How to Form a Virginia LLC: Benefits, Drawbacks, and Startup
Read our introduction to starting a Virginia LLC and order your VA LLC package online today.
Introduction: What is an LLC (Limited Liability Company)?
The LLC – short for Limited Liability Company is a business entity that provides both pass-through taxation as well as limited liability protection for personal assets to the owner(s). The organization of a LLC is fairly simple and entails filling in some basic initial details with your state, including the name of the company. A member of an LLC must be a person or another LLC. LLCs don’t issue shares, members can transfer ownership to other members or third parties. Only one member needs to stay in good standing with the state or federal government.
An LLC is taxed through individuals, and those who own an interest in the company are called members, not shareholders. Members can be silent or fully involved with daily decisions and operations. The LLC business type allows members (owners) to withdraw dividends and only be taxed on the funds that are distributed.
What You Need to Start an LLC in Virginia
Starting an LLC in Virginia isn’t exactly complicated, but knowing the processes and deadlines are important to keep your business in good standing. Getting your business registered with state and federal governments allows you to operate your business legally. You’ll need to have at least one member and file Articles of Organization with the Virginia State Corporation Commission to start your Virginia LLC registration.
The time and cost associated with creating an LLC in Virginia depend on whether you file yourself or use our Virginia LLC formation and incorporation services. Some attorneys and many accounting firms offer business startup services, but they generally charge a lot more for their time. Complex businesses should work with a tax professional or attorney to make sure your company is set up properly. We can save you a lot of time and money if you don’t need an accountant or attorney for business setup. Our tax and accounting partners can help you set up your accounting system and manage your tax returns. They also offer exclusive pricing for MyCompanyWorks clients.
Virginia State Startup Guide To Start Your LLC
Starting a business in Virginia doesn’t have to be expensive and time-consuming. We have developed a Virginia startup checklist that includes links to programs and resources to make it easier and faster for entrepreneurs to start their own businesses. These include:
Virginia Small Business Administration: Find local assistance for business guidance, funding, and small business education.
Virginia Small Business Development Center: Additional assistance with funding, marketing, accounting, legal services, and more.
Virginia Green Initiative: Find incentives offered to protect the environment through eco-friendly business practices.
In addition to these organizations, a quick Google search for “free Virginia small business resources” returns a bunch of resources to support your LLC startup.
Pros and Cons to Starting a Virginia LLC
Before you start with a Virginia LLC formation, there are some things to consider. To make sure the Old Dominion State is the best state to establish your company, read the pros and cons below.
Virginia LLC Pros
- Beyond the necessary filing and administrative tasks of setting up an LLC, running it can be less expensive than a Corporation.
- You can secure personal assets so they’re not subject to tax liens or lawsuits.
- Virginia’s business environment is favorable with lower corporate tax rates than the national median.
Virginia LLC Cons
- All dividends distributed by an LLC are subject to self-employment tax. In comparison, corporation shareholders only pay Medicare and Social Security taxes on their earnings.
- Because a Virginia LLC can’t issue stock, it can be hard to find investors and raise funding.
- While the Limited Liability Company entity type is less formal to manage, it usually costs more to file annual reports than corporations.
Other Important Considerations for a Successful Virginia Business Startup
Before you form a company in Virginia, consider the following tips to save time, money, and hassle down the road.
- It’s important to know the startup and ongoing costs for rent, labor, goods and services, and some money in the bank to cover expenses during the startup phase. You can track everything on a basic spreadsheet like this one. Every successful company starts with a plan. It may change over time, but it’s important to be able to see progress and where changes need to be made to advance your business.
- If you are selling products, then a Virginia Corporation might be a better fit. If you’re unsure of the best option there are plenty of places that offer advice on this. However, if your business is going to provide services such as consulting or contracting, it would be better to start a Virginia LLC.
- Next, look through our Virginia Business Startup Guide for steps to complete paperwork for a Virginia LLC or Corporation. Remember that all LLCs need at least one member or manager to register with the state. You can walk yourself through our online filing system, or let MyCompanyWorks do the work for you.
Final Summary
If you’re looking for a simple business type that offers limited personal liability and management flexibility, a Virginia Limited Liability Company may just be the best option for your business. Personal asset protection, simple operation, flexible ownership, and pass-through taxation are top reasons why the LLC is the most popular option for entrepreneurs, startups, and small businesses.
If you’re offering services rather than products, a Virginia LLC may be the easiest and most affordable option for your company. You can save yourself some money by filing your own paperwork. You can save time and money with MyCompanyWorks’ Virginia LLC Filing Service. If your company has more than one type of revenue or has in-depth compliance requirements, it may make sense to talk to an attorney or a tax professional before you start your business.
There are loads of small business resources, like the Virginia SBA and Small Business Development Center, that can help you start a business plan, apply for funding, and offer networking opportunities to help you grow your business. Connecting with other entrepreneurs and business organizations can be very valuable while you’re learning how to run your company.
It’s worth the time to consider the pros and cons of starting a Virginia LLC. You may find that forming your business in another state or even forming a Corporation may suit your business better than what a Virginia LLC has to offer.
Visit our Virginia Business Startup Guide to start a Virginia LLC on your own or order a business formation package MyCompanyWorks.
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