How to Form a Virginia Corporation in 2023

1) Choose a Name

One of the most important aspects of the incorporation process is naming your business. There are three major elements to consider when choosing a name:

Legalities

When naming a corporation in the state of Virginia, you will need to include one of the following words or abbreviations: incorporated, corporation, limited, company, Inc., Corp., Ltd., or Co. Your corporation’s name also cannot include any words or abbreviations that indicate other business types, like the phrase “limited liability company” or the initials “LLC.” You also are not allowed to include words that refer to certain types of businesses (like “bank” or “law office”) unless your business fits those descriptions.

Explanatory Naming

In addition to the legal considerations, you might want to identify your line of business or your mission in your company name. For example, you can display any closely held values in your name, like using the word “green” for environmentally friendly businesses.

A Name You’re Proud of

Keep in mind that this is your business, so you should choose a name that you’re proud of, and that you enjoy sharing with potential customers. You should also make sure it sounds good when spoken aloud, and also looks good when written down.

Check whether your preferred name is available: Visit the Name Distinguishability search on the Virginia State Corporation Commission’s eFile website to check whether it is already in use. If it’s not unique enough, you may need to tweak it or come up with a new name altogether.

Reserve Your Name

The formation process can take some time so it can be a good idea to go ahead and reserve your corporation’s name. You can reserve your name with the Virginia Secretary of State by filling out the Application for Reservation of Corporation Name. You will need to send a check or money order for $10 alongside the form to the following address: Clerk’s Office PO Box 1197 Richmond, VA 23218. Once you successfully reserve your name you will have 120 days until your reservation expires.

If you’d like a closer look at how this process works, see our walkthrough guide.

2) Select a Registered Agent

Virginia corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation in step three.

Who can be my Registered Agent?

A registered agent must have a physical address within the state of Virginia where mail and legal notices can be served during regular business hours. You can hire a service to act as your Registered Agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.

The Virginia Secretary of State says that,

every Virginia and foreign business entity authorized to transact business in Virginia is required by law to continuously maintain in the Commonwealth a registered office and a registered agent. The sole statutory duty of the registered agent is to forward to the business entity at its last known address any process, notice or demand that is served on the registered agent. A business entity may not have, at any given time, more than one person serving as its registered agent in Virginia..”

Our Recommendation: We recommend hiring a professional service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off the public record.

3) Complete Your Articles Of Incorporation

This is THE document that formally registers your corporation with the state of Virginia.

You can file online, or fill out the PDF and send it in via mail.

Keep in mind that you are acting as the incorporator when you fill out and submit the Articles of Incorporation. You should sign as the incorporator before submitting the document.

4) Establish a Corporate Record

Corporations are required under Virginia law to document and keep a permanent record of all important company decisions. Some things that are required to be kept in the corporate record include:

• Articles of incorporation and any amendments
• Bylaws and any amendments
• Minutes of shareholders and directors meetings
• List of names and business addresses of current directors and officers
• Most recent annual report

The official corporate record may be kept at the corporation’s principal place of business, or stored in a safe location elsewhere. You should take the opportunity to set up a secure digital or physical location for storing company records as soon as possible.

5) Designate a Board of Directors

The incorporator is responsible for selecting the initial director(s) of the corporation.

Unless initial directors were specified in the Articles of Incorporation, the incorporator should record initial director appointments in a signed document and file it to the corporate record. This document is known as the “incorporator’s statement.” A sample incorporators statement can be found here.

The initial directors (no initial directors are required in Virginia) will serve until new directors are elected at an annual shareholder meeting, or as otherwise indicated in the bylaws. The incorporator may serve as an initial director.

6) Create Corporate Bylaws

Corporate bylaws set out the rules and procedures for how the corporation will operate. Some important topics typically covered in the bylaws include:

• How shareholders will conduct votes
• The total number of directors and how each director will be elected
• How often the board of directors will meet
• The types of officer roles that will be appointed
• Procedures for resolving internal disputes

Bylaws are not legally required in Virginia, but they are strongly recommended.

Bylaws help your business run smoothly, and are sometimes required by financial institutions for opening business bank accounts or acquiring loans.

Either the incorporator or the initial directors may prepare the company bylaws. The bylaws should be recorded in an internal company document, signed by the incorporator or a director, and filed to the corporate record. The bylaws are not filed with the state of Virginia.

If you’d like a solid framework for creating corporate bylaws, there are plenty of services and free templates available online.

7) Hold First Board Meeting

After designating a board of directors and preparing bylaws, every corporation is legally required to call for an initial board meeting and to have an annual board meeting going forward. The incorporator often arranges and attends this first meeting. During the first board meeting, the initial directors should plan to cover the following topics:

• Review and approve corporate bylaws
• Designate officers to manage day-to-day business affairs
• Choose a bank
• Approve issuance of stock certificates
• Determine whether the company should elect to be taxed as a C corporation or S corporation (see step Nine for more details)

Recording Meeting Minutes: a detailed record of all key discussions and decisions during the board meeting should be prepared and distributed to all board members for their review and approval. This record is known as the “minutes”. A copy of the minutes should be sent to each director for review and filed in the company record.

8) Handle Tax Obligations

Federal Requirements

You’ll need a federal tax ID number (EIN) to operate a corporation in Virginia. You can obtain your EIN from the IRS for free, and it’s a fairly painless and simple process. An EIN is required for your corporation to hire employees, file corporate taxes, open business bank accounts, and more.

A major decision for any corporation is determining whether to be taxed as a C corporation or an S corporation. Take a look at how these two formats differ:

• C Corp: The majority of corporations are C corporations, as they are subject to far fewer restrictions than S corps. With a C corp, profits are taxed at the corporate level, and again on the personal tax returns of the shareholders, resulting in what’s commonly referred to as double taxation.
• S Corp: This is only an option if your corporation has fewer than 100 shareholders, only issues one class of stock, is not owned by another business entity, and does not have any foreign shareholders. If your corporation meets these requirements, you can select the S corp’s pass-through taxation which eliminates the double taxation issue of C corps. S corp dividends are not taxable.

State Requirements

Businesses in Virginia are subject to a 6% corporate income tax. Additionally, depending on your business’ activities, there are a variety of other tax registration requirements (these include various farm animal and produce taxes, and taxes on things like motor fuel, tobacco, and soft drinks). You can learn about taxes for which you may be liable here.

To file for all the taxes you may need to pay, register with the Virginia Department of Taxation. Doing so will create an online account for you, where you can access business services such as determining which returns you need to file and when, filing and paying taxes, asking for assistance, and managing your tax account.

Local Requirements

There may be additional taxes you need to pay to your city and/or county. To be sure that you don’t miss something, contact your local agencies. Here are business resources for Virginia’s biggest municipalities:

• Virginia Beach
• Virginia
• Chesapeake
• Richmond
• Newport News

9) Obtain Business Licenses and Permits

Virginia does not have a general business license that applies to all companies operating in the state; instead, there are industry-specific permits and licenses that you may need to acquire. Reference our guide for any required permits or licenses. It includes general permit requirements, business specific permits, permits listed by business, and a listing of state agencies administering professional licenses.

Much like you should check to see if your local government has tax requirements, there’s also county-level occupational licenses that you may need to acquire. Learn more at this link.

10) Acquire Insurance

Every business with employees located in the state of Virginia is required by law to obtain two different kinds of insurance policies. According to the Virginia Secretary of State, “If you hire employees, your business is required to register for unemployment insurance to operate in Virginia. Virginia also requires workers’ compensation insurance.”

You can learn more about these insurance types and how they apply to Virginia businesses by visiting the Division of Unemployment Insurance and/or Department of Workers’ Claims websites. No matter what line of business you’re in, you need these policies.

In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.

11) Open a Business Bank Account

To operate a corporation and receive the limited liability protection that comes with it, you have to keep your personal assets entirely separate from your business assets. Due to this requirement, it’s strongly advised that you acquire a business bank account for your corporation.

Failure to successfully keep your personal and business affairs separate could result in a court piercing the corporate veil and you being personally responsible for your corporation’s liabilities. If you need help finding the best business bank account check out our recommendations.

Get Help Forming a Corporation

The process of incorporating in any state can be a lengthy one. If you run into any trouble along the way, remember that there are plenty of organizations that can help you navigate the incorporation process.

Online Incorporation Services

If you would like to hire an affordable business incorporation service to create your corporation for you, services like ZenBusiness and Incfile can help you out. These service providers can handle most of the formation process, while still charging much lower rates than a business attorney’s fees.

There isn’t the same level of personalization that a lawyer can provide, but incorporation services can still be a tremendous help. The only major issue with these service providers is the fact that they can’t provide any actual legal advice, so you need to know what you want ahead of time.

Virginia Business Attorney

There are some situations where hiring a business lawyer is a preferable route to using an online incorporation service. The corporation as a business structure can be highly complicated, and if you want to have the peace of mind that every single step was taken care of by a true expert, hiring a business attorney to form your Virginia corporation is the way to go.

If you would like to pursue this route, there are some convenient services that can help you choose the right lawyer for your business. We like to use Avvo, which has extensive reviews and ratings for hundreds of Virginia business lawyers, which can make it much easier to select an attorney who has your best interests in mind, and also has the expertise to get the job done right.