Creating an LLC for your Virginia business is not only beneficial for tax purposes but also diminishes your personal liability.
To recap, a limited liability company is a business entity separate from the members who split the profits and losses of the business. Each LLC member gains personal asset protection.
LLCs with multiple members typically run the business per the terms of an LLC operating agreement. This agreement determines outcomes in case of disputes among members.
The costs of forming an LLC vary depending on your registered agent choice, insurance, taxes, and business permit requirements. Virginia has low LLC formation costs compared with other states, plus a streamlined, mostly online registration process.
Virginia LLC formation cost: $100
You can start an LLC in Virginia for $100. It’s the state filing fee for obtaining your articles of organization — a document that officially forms your legal entity with the state.
Articles of organization include background information on your business such as name, address, registered agent information, and members information. You can change information in your LLC articles at any time by filing amendment forms and paying change fees.
You will be charged $25 for changing the company name. But changing registered agent details, registered office, or company address is free.
If you wish to register an LLC from another state in Virginia, the foreign LLC fee is also $100.
Expedited processing is available if you want your new Virginia LLC formed quickly. The filing process takes 4-6 weeks for standard mailed-in formation documents. But it can be expedited.
First, you can use the Clerk’s Information System (CIS) to file your document online. Online requests are processed in a matter of business days.
Or you can pay expedited service fees:
- $50-$100 for next-day expedited service.
- $200 for same-day service.
Extra Virginia LLC formation costs to account for
When forming an LLC in Virginia, you may also incur other types of fees related to registered agent services, business license application, and name registration.
Insurance is another cost to consider since you’d want to protect your stake in the company and employees in case of injury or unemployment.
So let’s take a look at the other costs to budget for.
Registered agent fees
Each LLC formed in Virginia must have a registered agent.
A registered agent is a designated representative who receives legal documents for your business. You may serve as your own registered agent or hire a professional registered agent service for a fee.
If you choose to be your own registered agent, you’d have to be available every day during business hours in case your business is served. Your street address could also become of public record if you run your business from home.
If you hire a professional services company, they will forward you any service of process documents your business receives. Your Virginia registered agent must have a physical address in the state and may charge you between $60-$100 per year.
Soundly, Virginia officials impose no state fees for changing the registered agent details at any time of your operations.
Purchase your LLC name now if you already know what it will be! You can reserve a business name for just $10 for up to 120 days.
Virginia has a short wait time for reserving business names, but you should be aware that when the 120 day period runs out, another company can book it.
Fictitious name registration
If you want to get a DBA for your LLC, it’s as easy as filling out a form and paying a small fee in Virginia.
Business owners choose to do this when they want to run the business under a name that’s different from its legal name. Fictitious name choices are not subject to word restrictions like a legal business name is.
You can submit requests online through the Office of the Clerk of the Virginia State Corporation Commission (SCC) for $10.
Trademark and service mark applications
If you’d like to protect your company’s intellectual (IP) property, then it’s worth considering a trademark or service mark to protect your company.
Trademark filing with the Commonwealth of Virginia costs $30 per class to use a name or mark for 5 years.
Under the Virginia Trademark and Service Mark Act, registration grants you exclusive use of the mark in Virginia only. You must register with the United States Patent and Trademark Office (USPTO) for trademark protection in all 50 states.
The cost of federal trademark registration is inhibitive for many small business owners. Others consider the price to be an investment in further protecting the business and property.
- A person who uses the same name, logo, or packaging designs as your company can be sued for trademark infringement and awarded damages.
- Trademark registration grants exclusive use rights over words, phrases, symbols, or logos that distinguish one business from others.
Business permits and licenses
Some regulated industries and professions also require a business license from the state to legally operate in Virginia. The costs vary, and the licenses are due for annual renewal.
Here are several business license cost examples in Virginia:
- CPA license cost: $75 for application, then $60 annually.
- Architect license cost: $75 for application.
- Contractor license cost: $235-$385 for application, depending on the class.
Also, companies selling goods will need to register for a sales and goods tax (get a sales license). You can do this online for free.
Does Virginia have an annual LLC fee?
Yes, Virginia requires every entity, regardless of type, to pay annual registration fees.
LLCs need to file an annual report on the last day of the month in which the company was either formed or authorized to transact business in Virginia. The annual report fee is $50.
If you miss the deadline, a $25 late fee will be automatically applied.
Remember: timely annual report filings are required to maintain good standing with the state. Failure to comply may lead to an LLC dissolution.
What taxes do LLCs pay in Virginia?
Limited Liability Companies are treated as disregarded entities for tax purposes to the IRS. Therefore, a single-member LLC is taxed as a sole proprietorship. Multi-member LLCs can be taxed as partnerships or corporations and must pay income taxes as appropriate.
However, on a state level, your LLC may be subject to local taxes such as the following.
1. Sales tax
Sales tax applies to sales of physical products at a rate of 5.3% on average. Though the rate varies depending on the county/city, you operate in.
- 7% sales tax is collected in James City County, Williamsburg, and York County.
- 6.3% sales tax applies to businesses in Charlotte County, Gloucester County, Halifax County, Henry County, Northampton County, and Patrick County.
- 6% sales tax is used in several locations across Central Virginia, Hampton Roads, and Northern Virginia.
So always double-check your dues with a local representative of the Virginia Department of Taxation before filing a tax return.
2. Corporate income tax
If you elect to tax your Virginia LLC as a C-corporation, you must pay corporate taxes on income based on profits earned.
The corporate income tax rate in Virginia is 6%. LLCs taxed as partnerships or S-corporations will pay taxes at the individual shareholder’s rate.
3. Employee taxes
If you hire employees, you’ll have to:
- Withhold applicable federal taxes from employee wages and pay payroll taxes. Employees and employers each pay 7.65% for Social Security and Medicare.
Your LLC may also have to pay federal (FUTA) and state taxes (SUTA) for unemployment claims.
Conclusion: How much does an LLC cost in Virginia?
You can create an LLC in Virginia for $100 and renew it annually for $50. That’s the minimum cost to set up this business structure.
However, if you decide to reserve a business name, retain exclusive rights, or register a DBA, each carries additional filing fees and expedited fees.
Add at least $100 for appointing a professional registered agent. There are varying county and local fees to pay if licenses or permits are required.
Both domestic and foreign LLCs must consider the tax implications of doing business in Virginia. There are corporate and sales taxes to consider.
These amounts vary based on your annual revenue but could add up to hundreds or thousands of dollars you must pay to the Internal Revenue Service and the Commonwealth of Virginia.
Here are some questions you should ask yourself when thinking about LLC costs:
- What will I name my company? There are fees to reserve or retain trademarked use of the name.
- Where will my business be located? The county where your principal business office is could impact the cost of your LLC if you need to obtain permits or licenses to operate there. Plus, affect your sales tax rate.
- Do I want my business to be a separate entity? This decision alone is a big one because of the risk of personal losses associated with a sole proprietorship. Without an LLC, you can jeopardize both your business and personal assets in a lawsuit.
It’s best to consult a legal professional or CPA before finalizing any business formation decisions.