Forming a Limited Liability Company (LLC) in Virginia
Limited liabilities companies have rapidly become one of the most popular business entity types for new and small businesses throughout the country.
What is an LLC Exactly?
In Virginia, an LLC is explicitly defined as:
“…an unincorporated association of one or more members (the owners) who share in the profits and losses of the company’s business. It is managed in accordance with an operating agreement by one or more members (member-managed) or by one or more managers (manager-managed). A limited liability company is a separate legal entity and, generally, the members and managers are not liable for the obligations of the limited liability company.” Source
To summarize in everyday language, the LLC business structure combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation, creating the best of both worlds for business owners. This means that if you choose to form an LLC, your business will become its own legal entity that has separate debts and legal matters. LLCs are, however, still tied to your personal taxes.
What Types of Businesses Should Choose an LLC?
Is an LLC right for you? Consider the statements below:
- You do NOT plan on raising investment money for your business
- You want asset protection for your company
- You need flexible business management and taxes
If you agree with these statements than an LLC is a good option for your business. Whether you are a sole proprietor, have a partner, or a multi-member corporation, the LLC is an excellent choice for small business owners, as it can provide the same limited liability protection as a corporation, without many of the complexities and formalities associated with them.
LLC Creation in Virginia
What follows is an overview of how to create an LLC in Virginia. This is only a guide and not intended to be a definitive legal document. For more information, please consult the Virginia State Corporation Commission.
Overview - LLCs are required to complete and submit Articles of Organization with the State Corporation Commission. This is done online or by mail. The Articles of Organization must include the following information:
- LLC name, address and county or city where LLC office exists
- Registered agent’s name and address
- Organizer’s name, phone number, signature, and date
LLCs are required to submit signed original Articles of Organization to the Clerk of State Corporation Commission, accompanied by the necessary fees.
Forms and fees - LLC registrants are required to complete and submit Articles of Organization with the Clerk of the State Corporation Commission. A $100 filing fee is required for an LLC. Documents to be expedited the next day are charged an additional expediting fee. For same-day processing, there is an expediting fee. Check out this web page to determine all necessary fees.
Timeline - The usual processing time for filing is between three to five business days. You can expedite the process, of course, with an additional fee.
Naming requirments - You can choose any name for your LLC as long as it ends with “Limited Liability Company,” “Limited Company” or any variation of its abbreviation—e.g., LLC, L.L.C., LC or L.C. Names may be reserved for up to 120 days. You may file a name reservation application with the State Corporation Commission by submitting a completed request form SCC631-PDF and required fee via mail.
Before you get your heart set on a name, however, it may be helpful to determine whether it has already been claimed. You can check for name availability with the State Corporation Commission before filing.
Corporate Address - Choose an address appropriate for your business and use it when filing. This one small step will go a long way towards establishing your LLC as a credible business player and protect your privacy. Check out our blog on this topic. For now keep in mind that an address, like a phone number or email, is sticky and tough to change out. Your web site, business cards, vendors, IRS, and customers will all hold on to the address you use. Fortunately, you can get a real Business Address, not a P.O. box, but a commercial location with Business Address service such as the one provided by Office Evolution Herndon.
Formation Requirements - To form an LLC, a registrant must first file Articles of Organization with the Clerk of the State Corporation Commission. The filing fee must accompany all submissions. To begin the process simply go to this webpage.
Assign an agent for service of process - This is also referred to as the resident agent. Who do you want to get all the legal stuff? This is very important. In Virginia the requirements for a resident agent are:
- Maintain normal business hours at a business office (registered office).
- Be available during those business hours to receive service of process.
- Have a legal address in Virginia (a Post Office Box is not acceptable).
- A business entity cannot serve as its own VA registered agent.
There are many resident agent services in Virginia. It’s best to do a web search and find one that is best suited to your needs. The good thing is that they are relatively inexpensive.
Get an Employer Identification Number (EIN) from the IRS - If there are two or more members in your LLC, your company will need to obtain an EIN from the IRS, for tax purposes. For more information about the EIN and taxes check out my article on how to start a business and keep the IRS happy.
Create an operating agreement - You are not required to have a limited liability company operating agreement in Virginia, but it is advisable to have one should your LLC have more than one member. The State of Virginia recognizes limited liability company operating agreements as governing documents. To learn more about operating agreements click here.
Remember your continuing legal obligations and fees - LLCs in Virginia are required to pay an annual registration fee on or before the last day of the month in which the LLC was formed, in all subsequent years following the year of formation. A notice via mail will be sent to the registered agent every year to remind your LLC of the annual registration fee payment. The registration process may be done online, by mail or in person. There is a penalty fee for payments made after the date stipulated in the notice sent by mail.
As mentioned, the Virginia State Corporation Commission has all the information you need to set up your LLC. While you can set up your own LLC with minimal fuss, it is never a bad idea to review your set up with an attorney. At least consult an accountant come tax time so you don’t run afoul of corporate tax law. For more detailed information about LLCs check out this article on the Nolo website. You should also carefully consider your workspace when setting up a company.
At Office Evolution Herndon, we provide private mailboxes to entrepreneurs and professionals throughout the Dulles Technology Corridor. Our Business Address services are perfect for home-based professionals from Tysons Corner, Reston, Herndon, Ashburn and elsewhere in the Northern Virginia area. In addition to our private, secure mailboxes we offer conference room rentals, live call answering, and remote receptionist and other services to optimize your home-based business. Plans and memberships can be tailored to meet almost any budget.
Office Evolution Herndon -- 205 Van Buren St. Suite 120 Herndon, VA 20170
Minutes from Dulles Airport and centrally located in the Herndon Business District, Office Evolution Herndon keeps you in the center of the action without the long commute. We're just a short drive from Ashburn, Reston, Sterling, Chantilly and other nearby communities. When the new Silver Line Metro Station opens, you'll be within a 10-minute walk. For those who drive we have Free Parking. Outside the office, we are a great location for work or play. Walk to Worldgate Centre for premier shopping, movies and dining. Get lunch at fantastic local restaurants, or head to Reston Town Center.