How to Start a Business in Virginia (Updated 2024)

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Virginia.

By , Attorney
Updated by Amanda Hayes, Attorney University of North Carolina School of Law
Updated 4/23/2024

When starting a business in Virginia, you'll need to learn and follow the Commonwealth's laws and requirements around businesses. Follow the steps outlined below to create your Virginia business.

1. Choose a Business Idea

The first step is finding your business idea. Choose an idea that's practical to implement. For example, you should be asking yourself questions like:

  • Do I have experience in the industry I want to start a business in?
  • What would the startup costs be?
  • Do I have enough capital to sustain my business until I can make it profitable?
  • Is there demand in my geographic region for my proposed goods or services?
  • How much competition is already out there? Is the market already saturated or would my business meet an unmet need?

Once you have the start of an idea, you should draft a business plan. A business plan can help you answer the above questions and give you an idea of what you need to get your business up and running. If you have experience in the industry, you can better anticipate costs and challenges. If you don't have as much experience, talk to people who do. Know your industry and your market.

At this stage, you should also be thinking about funding. The ultimate goal is to make a profit. But as the saying goes, "You have to spend money to make money." You can start a business on a shoestring budget. But you have options to raise capital such as applying for a business loan, pitching to investors, and recruiting friends and family. (Check out our section on business financing, loans, and capital for ideas and guidance on financing your small business.)

Once you have your idea, you need to start forming your business. The first task when legally forming your business is choosing the right business structure. The kind of entity you select will depend on your current and future business needs.

The most common legal structures for a small business are:

You'll want to pick the business structure that provides your business with the best tax, finance, and liability benefits. For example, a sole proprietorship is easy and cost-effective to set up but it doesn't give you any personal protection from your business debts. With a sole proprietorship, you and your business are the same for tax and legal purposes. On the other hand, an LLC requires official paperwork to set up and usually state fees to start and maintain. But LLCs give members (owners) limited liability protection, and LLCs have great tax flexibility. However, if you're looking for investors, you might be better off forming a corporation.

States recognize business structures in addition to the main four listed above. In Virginia, you can form a limited partnership, limited liability partnership (LLP), or limited liability limited partnership (LLLP), which are types of partnerships where some partners have limited liability.

Alternatively, if you provide a qualified professional service, you have the option of forming a professional corporation or professional LLC in Virginia. In general, a "professional service" is a service that requires a license, certification, or other legal authorization.

Depending on which business structure you choose, you might be able to elect to become an S corporation, a tax entity. Different types of businesses, such as LLCs and corporations, can elect to be taxed as S corporations but legally remain corporations or LLCs. You can speak with a tax attorney or other tax professional to learn more about S corporations.

3. Choose a Name for Your Virginia Business

You'll want to pick a name that matches the image you want to create for your business. Your business name will appear on your signs, advertisements, merchandise, business listings, and website. Depending on your business activities and the impression you want to make on customers, your business name could be straightforward (think, "Al's Burger Shack") or more abstract or thought-provoking (think, "Quarters" for an arcade). Either path can make for a good, marketable name.

When choosing a name, you'll need to follow Virginia's laws around business names. Virginia law requires that your name be distinguishable—meaning, different enough—from any business name already on file with the Virginia State Corporation Commission (SCC). You can check for available names by doing a business entity search on the SCC website.

Entity name designators: For most business entities, Virginia law requires you to include certain words that identify your business's entity structure (like including a word such as "LLC" for LLCs or "incorporated" for corporations). See our article on how to form a Virginia LLC for more information.

Reserving your business name: You can reserve an available name for 120 days by filing Form SCC631, Application for Reservation or Renewal of Reservation of a Business Entity Name with the SCC. You can also repeatedly renew the reservation before it expires. As of 2024, the filing fee to reserve or renew a name is $10. You can file online via the SCC's Clerk's Information System (CIS) or by mail.

Filing a certificate of assumed or fictitious name: If you do business under a name other than your legal name, then you're using an assumed or fictitious name (also called a "trade name" or "DBA"). The legal name of a sole proprietorship or general partnership is the true names of all the owners. The legal name of an LLC, corporation, or other registered entity is the name on file with the SCC (usually in the company's formation documents). If you use an assumed or fictitious name, you must file a certificate with the SCC and pay the associated filing fee of $10 (as of 2024). Individuals use Form SCC59.1-70-IN and registered companies use Form SCC59.1-70-BE. You can file these forms online via CIS or by mail. See the SCC's fictitious names webpage for more details on this filing.

If you plan to conduct business online, you might want to register your business name as a domain name. Moreover, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.

4. Register Your Business Entity With the Virginia State Corporation Commission

You can register your business online using CIS or by mailing the appropriate formation document to the SOS. You can find the organizational documents, as well as a link to register online, under the forms and fees section of the SCC website. Some business types don't require you to file any paperwork.

Here's how to form each type of business:

  • Sole proprietorship: You don't need to file any organizational documents with the state to start a sole proprietorship in Virginia.
  • General partnership: To create a general partnership in Virginia, you don't need to file any organizational documents with the state. But you should draft a partnership agreement to establish the rules for how your partnership will be managed and how the assets and liabilities will be divided among the partners.
  • Limited partnership: You must file a Certificate of Limited Partnership (Form LPA-73.11) with the SCC to create a limited partnership.
  • Limited liability partnership (LLP): A partnership or limited partnership can become a registered LLP by filing a Statement of Registration as a Virginia Registered Limited Liability Partnership (Form UPA-132) with the SCC.
  • Limited liability limited partnership (LLLP): A limited partnership can become a registered LLLP by registering as such with the SCC. You can file a Statement of Registration as a Virginia Registered Limited Liability Partnership (Form UPA-132) with the SCC and indicate in your business name that your partnership is an LLLP. The partners or the partnership agreement must authorize the registration.
  • LLC: To create an LLC in Virginia, you must file Articles of Organization (Form LLC1011) with the SCC. You should also prepare an operating agreement to establish the basic rules for your LLC's operations.
  • Professional LLC: Licensed professionals of qualified services can form a professional LLC in Virginia by filing Articles of Organization for a Professional Limited Liability Company (Form LLC1103) with the SCC.
  • Corporation: To create a corporation in Virginia, you must file Articles of Incorporation (Form SCC619) with the SCC. You must also prepare and adopt bylaws for your corporation. Corporate bylaws, similar to an LLC's operating agreement, set out your corporation's internal operating rules. You don't need to file your bylaws with the state.
  • Professional corporation: Licensed professionals of qualified services can form a professional corporation in Virginia by filing Articles of Incorporation of a Virginia Professional Stock Corporation (Form SCC544) with the SCC.

To form some of these businesses, you need to appoint a registered agent in Virginia for service of process. A registered agent agrees to accept legal papers on the company's behalf.

After you form your corporation or other applicable business with the SOS, you can file IRS Form 2553, Election by a Small Business Corporation, with the IRS to elect S corporation tax status.

5. Apply for Virginia Licenses and Permits

You'll probably need to apply for at least one license, permit, or registration for your business. You can find more detailed information in our article on Virginia business licenses.

Tax registration. If you sell taxable goods or services in Virginia, you must register with the Virginia Department of Taxation (DOT) to collect report and collect sales tax and obtain a sales tax certificate. If your business has or will have employees, you must register with the DOT for employer withholding taxes. You can register for both types of tax—and other business taxeseither online via Virginia Tax Online Services or on paper using Form R-1, Business Registration Application.

Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business's name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.

Regulatory licenses and permits. You might need to apply for permits or licenses related to health and safety, the environment, building and construction, and specific industries or services. Different departments and agencies oversee various regulatory licensing. You can check the websites of individual state agencies for more information. For example, the Virginia Department of Environmental Quality issues air, water, and waste permits. Many other licenses are issued locally. Contact your town or city licensing department to determine if you need a local business license.

Professional and occupational licenses. The Virginia Department of Professional and Occupational Regulation (DPOR) oversees the licensing and regulation of many of the state's licensed professions and occupations. The DPOR website has sections listing various professional regulatory boards and regulated professions and occupations.

6. Pick a Business Location and Check Zoning Regulations

Once you have the legal paperwork behind you, it's time to choose a location for your business. Before picking a place, you'll need to think about the costs, location and space, and local zoning:

  • Choose an affordable space. Consult your business plan to see whether you can afford your desired location, especially during your company's early months. If you buy a space, you'll need to pay your mortgage, utilities, and property taxes. If you lease, you'll be responsible for rent, a security deposit, utilities, and other potential shared or individual costs. If you lease a commercial space, negotiate terms that'll work for your business in the long term.
  • Consider your space's geography and layout. When shopping for a place for your business, think about the location and the space itself. First, consider your target market and whether you need a spot that's central and walkable or accessible to cars. Second, think about the space you need to run your daily business activities. Do you need storage space? How many offices will you need? How can the space be split up between public-facing and employees only?
  • Verify your desired property is zoned for your kind of business. Check that your location is properly zoned for your business activities. Keep in mind that commercial zoning might be split into different kinds of business activities like retail and industrial. You can usually find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.

Do you need a physical location for your business? You'll generally need some sort of mailing or office address for your business. Sometimes, an address is legally required. Oftentimes, this address can be your home address, a P.O. box, or a coworking space, among other options. Read our article on whether you need a physical address for your small business to learn more.

Can you run your business out of your home? Many people run their businesses out of their homes. If you decide to operate a home-based business, check your local zoning laws. In terms of allowable business activities, residential zoning laws are often stricter than commercial zoning laws. Review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.

7. Register and Report Business Taxes

Virginia taxes every kind of business. You can find many of the tax forms you need on the forms webpage of the DOT website, along with links to file online.

Sole proprietorships. As a sole proprietor, you'll pay state taxes on business income as part of your personal state income tax returns (Form 760).

Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Virginia partnerships also must file Form 502, Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax. Partnerships can also elect to pay the pass-through entity tax by filing Form 502PTET. By making this election, the partnership, as a pass-through entity, pays taxes at the entity level on behalf of its partners. In addition, limited partnerships must pay an annual registration fee to the SCC.

LLCs. By default, LLCs are considered "pass-through tax entities," meaning members pay state taxes on their share of LLC income on their personal tax returns. In addition, LLCs themselves have to file an additional state tax formeither a pass-through entity return or a corporation return. As with a Virginia partnership, you can elect to have your LLC taxed at the entity level by electing to pay the pass-through entity tax (and filing Form 502PTET). Alternatively, a Virginia LLC can elect to be taxed as a corporation by filing Form 8832, Entity Classification Election with the IRS. Virginia LLCs must also pay an annual registration fee to the SCC. For more, read our article on LLC annual report and tax filing requirements in Virginia.

Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on their personal state tax return. Virginia corporations and corporations with Virginia-based income must file a corporation income tax return and pay the associated income tax. Your corporation might be required to make estimated tax payments. Finally, corporations must file an annual report and pay an annual registration fee to the SCC.

If you have employees, you must also deal with state employer taxes.

And, apart from Virginia taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.

8. Obtain Insurance for Your Virginia Business

Regardless of your industry or type of business, you should look into getting insurance coverage for your business. Business insurance can protect your business and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes.

An insurance agent can help you explore the different coverage options for your business. You should consider getting general liability insurance to protect your business against claims related to bodily injury or property damage. Your business might also benefit from cyber liability insurance to cover litigation and settlement fees following a data security breach.

For further guidance, see our article on what types of insurance your small business needs.

9. Open a Business Bank Account

No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.

Additional Help With Starting Your Virginia Business

Virginia's state government website has a business in Virginia webpage with helpful information and resources. The webpage is divided up into sections related to:

  • starting a business
  • running a business
  • relocating or expanding
  • professional licenses
  • doing business with Virginia, and
  • small, women, and minority businesses.

The SCC also has a webpage that takes you through four simple steps to start your Virginia business.

Find the business structure that fits your business. Take our business formation quiz for help deciding the best structure for your business.

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