What is an LLC (limited liability company) and how can I organize it?
LLC Registration in Virginia consists of 6 simple steps that can be done over the span of 4 to 6 weeks. But before the process of registration can begin, it is significantly important to identify if an LLC is right for you. LLCs are mainly known as corporations or partnerships; they provide one with legal protections such as protection from debts, personal liability, and civil cases.
The following steps are quite crucial to the process of administering an LLC:
- A proper name for the LLC has been chosen
- Register office and agent
- File Articles of Organization
- Draft LLC operating agreement
- Register with the IRS and the Virginia Department of Taxation
- Pay annual registration fees
What is the process of LLC registration?
First and foremost, Choosing a proper name for your LLC registration is crucial because the name will represent your LLC moving forward and the name has to fit some requirements, such as it should include the words “limited company” or “limited liability company;” the abbreviations “LC,” “L.C.,” “LLC” or “L.L.C.” can also be used. Some words cannot be used in the name such as: “engineer,” “bank,” “trust,” “national,” etc. An individual can reserve their corporate name for 120 days for a fee of $10.00.
Furthermore, to complete the registration of your LLC, you must appoint a registered agent. A registered agent is an individual or business entity that is designated to accept tax and legal documents on behalf of your business. The agent must be a Virginia resident who can be a member or manager of the LLC or a corporation authorized to do business in Virginia. According to Virginia’s law, your company cannot serve as its own registered agent.
The next step for LLC registration consists of filing your Articles of Organization (Form LLC-1011) with the Virginia State Corporations Commission. These articles include the following:
- The name of the LLC
- The address and name of the LLC’s registered office and agent
- Initial principal office address of LLC
- Signatures of the LLC’s founders or organizers
Double-check with your registered agent when submitting your Articles of Organization that your information is correct and up to date. There is a $100 fee when submitting your Articles of Organization to the Corporations Commission.
Notably, the next step would be to draft an LLC operating agreement for your LLC registration. Although it is not required by the state of Virginia, it is recommended. An LLC operating agreement is a legal document that creates a member-managed company, where the members collectively set forth the rules and regulations that need to be followed. Creating an operating agreement helps organize and preserve your LLC. In addition, most banks expect LLCs to have an operating agreement to ensure that the LLC is properly prepared in running the business professionally. Drafting an operating agreement would be helpful in an instance where arising issues amongst co-owners can be solved by discussing important issues in the operating agreement.
Registering your LLC with the IRS and complying with the regulations of the Virginia Taxation Department is significant. If your LLC has more than one member it must acquire its own Employer Identification Number (EIN) from the IRS. EINs are free and required by banks to open a business checking account. Another regulatory requirement would be to obtain a business license depending on the business type and location. Some businesses that require licensing are barbershops, real estate agents, and engineers. More information on Business licenses can be found here: http://www.mughallawfirm.com/business-lawyer/business-license-registration/ If your LLC is working in retail and selling goods, which require you to collect taxes then you’ll need to register with the Virginia Department of Taxation. You can typically register online or on paper using Form R-1
Lastly, paying an annual fee of $50 will be yours and the LLCs responsibility. Virginia does not require LLCs to file annual renewal reports but does the require the $50 annual registration fee. If the deadline to pay the $50 is missed the is a penalty fee of $25. You can pay your annual fee here: https://cis.scc.virginia.gov/ or by mail.
LLC registration makes your business official so make sure to be proud of yourself!