With strong connections to both government and the private sector, Virginia has been an economic and cultural center in North America since before the United States even existed. Forming an LLC here puts you in the position to be a part of those traditions while taking control of your financial future.
If you want to start an LLC in Virginia, though, you’ll need money. As long as you know what you’re doing, you can keep the price reasonable and get good tax write-offs out of it. We’re here to help you figure out where you need to spend your money, as well as optional purchases you’ll want to make that can make your life easier, both now and in the future.
This article will help you make a budget for starting an LLC in Virginia. Be sure to also check out our How to Start an LLC in Virginia article for more general information.
- The required costs for every LLC
- Extra costs we recommend you incur
- The different ways you can form your LLC, as well as the pros and cons of each
Total Virginia LLC Cost – $100
In Virginia, the State Corporation Commission (SCC) requires you to file articles of organization to create an LLC. This filing will cost you $100, and it’s the bare minimum you have to pay to get started.
Keep in mind that you will likely need to do more than just legally form your business. Many owners find that they need to pay local costs for licenses and permits. Several optional services are often crucial to getting a company off the ground. We’ll discuss these in greater detail below.
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How Much it Costs to Start a Virginia LLC
Just as with anything else, paying the least you can get away with is not a great idea when starting your LLC. There are likely many costs that you’ll need to think about if you want to make your experience easier and more efficient.
Articles of Organization Filing Fee – $100
Your LLC's articles create the company. Without them, the company doesn’t exist. After they’ve been filed, the LLC can buy, sell, borrow money, and conduct other lawful business. Thus, making sure that you have this document correctly drafted and filed is your first major step.
Maybe you think drafting the articles sounds hard, but it doesn’t have to be. The Virginia SCC provides a fill-in-the-blank form and instructions on its website. While you’re there, you can also file the articles online.
Of course, if you, your LLC formation service, or your lawyer want something more involved, you’re free to draft your own. But keeping things simple with the state’s form is a good way to get started.
Virginia LLCs – Optional Costs to Consider
Starting a business involves more than just paying money and forming a company. You also need to think ahead regarding the needs of your LLC, and how to ensure its health and survival when the unexpected happens. To cover your bases, here are some different costs we strongly recommend you think about incurring.
Expedited Processing Fee – $100 to $200
It can take 2-3 business days to process an LLC’s articles or organization, which might be longer than you want to wait. If that’s the case, the SCC does offer expedited processing, but only if you file online. Paper filers will have to wait the full 2-3 business days.
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.
Business License – Varies
Virginia doesn’t require a statewide business license, but your local government (city or county) might. The City of Richmond, for example, requires that all businesses there must pay for a business license every year. The fee can be $0 if your company does less than $5,000. Most businesses in Richmond, however, will pay $30 or more.
Contact your county and city governments for your exact requirements. Note that, in most cases, you will have to get a license before opening your doors.
Finally, keep in mind that lots of businesses also require professional licenses from the state. Check with the Department of Professional and Occupational Regulation for more information.
Registered Agent Fee – $100
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 a person or company you name that makes their address publicly available. You need to have a registered agent so that, if the state or someone else needs to contact your company, there is one place they can always go.
This also means that your agent will receive the legal papers if your LLC is ever sued. That might not be fun to think about, but if it happens, you need to know as soon as possible.
Many owners are tempted to serve as their companies’ agents. This is usually not a good idea. It involves making your address public and being constantly available just in case someone wants to sue your company.
It’s an easier and cost-efficient plan to hire a Virginia registered agent service for your company. These agents usually charge $100 per year and take care of all your company’s registered agent needs. It’s money well spent.
Operating Agreement — Variable
An operating agreement sets down the rules of your LLC. It says how the people in charge should do their jobs, when meetings must be held, how members can enter and exit the company, and almost any other matter you might need to address.
Virginia won’t force your LLC to have an operating agreement, but it is a very good idea to get one. Without a binding contract, you have much less control over what happens to your company if and when something unexpected happens.
If you choose to have an operating agreement, you don’t have to file it with the state. You can write it yourself, but unless you are a lawyer or know exactly what it’s supposed to look like, we don’t recommend that option.
A lawyer would likely charge you by the hour for drafting a Virginia LLC operating agreement. While that contract would likely be a good one, that could also run you at least a few hundred dollars. You can have a contract drafted, though, for as little as $39 when you use a formation service to do it.
DBA fee — $10
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. The SCC provides a form DBA certificate on its website. There is a filing fee of $10 for the certificate, which can be done online or via hard copy with the SCC.
Name Reservation Fee — $10
Maybe you have a great business plan and the perfect name for your LLC, but you’re not quite ready to start yet. If you want to make sure that a certain name is still available when you want it, you can file an Application for Reservation with the state. The filing fee is $10. It can be filed online or via hard copy with the SCC.
Once you’ve applied, the reservation is good for 120 days. If you want to renew the reservation, you can do so within 45 days before it expires.
Domain Name — about $20 per year
In this day and age, small businesses need a presence on the Internet. The first step in creating a good website is to get your own domain name. While this might have been pricey in the past, it is now quite affordable.
You should secure your domain name as soon as possible, even if you don’t have plans for a website right now. If you don’t, a competitor could buy your ideal domain and its variations to block you from using them. Domain squatters also sift through newly registered LLC names and will buy their domains only to relist them with huge markups.
In general, a domain ending in .com will be more expensive than a .net or .info domain, and some names will likely be taken, meaning you will have to do some searching (and maybe compromising).
A domain name from GoDaddy.com or a similar registrar may cost you between $20 and $50 per year, with regular specials and sales where you can get substantial discounts.
Registering with the State Tax Office — Free
All LLCs should register with the Department of Taxation so that they can pay their taxes, like employer withholding tax and sales and use tax. In order to complete this step, you will need an Employer Identification Number from the IRS. (See the next section for how to get one of these.)
For further details about any taxes that could be due for your LLC, contact the Virginia Department of Taxation.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a number created by the Internal Revenue Service and assigned to a business for paying taxes. (Think of an EIN as a social security number for a business.)
While some LLCs don't need them, in Virginia, you do need one to register your LLC with the Department of Taxation. Even if you didn’t need it, we would still recommend that you get one. Many banks won’t allow your LLC to have its own business bank account unless it has an EIN. Having an EIN can also simplify the process of getting credit.
You can apply online and get an EIN for free in minutes, or you can apply for one through the mail or fax. Whatever you do, don’t pay someone else to get an EIN for you. It’s too easy to pay someone else to do it unless it is part of a broader service package.
Foreign LLC Qualification Fees — about $100 per extra state
If your LLC does well, you may want to expand to new locations. If one of those places is in another state, you’ll have to pay to do business there. You won’t have to re-form your company, but you will have to register with the Secretary of State there and pay some extra fees.
The exact fees will depend on the state in which you are registering. As a rule of thumb, expect to pay about $100 in filing fees to register your limited liability company as a foreign LLC in another state.
Writing Formation Costs Off
Whether or not they are required fees, all of these costs are vital. Thus they can be deducted from your taxes as startup costs. The IRS and the state, though, handle these costs differently, so it will be important to confirm details with your LLC’s accountant.
The IRS has a lot of guidance on this matter, and you should compare your specific costs to the materials on the IRS website.
Keep in mind that, in most cases, an LLC is taxed as a pass-through entity. In other words, your income and deductions will go on your personal taxes, rather than a separate income tax for the LLC. The IRS allows LLC owners to deduct $5,000 of their startup expenses in the first year.
Virginia has its own separate list of deductions pertaining to state income tax, which are not directly parallel with federal deductions. You may, though, be able to deduct business interests that are not allowed on your federal returns. For more information on this, consult with a Virginia accountant.
Adam forms an LLC in Richmond to open a pizza place near the university. When doing initial research, he sees that “Adam’s Pizza LLC” is an available business name and immediately files a name reservation with the SCC. A month later, he has a space picked out and is ready to form the business, so he files his articles of organization.
Even though Adam will work the restaurant himself, he has a formation service put together an operating agreement. He foresees that his business will be a great success and may expand to other locations, so he feels that it is best to be prepared. He also hires a registered agent service that will be his agent for any other locations he opens.
Because his business will do between $5,000 and $99,000 of business in a year, Adam will pay $30 for a Richmond business license.
Finally, as part of his push to bring hungry college students to his restaurant, he obtains a web domain and uses it to aggressively advertise his business as Adam’s Pizza Place. To use that LLC name, he also has to file a DBA request with the SCC.
His formation costs are as follows:
- Virginia LLC Articles of Organization: $100
- Registered agent company fee (first year): $100
- Virginia LLC Operating agreement draft: $39
- Business license fee: $30
- Name reservation fee: $10
- DBA fee: $10
- Web domain costs (first year): $50
For income tax purposes, both the state and the IRS will tax Adam directly. In other words, he will get income from the LLC, and from that, he will pay his personal income taxes.
The total amount of Adam’s deduction in this example is $339. Before the deduction, his total taxable income for the year was $30,000. After the deduction, his taxable income went down to $29,661. Because Adam is in the 12% tax bracket, that means he saved $40.68 in federal income taxes this year, plus other deductions he may have had.
Finally, keep in mind that if Adam had more than $5,000 in expenses, he would likely be able to claim those, but not all in the first year. Instead, he would have to break out his deduction over multiple tax years on his federal return.
Cheapest Way to Start an LLC in Virginia
Now that you have a basic idea of the costs, we’ll turn to the cheapest way to get your LLC formed while still accomplishing all you need. Here are your options.
Formation Service – $39 + state fees
A business formation service is a popular and inexpensive way for new LLC owners to get started.
These companies are dedicated to helping entrepreneurs bring their visions to life. They have not only the knowledge of all the state laws you need to know, but also forms, documents, and procedures to make your life as easy as possible.
Formation services are quick and complete ways to handle formation needs for most LLCs.
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
While formation services can be great for most people, they are not always the best choice. Some cons for these services are:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Attorneys are licensed, reliable, and powerful resources for business formation. They are also quite expensive. Some business owners might have a lot of money to spare, but most don’t. Paying an attorney by the hour means that the bill can quickly grow to thousands of dollars when a formation service can often get you the same result for much less.
A business owner with more resources, though, could benefit from having an attorney if their business was at all complicated. For that reason, some owners choose to go this route.
Despite the expense, sometimes hiring a lawyer is the best choice.
- Lawyers help you manage risk. An LLC with complicated legal issues needs a lawyer. In our example above, if Adam were opening a personal injury law firm instead of a restaurant, it might be good to have a lawyer take a look at his plans to make sure everything was done the right way.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
For most people, getting an attorney comes with considerable downsides that outweigh any benefits.
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very caring people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Many people, after searching the Internet for the information they need, decide to try forming their new LLCs themselves. This process can give you a lot of personal expertise, but remember that time is money. If you are spending hours on your business formation, that’s time you’re not spending on the substance of your business.
In most instances, then, it is more cost-effective to just pay an LLC formation service, with confidence that everything has been done correctly, rather than try to reinvent the wheel yourself.
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t figure out the value of your time, a DIY solution is the cheapest option.
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that then costs them more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Virginia LLC Fees: How Much Will it Cost to Maintain your LLC?
Even after you’ve formed the company, there are annual costs for which you will have to budget. These include both government fees and amounts paid to third parties, like:
- Local Business License, depending on exact location: varies by business and location
- Annual registration fee: $50
- Registered agent service fee: $100
- Domain name: $20
Also, any small business should have an accountant. Costs for accounts vary significantly, but you should spend an average of $2,000 to $3,000 per year on an accountant in most cases.
How Much are LLC Taxes in Virginia
As noted above, Virginia treats most LLCs as pass-through entities, meaning that an income tax rate of 2% to 5.75% will be applied to your earnings. If you elect to have your LLC taxed like a corporation, though, it will pay a 5% tax. If you are considering this kind of tax treatment, talk with your accountant about the pros and cons.
However your business pays income tax, though, you will probably have other taxes as well. For example, if your LLC hires workers, you will have to pay employment taxes. If it sells goods and services (and it almost certainly will), you'll also have to collect sales and use tax.
The Department of Taxation website will have complete information about any taxes you’ll have to pay.
Virginia LLC Formation Costs Quick Links
- City of Richmond — Businesses Tax, Fee, and License Descriptions/FAQs
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Virginia Department of Professional and Occupational Regulation
- Virginia SCC — Annual Registration Fees
- Virginia SCC — Application for Reservation or Renewal of Reservation of a Business Entity Name
- 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 LLC Formation Costs FAQs
How much does it cost to start an LLC in Virginia?
The minimum cost is $100. This amount is the filing fee for your LLC’s articles of organization.
What is the cheapest way to start an LLC in Virginia?
A do-it-yourself approach will have the lowest price tag, but it isn’t the cheapest in terms of your time. The best balance of price and time, for most people, is to use a formation service.
Do I need to hire an attorney to form an LLC in Virginia?
No. Most people will not need to invest the considerable expense and time of hiring a lawyer. A formation service or a DIY approach will work for most business owners.
Can I pay to form an LLC more quickly in Virginia?
Yes. Formation services will generally complete formation tasks faster than business owners acting on their own. If you need the state to hurry up and process your articles more quickly, you can also pay an extra $100 or $200 to make that happen.