
There are many good reasons to get your LLC its own bank account:
- Accounting: You’re in business to make money. You can’t tell if you’re making money unless you know exactly how much your company spends and deposits every month.
- Credit: Even successful companies need to borrow money. You don’t want to use your personal credit, though, for a business expense. Keeping your company’s money separate helps build up company credit that it can use for business purposes.
- Personal Asset Protection: Keeping your company’s money separate from your own is the whole point of even forming an LLC. Without a business bank account, you risk losing that protection.
Proper accounting is crucial. You must keep detailed financial records about your business, its expenses, and its income. You can’t do that if you are mixing in your own information and money with that of the business. Your LLC’s books are easier to keep with its own account.
Getting credit for your business is also important, though not as many people think of it at the beginning. Sooner or later, you will likely need to make improvements or invest in new technology for your business. When that time comes, the LLC should do the borrowing, not you. Get started building that credit now.
Legal protection is perhaps the most important reason for having separate bank accounts. The whole idea of forming an LLC is that if someone sues it, your own assets are not at risk. This company/individual separation is called the corporate veil. (Even though an LLC is not a corporation, it's still called a “corporate” veil.)
If you treat your company’s assets like your own, the veil can be pierced, and you can lose all liability protection. So, for example, if you are taking the company’s money and using it to pay your household bills, you could lose all the legal protection that you got by forming your LLC!
Mixing assets is a bad idea. Just don’t do it. Go to the bank now and get your LLC its own bank account. You’ll be glad you did.
Get Business Insurance For Your Virginia LLC
Starting your own company is exciting, but it’s also a big risk. You need to make sure that you minimize that risk by buying insurance to protect your business against many of the problems it is likely to face.
Here are some types of insurance you should think about for your LLC:
- General liability insurance: You’ll need this if there's an injury on your property. It pays for damages and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Workers compensation insurance: If your LLC has two or more employees, it’s’ required to carry workers’ compensation insurance to protect against on-the-job injuries. Whether LLC members count as employees is a technical question about which you should consult a Virginia attorney.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your Virginia Company Compliant
You’ve made it through the basics. Now you can get started. Keep in mind, though, that you will still have to comply with various laws from time to time. Here are a few things you should keep in mind as your LLC operates.
Virginia Business Permits and Licenses
The state won’t require you to have a general business license. Your city or county might, though, so make sure that you check with local governments to make sure you’re compliant.
Lots of businesses also require professional licenses from the state. Check with the Department of Professional and Occupational Regulation for more information.
Virginia Tax Requirements
Most LLCs are set up as pass-through entities. This means that they do not pay income taxes themselves, but the members are taxed on the income that passes through to them. If you wish to have different tax treatment for your business, you should talk to a Virginia accountant or lawyer.
Federal LLC Tax Filing Requirements
Your LLC is also considered a pass-through business entity for federal tax purposes. Profits or losses from your LLC should be on Schedule C of your personal tax return.
Annual Report and Other Filing Requirements
Unlike many other states, Virginia does not have a statute requiring LLCs to file an annual report. (Annual reports do need to be filed by corporations, though.) It does, however, require an annual registration fee of $50. The annual fee can be paid online.
Virginia Business Formation Quick Links
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Virginia Code Title 13.1, Chapter 12 — Virginia Limited Liability Company Act
- Virginia Code Title 59.1, Chapter 5 — Transacting Business Under Assumed Name (DBA)
- Virginia Department of Professional and Occupational Regulation
- Virginia SCC — Annual Registration Fees
- Virginia SCC — Business Entity Search
- Virginia SCC — Expedited Services
- Virginia SCC — Online Portal Business Sign-In/Clerk’s Information System
- Virginia SCC — Form Articles of Organization
- Virginia SCC — Form Certificate of Assumed or Business Name (DBA)
- Virginia Tax — How to File and Pay Sales and Use Tax
- Virginia Tax — Online Services for Businesses
- Virginia Workers’ Compensation Commission — Information for Employers
Virginia LLC FAQs
How much does it cost to start a Virginia LLC?
The filing fee for articles of organization is $100. The state fee for an LLC registration is the same whether you file online or by mail.
What is the processing time to form my Virginia LLC?
2-3 business days. You can expedite your LLC formation and receive next-day or same-day service for an extra fee.
What are the benefits of a Virginia LLC?
A Virginia LLC protects your personal assets while giving you favorable tax treatment. You can also use an operating agreement to customize your business structure so it best serves the needs of you and the other LLC members.
Where do I check if my Virginia LLC name is available?
Use the Virginia SCC’s free Business Entity Search.