Think about your LLC a year from now: raking in profits and taking Virginia by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Virginia.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Virginia startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Virginia
Optional: LLC Name Reservation Fee
- $10 to file a hard copy, with an optional $50 fee for next-day processing or $200 for same-day processing
Required: Articles of Organization Fee
- $100 to file online or on paper, with an optional $100 fee for next-day processing or $200 for same-day processing
Overall Virginia LLC Formation Costs
LLC Name Reservation Fee
This step is not essential to the LLC formation process, nor is it required by the state. So, by all means, if you’re ready to start your business, skip it and go straight to the Articles of Organization, which will automatically register your name. But if you likely won’t start your business for some time and you want to protect your desired name, consider reserving it. You’ll pay a $10 fee and receive 120 days of exclusive rights to that name. You can then renew this reservation with another $10 payment.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Virginia LLC. The Articles of Organization officially registers your business with the state, so file it as soon as you can! It costs $100 to file online or using a hard copy, but once your Articles of Organization is accepted, you won’t have to file it again during the life of your LLC. Need it processed ASAP? There are two expedited service options: next-day for $100 and same-day for $200, along with an Expedited Service Request Form.
Business and Professional Licenses
Not every LLC needs to be licensed before doing business in the state, but some do. It all depends on the business’ type and location. For example, plumbers and electricians must seek licensure through the Virginia Board of Contractors, while cosmetologists go through the Board for Barbers and Cosmetology.
On top of that, your specific city and/or county may have it’s own licensure laws, so your LLC may end up needing multiple licenses, or it may not need any. Check with the Department of Professional and Occupational Regulation along with your local government to see which (if any) it needs.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Virginia business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. There’s a whole sea of qualified business attorneys, so finding the right fit can seem like a daunting task. But using a site like Avvo can help. It gives you access to a large database of attorneys so you can compare rates, locations, areas of expertise, and find the best Virginia business attorney for your LLC.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Virginia. Foreign LLCs don’t file the Articles of Organization. Rather, they must submit an “Application for Certificate of Registration.”
All foreign business entities are required to foreign qualify in Virginia, or they could incur some pretty severe penalties. Avoid them by completing an Application for Certificate of Registration and mailing it to the State Corporation Commission. The filing fee is $100 but, like the Articles of Organization, you only need to file it once.
LLC Annual Fees
All the costs discussed so far have been one-time startup fees. But Virginia LLCs have annual maintenance costs too, mainly the Annual Registration Fee. This $25 fee is due on the last day of your company’s anniversary month either online through the SCC eFile portal or by requesting a paper form. You should plan this $25 payment into your yearly budget.
The federal government classifies LLCs as “pass-through” entities, meaning that they don’t file a corporate tax return – their individual members report income and losses on their personal returns. Virginia doesn’t impose state income or franchise taxes on its LLCs either. Even so, they need to file business tax returns to keep their information updated with the State Corporation Commission.
In certain situations, your LLC will need to pay specific business-related taxes. For example, if it sells merchandise, it will owe a Sales Tax and Use Tax, and if it hires employees, it will owe a Withholding Tax and an Unemployment Tax. Make sure to register for the appropriate taxes through the Virginia Tax Online Services website.
If you’ve set up your LLC to be taxed as a corporation, it will be subject to Virginia’s 6% corporate income tax. For more information, visit this page on Virginia’s Tax website.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
If you skip the Articles of Organization or Application for Certificate of Authority, your LLC won’t even be able to begin doing business. Once you’re up and running, make sure you file your Annual Registration Fees on time. Late payments will incur a $25 fine and forfeit your good standing with the state, and if you don’t pay within three months, the state will terminate the company.
Outstanding tax payments come with their own penalties. Late taxes incur a fee of 6% of the amount due per month (up to 30%). The same applies to late filings. Check out this page on Virginia’s Tax website to learn more.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Virginia.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Annual Registration Fees – so your business doesn’t fall out of good standing.