- Conduct thorough research on the type of business structure you wish to launch in Virginia.
- Decide upon a perfect business idea and follow it up with a well-crafted business plan.
- Look into the different business setup-related laws and regulations that are currently in existence in the state of Virginia.
- Get the necessary licenses and permits to conduct business operations in Virginia. Virginia has no statewide license, but certain businesses require a permit.
- A business bank account and a relevant insurance policy can go a long way in ensuring a business's success.
In recent years, business setup in Virginia has become widespread, with the region boasting over 780,000 small businesses and employing more than 1.6 million people.
If you are keen on starting a business in Virginia, our step-by-step guide will help you navigate the business setup process. So dive in to learn more!
Things to Consider before Starting a Business in Virginia
You will need to equip yourself with a perfect business idea followed by a sound, thought-out business plan for any business to become a successful one. Other key features of kicking off your business in Virginia include choosing a business name, picking the appropriate business entity, and following the necessary steps to register a business in Virginia, among other things.
Here is all you need to know about starting your business in the State of Virginia:
1. Decide upon a Business Idea
Picking the perfect business idea is about more than just deciding what product or service you're going to offer. Still, it's also about conducting thorough research to gain a good idea of your customer base and market.
To gain a clear idea of who is buying from you before starting a business in Virginia, you can go ahead and carry out a thorough assessment of Virginia's other companies or your competitors. It would also help you survey possible future customers and look into industry trends.
After coming up with the perfect business idea, you can devise a sound, thought-out business plan about the same.
2. Pick a Name for Your Virginia Business
Picking a name for your brand new business in Virginia is one of the most important decisions you will have to make while starting a small business in Virginia. Here are a few things to keep in mind while picking a business name:
- It should be unique: The business names in Virginia should be unique. You can utilize the Virginia State Corporation Commission's Clerk's Information System to search all the business names in the region.
- It Should be Catchy: A good business name must be unique and also memorable so that it leaves behind a positive impression in the mind of your customers.
- Check if Suffix Is Necessary: If you start an LLC in Virginia, your company name shall include the phrases "limited company" or "limited liability company" or its abbreviations (LC, L.C., LLC, or L.L.C.).
- A DBA in Virginia: If you want to use a DBA ("doing business as") or an alias for your business in Virginia, also referred to as a trading name (a trading name is different than a legal name), you will have to register with the State Corporation Commission duly. You can complete the registration process online or using paper forms. The procedure for DBA registration depends significantly on the county. Unlike with business names, fictitious names, which DBAs are subject to, do not have to be necessarily unique.
3. Choose the Apt Business Structure
One of the most crucial choices you will have to make when you opt to register a business in Virginia is to decide upon the business structure. It will further determine your company's tax structure, how easy it is to attract investments, and your liability if things do not go according to plan.
Types of business entities seen in Virginia include sole proprietorships, which are owned by one person only; partnerships consisting of two or more owners; corporations or legal entities which exist separately from owners; and limited liability companies (LLCs), which include elements of both corporations and partnerships.
- Sole proprietorship: You must formally incorporate your business or establish a partnership to have a sole proprietorship. It implies that you are the sole owner of your business, and it does not exist separately from you.
- LLC: When it comes to an LLC, your personal assets are awarded a certain level of protection against creditors in bankruptcy and legal judgments if anyone tries to sue you.
- C corp: If you are hoping to form your business as an entity entirely separate from you, you will want to launch a C corporation. A c corp offers more robust personal asset protection and confers upon you a truly unique opportunity to raise capital via stocks.
The business entity you opt for will also determine its tax rate. All corporations in Virginia are taxed at a rate of 6% of taxable corporate income and will also have to render an annual registration fee ranging from $100 to $1,700. In case your business is a retail operation that sells certain goods, you will also have to pay the state's sales tax, which varies based on the type of good and whether it is sold remotely, in a shop setting, or for consumption (for instance, food, alcoholic beverages, or tobacco).
4. Get an EIN
Once you decide how to name and file your Virginia business, you will need to get an employer identification number (EIN). It is a nine-digit number, and it's conferred upon new organizations by the IRS and by Virginia state for tax-related purposes. An EIN makes it easy for organizations to file taxes at both the federal and state levels.
5. File Necessary Documents
To successfully incorporate your business for starting a business in Virginia, you will have
to file Articles of Incorporation (for a corporation) or Articles of Organization (for an LLC) with the State Corporation Commission. The requisites for registering a business with the tax authorities once it's been formed are:
- Name and address of your legal business
- The name and email of the person who is choosing to file online to create an account, or the account information, in case there is already one there
- Your federal EIN number
- Your North American Industry Classification System (NAICS) code
- The business's entity type, as well as tax type or structure
- Name, email, and phone number of the business's primary contact and responsible party (these may be two separate individuals)
6. Acquire the required business license and permits
In Virginia, the only permit or license every business needs to attain at the state level for starting a business in Virginia is a sales tax certificate. Additionally, certain companies may demand other specific types of licensing and permits.
7. Pick a Business Location (if Applicable)
The location of your business may significantly impact its ability to achieve success in case the business is heavily dependent on foot traffic to ensure success. But, it is essential to keep in mind that not every business needs a retail or office location.
When you are launching or starting a business in Virginia, you will have to decide between whether you will be working from your home, carrying out your business functions via online mode, or setting up a retail location.
If you are leasing space for your business activities, it is essential to read through the lease agreement carefully. Additionally, getting a business attorney to review the contract is always a good idea to ensure that you are perfectly aware of your roles and responsibilities under the lease terms.
8. Check out Insurance Options in Virginia
Are you wondering about how to start a business in VA? Relevant insurance helps safeguard your Virginia business and its assets in case of some unexpected occurrence. A few types of insurance in Virginia are:
- Liability insurance: Offers protection against any lawsuits arising from accidents, injuries, or negligence.
- Commercial property insurance: Takes care of the costs arising out of fire or weather damage, or theft.
- Commercial auto policy: Confers protection upon any vehicle you plan on using as part of your business.
- Workers' compensation coverage: It covers internal employee disputes, employee injury, and victims of crimes pertaining to workers at the workplace. It is mandatory insurance in Virginia.
- Professional liability insurance: This type of insurance safeguards manufacturers, wholesalers, distributors, and retailers against lawsuits that are associated with unsafe products.
- Cyber liability insurance: Takes care of your costs in case your Virginia business suffers a data breach.
- Umbrella insurance: Extends coverage to exceed policy limits of other insurance plans.
9. Factor in Other Financial Considerations
In addition to insurance, you will most likely have to rent space, pay to register a domain name and get your business website designed, place ads in publications and even billboards to market your business to the target customer base, and invest in equipment and software, among other things.
You may also feel the need to hire seasoned professionals like lawyers and accountants to take care of critical business-related tasks on your behalf.
10. Hire Employees
Unless you plan on being a solo employee of your business in Virginia, it is extremely important to hire a solid team of talented and diligent employees. It is also crucial to abide by the hiring process's legal guidelines, such as registering with the IRS for employee taxes. Once you are done hiring your employees, you must start the usage of a payroll service to generate paychecks, track time, and make the tax season more hassle-free in nature.
Virginia is well known across the nation as of the most entrepreneur-friendly regions if you have a good business idea and an accompanying business plan up your sleeves. Starting a business in Virginia has now become an extremely recurring phenomenon as the region now boasts over 780,000 small businesses and employs over 1.6 million people.
Kicking off a new business becomes a relatively simple task when you have the right guidance from business professionals. Our simple and precise guide is the way to go when it comes to assisting individuals who are hoping to launch their business endeavors in the entrepreneur-friendly climate of Virginia.
What are the requirements for incorporating a business in Virginia?
To launch a business in Virginia, you have to file the Articles of Organization in the case of an LLC, or the Articles of Incorporation in the case of a corporation. The aforementioned documents are filed with the State Corporation Commission. Additionally, you must also get a federal EIN number to duly register your business with both the state and the federal tax authorities.
Does Virginia mandate a statewide business license?
No, Virginia does not boast a statewide business license, even though some counties and municipalities do necessitate business licenses. The Commonwealth of Virginia, however, does require business licenses pertaining to certain regulated professions, such as the likes of healthcare, education, and finance.
What are the costs of registering an LLC in Virginia?
The fee for filing the Articles of Organization to register your LLC in Virginia is $100. The state charges an additional $10 to reserve a business name.
Learn more with us:
- How do I start a business in Washington, DC?
- How do I start a business in Maryland?
- How do I start a business in Oklahoma?
- How to start a business in Arizona?
Access our Guides.
We can help!
At levy, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most — your business.
We can help you streamline operational processes for your business and save up on time in the long run. Learn more.
Like our content?
Subscribe to our blog to stay updated on new posts. Our blog covers advice, inspiration, and practical guides for early-stage founders to navigate through their start-up journeys.
Note: Our content is for general information purposes only. Levy does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.