Steps to launching a business:
Choose a structure,
A business becomes a ‘legal entity’ meaning that it can own property, can hold bank accounts, and pays taxes almost exactly as if it were a living citizen of the Commonwealth of Virginia. There are several types, however, each with its own benefits and limitations. While it can be changed later, it is far easier to make this decision correctly before going further.
Business structures are like classes of cars. There are reasons to buy a pickup truck, a coup, sedan, SUV, minivan; just like there are reasons to choose LP, LLC, S-Corp, C-Corp, etc.. The ‘right choice’ for you is truly dependent on your needs. Get to know the types and make a good decision for yourself. This decision impacts taxes, the relationships between owners, and, legal liability. If the company is sued for personal injury, can the plaintiff sue you personally and take your house, car, and bank accounts? These are important considerations.
Sole Proprietorships are usually owned by a single person or a couple. You are personally liable for all business debts, can freely transfer all or part of the business, and for taxes, you can report profit or loss as personal income.
Limited Liability Companies (LLC’s) are very popular. You have limited legal liability like a full corporation however, for taxes they are more like Sole Proprietorships or Partnerships.
General Partnerships let you share profit, loss, and managerial duties among the partners, and each is personally liable for any debt entirely. Members file an informational tax return and income/loss is filed personally. (“Joint Ventures” are short-term partnerships.)
“Corporations” are complex structures with more startup cost. They are owned through stock and have more complex licensing, taxation, and regulation requirements. They have to follow formalities like issuing stock certificates, holding annual meetings and keeping minutes, electing directors, etc.. Forming a Corporation should always be done with the assistance of a qualified attorney.*
*C-Corporations are distinct legal entities, taxed separately from their owners and are generally not favored to own assets that substantially appreciate in value. While they protect against personal liability, they do not have many of the tax and operating advantages of an LLC or limited partnership, except that lower tax rates may apply to annual net income below $75,000.
*S-Corporations are not taxed as a separate legal entity and protect their owners against personal liability, but there are limitations on the number and type of eligible stockholders. They also have certain less favorable tax and operating advantages than LLC’s.
*Benefit Corporations are a new form of stock corporation that incorporate aspects of nonprofit organizations.
- Here is more information about business structures.
- Federal tax implications of different business structure choices.
- Free legal information regarding each structure.
- See what structure others in your industry choose with an online wizard.
- We recommended consulting with both a lawyer and an accountant before choosing.
- If you are starting an agribusiness, there are state resources tailored to help.
A little bit of planning goes a long way. “Failing to plan is planning to fail.” Find a business-plan writing guide that seems to fit your business, that you’re comfortable with, and that seems reasonable. Follow it.
Register your business and its name
Virginia offers an online registration system on this website that can accomplish this task for most users. If your business structure is too complicated for the online system, or if you are starting a non-profit organization, the forms must be filled out and filed manually with the State Corporation Commission, a lawyer can help you with this.
(Special Note: Business One Stop auto-fills State Corporation Commission forms for you to print and file. However, if you are registering a new LLC or corporation in Virginia and only need to file your Articles of Organization or Incorporation, you can file those Articles electronically. The SCC system is independent and not yet linked to the Business One Stop.)
There are companies that will offer expensive ‘services’ you could have done yourself through the business registration portion of this website. Proper planning will help you avoid paying for paperwork services. Remember Virginia’s Business Information Hotline is here to assist: 804-786-6585!
- Check to make sure your company name isn’t taken, and register your name and trademarks with the federal government.
- For more information about the registration process, including information for more complex business structures complete with forms and look up tables, this commission is the authority.
- For most businesses, the online registration tool can handle this part for you.
- You should always consult a lawyer if you still have questions.
- You can register for SWAM certification if you are a small business (under 250 employees, $10M revenue), woman-owned, or minority owned.
Get your tax numbers
The same way a person has a Social Security Number, a business has federal and state tax numbers.
- The online registration tool can assist you with obtaining your federal and state tax id’s.
- Federal Information on business taxation.
- View forms required for each type of business structure.
- In Virginia some types of businesses require specific tax registration.
Some businesses require special permits and professional licenses.
- Do you need a license or permit?. Check the list
- Virginia’s Business One Stop’s online registration tool can take care of many of these professional, occupational, specialty and local business licenses quickly online.
- Your city, county or town may require a local business license and/or zoning permits. It is a good idea contact your town, city, & county’s Commissioner of Revenue or Department of Finance to determine business licensing requirements as well as the Zoning Office to determine requirements they may have.
For questions about local regulations and licenses, start from the bottom. Often the local office can also give you some good pointers on what else you might need at city/county levels!
Open your doors
Congratulations! Though we’re still here to help…
- Do you have a website set up? Virginia businesses can set one up at no cost.
- We can be your first customer! Have you considered selling to the Virginia State Government?
- The Business Information Hotline (804-786-6585), email, and live online chat are available during regular business hours.
- If you have not written a business plan, it is never too late. Help is available with this process, as well as general planning and mentoring.
- Additional resources are available on the “Considering” section of this site.
- Virginia has a network of 30+ business incubators across the state.