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.
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.
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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.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform a Virginia business name search to make sure the name you want is available.
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 register your business with the state, so file them as soon as you can! It costs $100 to file online or using a hard copy, but once your Articles of Organization are accepted, you won’t have to file them 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.
The information required to file your Articles of Organization includes the official business name of your LLC, the name of your registered agent, an indication that your registered agent is an individual or a business, your registered office address, your LLC’s principal business address, the date, and the name and signature of your LLC organizer.
Before we move on, we’ll briefly mention that Virginia professional LLCs need to file a specialized version of the Articles of Organization. For more information, consult our complete guide to Virginia professional LLCs.
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 its 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.
What are some of the most commonly required business licenses for Virginia LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Service
Starting an LLC in Virginia 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 service. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like LegalZoom and ZenBusiness) offer basic LLC formation services 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 Virginia 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, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
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 $500-2,000.
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.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Virginia. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
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 report and registration fee. This $50 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 $50 payment into your yearly budget.
The information required to file your annual report includes the official business name of your LLC, your State Corporation Commission ID number, the jurisdiction where you originally formed your LLC, the name and address of your registered agent, your LLC’s principal office address, and the names and addresses of your LLC members and/or managers.
For more info on annual reports for Virginia LLCs, check out our full article on this topic!
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.
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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.
Key Steps for Starting a Virginia LLC
- The first step to forming a Virginia LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Virginia, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $100 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Virginia LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Virginia Department of Taxation, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Virginia!
Key Steps for Maintaining a Virginia LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Virginia.
What are the state business tax rates in Virginia?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 2% and 5.75%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Virginia’s 6% corporate income tax on your business revenue.
How quickly does Virginia process LLC formations?
The Secretary of State should be able to process your LLC’s formation “in real-time” if you file online. If you choose to file using a paper form, the turnaround time may exceed two weeks. You can expedite your paper filing for $100 (next-day service) or $200 (same-day service), but even these options are slower than filing online.
How many small businesses are there in Virginia today?
The state of Virginia is home to more than 765,000 small businesses. Entrepreneurs of all backgrounds and business types find that Virginia is a great place to own and operate a small business.
What are the top small business resources and websites in Virginia?
The Virginia chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Virginia LLCs. The U.S. Small Business Administration’s Virginia District Office is another valuable resource, and the state’s Department of Small Business and Supplier Diversity also has plenty of good info.
Should I form my LLC in Virginia, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.
Cost to Start an LLC in All 50 States
We break down the LLC costs in detail in all 50 states. View all of our State LLC Costs guides below.