How to Start a Business in Virginia
The state of Virginia is currently experiencing a “golden age” of entrepreneurship, especially in Richmond. That said, 2020 was a tough year for the state, and the unemployment rate increased majorly because of the Covid 19 pandemic.
However, the Old Dominion State remains resilient and is entering a recovery phase, with a 0.4% increase in the Total Payroll Employment as of January 2021. Also, Virginia's economy is shifting from an agricultural to a technical and manufacturing base, creating an ideal environment for entrepreneurs with creative ideas.
Now, let’s learn all about starting a business in Virginia
Simple Ways to Start Your Business in Virginia
1. Select a Business Concept
Before you start a business in Virginia, what is most important is the business idea. Unique ideas are great but may be limited by the lack of capital, expertise, or demand. Your idea must not be just unique but also feasible.
So, take some time to brainstorm and research business ideas. Consider writing a business plan after choosing an idea to assess your chances of making a profit, which will make your business structure enticing for your clients. Consider your interests, expertise, and startup funds.
2. Select a Name
While choosing a legal name is not required for sole proprietorships, this step is completely necessary for LLCs and corporations. The tedious task in this process is not just to pick a name but to pick a truly unique one. This means your business name must be distinct from that of other companies already registered with the Virginia State Corporation Board (SCC).
You can use a business entity search on the SCC website to scan for available titles. Luckily, you have an option of reserving a chosen name for 120 days after filing the Form of Renewal of Reservation of a Business Entity Name.
3. Establish Your Business Entity
It's time to transform your business idea into an official entity.
Sole proprietorships and partnerships are the most common legal frameworks for a small business. Limited Liability Companies and Corporations are also examples of business structures for small and large businesses. Consider which business structure provides the liability security you seek and the best tax and financial benefits for you and your company.
Here is some paperwork you need to complete depending on the structure of your business:
● Sole Proprietorships & Partnerships
Generally, sole proprietorships and partnerships can be launched without filling any organizational paper. However, for partnership, it is crucial to draft a formal contract containing the agreement and rights of the parties. Although this is not a requirement of law, the terms of the agreement will be referred to in case of any disagreement between the partners.
● LLCs & Corporations
To form a limited liability company in Virginia, you must first file articles of association with the Virginia State Corporation Commission. You can also draft an operating agreement stipulating the fundamentals of your LLC. However, the operating agreement is optional and not a basic requirement of law.
If you are launching a corporation, you must file and submit an article of incorporation with the SCC. It is essential for S Corporations to apply for Form 2553 and file them with the Virginia SSC. Although this is not a legal requirement; you can draft bylaws to establish your corporation's system of rules.
Also, entrepreneurs starting an LLC or a corporation will need a registered agent to conclude the service of process.
4. Complete your registration
Here are some basic registrations you must complete before starting a business in Virginia:
● Taxes
If you sell taxable products and services, you must register your business with the Department of Taxes. And if you will be hiring employees, it is essential to file for employee withholding taxes. Both forms of taxes and other business taxes can be registered electronically through VATAX Online Services or by filling Form R-1
● EIN
Companies and corporations need an EIN if they operate as a separate legal entity. For instance, the EIN is a requirement by banks to open a business account. Likewise, you will use your EIN when paying employees to demonstrate taxes paid and withheld.
You can obtain an EIN by filling an online application on the IRS website for free.
● Obtain the necessary Licenses and Permits:
Obtain the necessary licenses and permits from the appropriate department. For instance, the Department of Environmental Quality issues licenses relevant to environmental legislation. Likewise, the Virginia Department of Professional and Occupational Regulation issues licenses for occupations.
Many other licenses are granted on a regional basis. To find out if you need a local business license, contact your town or city's licensing department and make sure you get this done with a registered agent.
5. Choose a Location
In choosing a location, you must consider the convenience of your customers. Your business should be easy to access, ideally less than 20 minutes from your main market.
As a small business owner, you must be able to afford the rent and utilities, even when business is slow. Be sure to refer to your business plan to project future earnings when calculating ideal rent costs.
6. Obtain Insurance
Whether you decide to open a pizza shop, a restaurant, a liquor store, or start any other business, ensure to buy an insurance plan. Business insurance will shield your business and its assets from the consequences of unforeseeable circumstances like litigation or natural disasters. Professional liability insurance will be greatly needed if your business is an LLC.
We suggest speaking with an insurance provider and attorney to determine which coverage choices are best for your new business.
7. Open A Bank Account for Your Company
Whether you run a sole proprietorship, LLC, or corporation, it's crucial to open a separate bank account from your business to keep more organized accounts. This will prevent a mix-up of your personal savings with your business income. Additionally, you will have a more professional image when writing checks or submitting invoices.
You may want to get a business credit card as well to make business expenses more convenient and manageable.
8. Use Social Media
No matter how small or big your business is, you need social media to expand in your market. Besides, you can connect more with your customers and meet their demands when you interact with them on social media. As you become more comfortable online, you can use tools like Facebook Business Suite, which is designed to help small businesses monitor interactions on both Facebook and Instagram.
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