If you want to start and run a Virginia limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the initial filing and the most important ongoing reporting and state tax filing requirements for Virginia LLCs.
The State of Virginia requires you to pay an annual registration fee for your LLC. The fee is $50. You can mail in the payment or use the SCC eFile system to pay online. There is an additional convenience fee for online payments. The annual registration fee is due each year on or before the last day of the month in which your LLC was created.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states do impose a separate tax or fee on LLCs for the privilege of doing business in the state. Virginia does impose an annual registration fee (see above).
In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Virginia, like almost every other state, has a corporation income tax. In Virginia, the corporate tax is a flat 6% of net income from Virginia sources. The tax is payable to the state's Department of Taxation (DOT). Use the state's corporation income tax return (Form 500) to the tax. For more details, check Nolo’s article,50-State Guide to Business Income Tax, or the DOT website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Virginia employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOT. Begin by registering your business with the DOT either online (through the VATAX online service) or on paper (Form R-1). Once you've registered, you'll need to file withholding taxes on a periodic basis (for example semi-weekly or monthly) using Form VA-5 or VA-15. You'll also need to use Form VA-6 each year to reconcile your LLC's tax withholding. For more information, check the DOT website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Virginia Employment Commission (VEC). You can register for these taxes online (through VATAX) or on paper (Form VEC-FC-27). Then, each quarter, and depending on whether you're web-filing, use the proper versions of Forms VEC FC-20 and VEC FC-21 to report on wages and pay the UI taxes. For more information , check the VEC website.
If your LLC will sell goods to customers in Virginia, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Taxation and then make periodic sales tax payments for goods sold. You can register online (through VATAX) or mail in Form R-1. After you've registered, you'll be sent a Form ST-4, Certificate of Registration. Then, on a periodic basis (usually monthly or quarterly), you must submit sales tax returns to the DOT. You generally must file these returns online. For more information, check the DOT website.
If you will be doing business in states other than Virginia, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Virginia, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.