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- The Commonwealth of Virginia is an attractive location for startups. It has one of the country's lowest corporate income tax rates and has been named the third-best state for women-led startups.
- To register your business, you’ll need to identify your startup’s legal structure, such as a corporation, a limited liability company, or a partnership.
- You’ll also select a registered agent in Virginia, which will receive any legal documents related to your startup, such as notice of a lawsuit.
- Depending on your chosen business structure, you’ll need to register with Virginia’s State Corporation Commission before beginning operations in the state. You may file your formation forms online, by U.S. mail, or in person.
- When you’re ready to register your startup, depending on your chosen business structure, Virginia requires you to choose a unique business name, differing from any other registered businesses in the state. You will also have to pay filing fees.
- Although Virginia does not have a corporate excise tax, the Commonwealth does have a corporate income tax and a sales and use tax.
Stretching from the Appalachian Mountains to just south of Washington D.C., the Commonwealth of Virginia has a long, colorful history, serving as one of the U.S.’s original 13 colonies. Now, with more than four million people living within the Charlottesville, Richmond, and the Tidewater area, which includes Chesapeake and Virginia Beach, entrepreneurs are looking to the state to launch their startups.
In 2019, Virginia-based startups received $1.16 billion in investments, with Richmond playing a pivotal role in both the attraction of and support for founders. Having one of the nation's lowest corporate income tax rates, Virginia is an attractive state for startups and is the third-best state in the nation for women-led startups.
If you consider registering your startup in Virginia, this article will walk you through your next steps.
How to Register a Business in Virginia
When you register your startup in the Commonwealth of Virginia, you'll need to satisfy several legal requirements. However, before registering your startup, it’s a good idea to plan ahead, for example, researching the market and potential competitors, mapping out your financing, planning for operations and personnel, and creating a business plan.
Virginia provides various resources for launching your startup, such as checking name availability and new business registration fees.
In drafting your business plan, you’ll want to consider marketing, advertising, sales, location, and ownership, to name a few categories. To help guide you, you can check in with the U.S. Small Business Administration.
Once you’ve identified some of the basics about your business’s operation, it is then time to register your startup. Below, we'll walk you through the steps necessary to register your business in the Commonwealth of Virginia.
Determine Your Business’s Entity Structure
Before you register your startup in Virginia, you must determine its legal ownership structure. For example, in the Commonwealth of Virginia, you may choose to register as a:
- Limited Liability Company (LLC)
- General Partnership
- Limited Partnership (LP)
- Business Trust
- Sole Proprietorship
Your chosen business entity determines the next steps in registering your startup. For example, if you choose a sole proprietorship, you won’t need to register your business with Virginia’s State Corporation Commission (SCC). However, if you give your sole proprietorship a name that differs from your own, you’ll need to register your startup’s name with the Office of the Clerk of the Circuit Court in the county where your startup is located. You may need to apply for state or local licenses, such as a business license.
On the other hand, suppose you choose a for-profit structure for your startup. You would file your Articles of Incorporation of a Virginia Stock Corporation (Form SCC619) with the State Corporation Commission online, by U.S. mail, or in person. For a corporation, you’ll need to pay a charter fee (depending on the number of shares issued), as well as a filing fee of $25.
Identify Your Registered Agent
You’ll also need to select a registered agent, the sole duty of which is to “forward to the business entity at its last known address any process, notice or demand that is served on the registered agent.” According to Virginia law, a startup may not have more than one registered agent at any given time.
In Virginia, an individual can serve as a registered agent only if they reside in Virginia, are a member of the Virginia State Bar, or are part of your management team, and agrees to serve in that role for your startup.
Additionally, a business entity may serve as a registered agent, if that entity is authorized to transact business in Virginia and agrees to serve as a registered agent. However, a company may not function as its own registered agent.
Except in rare instances, the registered office must be a physical address and can accept delivery of documents during regular business hours. As such, a registered office may not be a post office box, except in a town with 2,000 people or less.
Submit Your Formation Forms
Depending on your chosen business structure, you’ll need to register with Virginia’s State Corporation Commission before commencing operations in the state. You may file your formation forms online, by U.S. mail, or in person.
Virginia’s State Corporation Commission supplies you with the registration documents for each permissible business entity. For example, for a limited liability company, you can use the sample forms provided on the site for your articles of organization. The articles of organization form identifies your filing fee as well, which for an LLC, is $100.
What to Do Next
After you submit your formation forms and register your startup with the state, you’ll also need to obtain a federal employer identification number for banking and tax filings. Additionally, you’ll need to check in with the Commonwealth of Virginia and your local city and county to see if there are any additional business registrations required, such as a business license.
How to Register a Business Name in Virginia
When you’re ready to register your startup, depending upon your chosen business structure, Virginia requires you to choose a unique business name, differing from any other registered businesses in the state. Specifically, a business name “must be distinguishable upon the records of the Commission from the names of all active business entities, except general partnerships, and from names that have been designated, registered, or reserved for use by other persons.”
To confirm if your startup’s name is distinguishable from any other registered businesses, you can use Virginia’s name check availability tool.
Virginia notes that an available name does not necessarily mean that is an acceptable name. For example, “an acceptable proposed name must include an appropriate entity designator (e.g., 'LLC'), if required, and may not include words and designations that imply the business entity will engage in a particular business activity unless it will actually conduct such business (e.g., 'bank') or words that are prohibited by law.”
An acceptable, distinguishable startup name “remains available for use on a first-come, first-served basis.” However, if you’re not quite ready to register your startup, but you’d like to preserve your company’s name, you can file a name reservation with Virginia, along with a filing fee of $10. You may keep your business name reserved for 120 days. If you need to extend your reservation, you may extend your reservation for another 120 days. However, for the extension to be effective, you must file for the extension during the 45-day period occurring before the expiration of your name reservation. Your name reservation form can be filed online for the fastest processing.
How Much Does It Cost to Register a Business in Virginia?
Depending on the chosen entity for your startup, you will have filing fees due when registering your company. For example, if you register as a corporation, you’ll pay a filing fee of $25. Additionally, you’d pay $50 for each $25,000 shares or fractions of those shares for a corporation. If you have more than one million shares, you will pay $2,500. If you register as an LLC or as a limited partnership, your filing fee is $100.
Although Virginia does not have a corporate excise tax, the Commonwealth has corporate income tax and sales and use tax. Virginia’s corporate tax rate is one of the lowest in the country, coming in at 6 percent. This tax is based on “sales, payroll and property factors.” Additionally, Virginia’s sales and use tax is 5.3 percent, “of which the state returns 1 percent to the localities.” To understand how these taxes apply to your startup, contact a qualified accountant familiar with the laws of Virginia.
After submitting your registration forms, you will need to learn about any required state or local licenses, such as a business license. You must also understand what annual registrations and fees are required of your startup, such as an annual report. Fees for these reports differ depending on your entity’s legal structure. For example, the annual report filing fee for an LLC is $25, where the annual report filing fee for a corporation is “based on the number of shares the corporation is authorized to issue according to the records.”
The Benefits of Registering a Business in Virginia
Here are some benefits of registering your startup in Virginia:
- Virginia is home to 766,826 small businesses, making up 99.5 percent of all Virginia companies. In addition, 1.6 million Virginians work for small businesses, making up 47.1 percent of all Virginia employees.
- Virginia’s economy is strong, “boasting a gross domestic product (GDP) of $534 billion in 2018,” and is growing at a steady clip of 2.8 percent, mirroring the U.S.’s economic growth rate of 2.9 percent.
- Virginia has the 11th highest level for per-capita personal income, coming in at 6 percent higher than the U.S. average.
- Additionally, Virginia has a low cost of living, translating into more “spending power” compared to personal income levels.
- Virginia also is home to over 162 universities, colleges, and junior colleges, including Washington & Lee, William & Mary, and the University of Virginia, making the state a melting pot of talent.
- Virginia’s geographic location is a demonstrable positive, as it is close to large markets, such as Washington D.C., Philadelphia, and Baltimore.
- CNBC recently recognized Virginia as the number-one top state for business.
The Limitations Associated with Registering a Business in Virginia
Here are some limitations of registering your startup in Virginia:
- The highly qualified talent in Virginia also increases the demand for the best of the best. With so many qualified candidates, the labor market is highly competitive, making it a job seeker’s game.
- Although corporate income taxes are low, Virginia’s tax code is complex. Restaurants, retail, and agricultural product sellers, such as those at the local farmers' market, face significant tax complexity in Virginia.
- If you choose to locate your business in Northern Virginia, you may be looking at rising home prices in 2021, reducing your spending power.
Learn more with us
- How to register a business in Idaho
- How to register a business in Illinois
- How to register a business in Indiana
- How to register a business in Iowa
- Learn more about state registration for your business
Access more guides in our Knowledge Base for Startups
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If you're looking for help registering your Virginia startup, we can get your documentation ready, overall shepherding this process to ensure it's done right, get in touch with us.
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Note: Our content is for general information purposes only. AbstractOps does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.
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