How to Start a Virginia Corporation (original) (raw)

Start a Virginia Corporation

When you plan to start a business in Virginia, you must decide on the appropriate structure. Starting a corporation may be more complicated than creating an LLC in Virginia or a sole proprietorship. However, it is not that difficult as well. There are a few guidelines that you should be aware of when it comes to creating Virginia corporation. Starting a corporation involves a legal process, that is, the process of incorporation.

In this article, I will share a step-by-step guide to start a corporation in Virginia. I will also enlighten you on the advantages and disadvantages of having a corporation. Some people consider starting a corporation in Virginia more than other business structures since it has many advantages over other forms.

What is a Corporation in Virginia

In definition, a corporation is a formal organization established by stockholders, shareholders, or other people to make a profit. Like individuals, corporations can undertake contracts, own assets, sue and be sued, pay taxes, limit state and federal taxes, and loan funds from banking institutions.

Common Types of Corporations

Before you start with the process of forming a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation: C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.
S-Corporation: An S-Corporation is set up similarly to a C-corporation but has different tax implications and owner limits. S-corps have no more than 100 stockholders and are not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.
Non-profit Corporation: Nonprofit businesses are frequently used by religious, educational, and charity institutions to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations. Read how to start a nonprofit corp in Virginia to learn about nonprofit corporations.

If you have a small business, it is recommended that you form an LLC instead of a corporation in Virginia. LLCs have more tax benefits than other structures. Besides, LLCs protect your personal assets. However, it is wise to consult a legal expert before you start setting up your business in Virginia.

– LLCBuddy Editorial Team

How to Start a Corporation in Virginia

To start a corporation in Virginia, you must follow the below steps that, include forming a corporation name, appointing a board of directors, filing for Articles of Incorporation, drafting corporate bylaws, meeting with the board of directors, issuing stocks, creating a shareholders agreement, requesting for an EIN, and getting a license and permit. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choose a Corporation Name in Virginia

Naming your business is one of the most crucial activities during the startup phase. Your corporation name serves as the foundation for your brand. Legal procedures should be taken into account when choosing your corporation name. Choose a corporation name that will enable you to develop a strong brand identity without being hampered by irrelevant factors.

If you are forming an LLC, there is a complete guide on Virginia LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your corporation in Virginia-

Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

Step 2: Board of Directors Initial Appointment

To form a corporation in Virginia, you must appoint an initial board of directors before making them permanent once the corporation is formed. In Virginia, you may appoint at least One board of directors. The initial board of directors is in charge of guiding the overall strategy of your business. The structure, responsibilities, and powers given to a board of directors are determined by the bylaws of a company or organization. So, appointing your corporation’s initial board of directors in Virginia is a big step in forming a corporation.

Step 3: Filing the Articles of Incorporation in Virginia

After you appoint the initial board of directors in your Virginia corporation, the next step is to write and file a Articles of Incorporation. In writing, the Virginia Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Virginia Registered Agent contact information, and the names and addresses of incorporators and/or initial board members, should be written.

Filing a Articles of Incorporation in Virginia may be done with three methods that are online, by mail and in-person. The Articles of Incorporation fee may vary from different states. However, in Virginia, it costs $100 for online and by mail filing or in person filing.

Online Filing: Get the eForm from the SOS site, login/subscribe to the site, fill up the form, submit online
Offline filing: Send the form by mail to or drop it off in person at State Corporation Commission, Clerk’s Office, P.O. Box 1197, Richmond, VA 23218-1197

Step 4: Draft Corporate Bylaws

Now you are done filing a Articles of Incorporation in Virginia, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made-

The responsibilities are given to each officer.
How will judgments in business be made?
Where and when are the annual shareholder meetings?
The minimum number of shareholders required for decision-making.
Location and timing of dividend payments.

Step 5: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 6: Issuing Stock in a Corporation

After starting your Virginia corporation, one of the first official corporate actions is issuing stock to the shareholders. Keep track of the number of shares issued to each shareholder and the purchase price. A corporation in Virginia is managed by its shareholders, who contribute to the business in exchange for ownership shares.

Step 7: Draft and Finalize a Shareholders Agreement

Even though drafting and finalizing a shareholders agreement is unnecessary, I suggest you still comply since it will benefit your corporation and its shareholders. A small business’s shareholders enter into a shareholder agreement contract. It establishes how ownership will be handled in unexpected situations, like a shareholder passes away, retires, becomes disabled, or quits the corporation. Early on in the life of your Virginia corporation, signing a shareholders’ agreement can help maintain corporate continuity and prevent future disputes.

Step 8: Request an EIN in Virginia

After everything is in place, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your Virginia corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Virginia can be through the following:

Apply Online- The EIN online application is the preferred method for customers to apply for and obtain an EIN.
Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
Apply by Mail- The EIN application For m SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 9: Get Licenses and Permits for your Corporation in Virginia

Before your corporation operates in Virginia, you must have a business license. A business license is a document issued by a government agency that permits you to operate your business in the geographic region that that agency governs. To legally operate your corporation, you’ll need a business license. Numerous corporate licenses need to be filed and renewed regularly. Check out how to get business licenses and permits in Virginia to know more.

You must also register a DBA name if you intend to conduct business using a name other than your corporation’s legal name. The DBA name is sometimes known as “doing business as” or a “fictitious business name.” Depending on your location, you may need to register the DBA with your state, city, and county. You can skip this step if your business solely uses your legal company name.

Important Information

Paying your Taxes in Virginia

Even if you have established your corporation in Virginia, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Virginia has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Virginia are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Virginia

A filing and annual fee must be paid to form a corporation in Virginia. Without it, your corporation won’t operate. The initial filing fee for a corporation may vary depending on the state. However, in Virginia, it costs 100foronlineandbymailfilingorinpersonfiling.ThecorporationinVirginiaalsohastofileanannualreport(thoughitmightnotbemandatory,itisrecommendedtofileone).Ensureyoucomplywithallthenecessaryfeesandcostssoyourcorporationwillrunsuccessfullyandsmoothly.If,inthefuture,youmakeanychangestoyourcorporation,youmustfiletheVirginiaAmendment.Itcosts100 for online and by mail filing or in person filing. The corporation in Virginia also has to file an annual report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly. If, in the future, you make any changes to your corporation, you must file the Virginia Amendment. It costs 100foronlineandbymailfilingorinpersonfiling.ThecorporationinVirginiaalsohastofileanannualreport(thoughitmightnotbemandatory,itisrecommendedtofileone).Ensureyoucomplywithallthenecessaryfeesandcostssoyourcorporationwillrunsuccessfullyandsmoothly.If,inthefuture,youmakeanychangestoyourcorporation,youmustfiletheVirginiaAmendment.Itcosts25 to file an amendment in Virginia.

Advantages of Starting a Corporation in Virginia

Limited Liability: The biggest advantage of setting up a Virginia corporation is that the shareholders are not personally responsible for the debts of the company. As a result, when you incorporate as a corporation, personal assets like homes, vehicles, and other possessions are prohibited. One of the main benefits of setting up a corporation over a general partnership or sole proprietorship business structure is that neither the business nor the owners are held legally responsible for the obligations of the business, even if it means giving up their personal assets.
Limitless Corporation: The fact that a corporation’s existence is independent of its owners is another significant benefit of incorporation. In other words, a corporation has an endless life and will continue operating normally even if the owner dies or decides to sell their ownership.
Advantages in Tax: The deduction of health insurance premium payments made on behalf of an owner-employee is one of the many financial benefits to which corporations are entitled. Corporations also save on self-employment taxes since their revenue is not subject to workers’ compensation, Social Security, or medical taxes. Tax rates on corporate profits are lower than those on individual income.

FAQs

What is the process for starting a corporation in Virginia?

To form a corporation in Virginia, you will need to file Articles of Incorporation with the Virginia State Corporation Commission. You will need to include information such as the name of the corporation, the address of the registered office, the names and addresses of the incorporators, the number of shares to be authorized, and the name and address of the registered agent. You will also need to provide information about the directors and officers, as well as the purpose of the corporation.

What taxes will my Virginia corporation need to pay?

Your Virginia corporation will be subject to Virginia state income tax and local business taxes, as well as federal income tax.

Is there a minimum amount of capital required to start a corporation in Virginia?

There is no minimum amount of capital required to start a corporation in Virginia, but you should be aware that some capital may be required to cover the cost of registration and filing fees.

Will I need to register my Virginia corporation with the IRS?

Yes, your Virginia corporation will need to register with the IRS by obtaining a federal Employer Identification Number (EIN).

How much does it cost to start a corporation in Virginia?

The cost of starting a corporation in Virginia depends on the type of corporation you are forming and the filing fees associated with it. It typically ranges from 100to100 to 100to225.

Do I need to file an annual report for my Virginia corporation?

Yes, Virginia corporations must file an annual report with the Virginia State Corporation Commission. The filing fee is currently $50.

Can I form a corporation in Virginia online?

Yes, you can form a corporation in Virginia online by filing the Articles of Incorporation with the Virginia State Corporation Commission.

What are the benefits of forming a corporation in Virginia?

There are many benefits to forming a corporation in Virginia, including limited liability protection, the potential for tax savings, and the ability to raise capital more easily.

Are there any special requirements for forming a corporation in Virginia?

Yes, Virginia corporations must comply with the state’s corporate laws, which include requirements for meetings and record keeping.

What is the corporate income tax rate for a Virginia corporation?

The corporate income tax rate for a Virginia corporation is 6.0%.

Is there a filing fee for dissolving a Virginia corporation?

Yes, there is a filing fee of $50 for dissolving a Virginia corporation.

What other fees may I be required to pay when forming a corporation in Virginia?

In addition to the filing fee for the Articles of Incorporation, you may need to pay an annual report fee, franchise tax, and/or an assumed business name fee.

Can I form a nonprofit corporation in Virginia?

Yes, you can form a nonprofit corporation in Virginia by filing the Articles of Incorporation with the Virginia State Corporation Commission.

How do I choose a name for my Virginia corporation?

Your corporation’s name must be distinguishable from all other existing Virginia corporations, limited liability companies, and limited partnerships. You can check for existing names by searching the Virginia State Corporation Commission’s website.

Is there a minimum number of directors required for a Virginia corporation?

Yes, Virginia corporations must have at least three directors.

Are there any restrictions on who can serve as a director of a Virginia corporation?

Yes, directors of Virginia corporations must be at least 18 years old and cannot be convicted felons.

How often must I hold meetings for my Virginia corporation?

Virginia corporations must hold an annual meeting of shareholders and directors.

How do I obtain a business license for a Virginia corporation?

You will need to contact your local government office to obtain a business license for your Virginia corporation.

Do Virginia corporations need to keep detailed records?

Yes, Virginia corporations must keep detailed records of all corporate activities, including meetings, resolutions, and financial statements.

Is there an annual fee for my Virginia corporation?

Yes, Virginia corporations must pay an annual fee to the Virginia State Corporation Commission. The amount of the fee varies depending on the number of shares authorized.

What is a “registered agent” for a Virginia corporation?

A registered agent is an individual or business entity appointed to receive legal documents on behalf of the corporation. The registered agent must have a physical address in Virginia where the documents can be delivered.

Does my Virginia corporation need to file a corporate tax return?

Yes, Virginia corporations must file a corporate tax return with the Virginia Department of Taxation.

Are there any requirements for issuing stocks and bonds for a Virginia corporation?

Yes, Virginia corporations must comply with state and federal securities laws when issuing stocks and bonds.

Is there a fee for filing a Virginia corporation’s annual report?

Yes, the filing fee for a Virginia corporation’s annual report is currently $50.

Is there a penalty for late filing of a Virginia corporation’s annual report?

Yes, late filing of a Virginia corporation’s annual report may result in a penalty of up to $2,500.

What type of insurance do I need for my Virginia corporation?

The type of insurance you need for your Virginia corporation depends on the type of business you are operating. It is recommended that you check with your insurance provider to determine the appropriate coverage for your business.

Who do I contact with questions about forming a corporation in Virginia?

You can contact the Virginia State Corporation Commission with questions about forming a corporation in Virginia.

What are the steps to start a corporation in Virginia?

The steps to start a corporation in Virginia include filing the Articles of Incorporation, appointing a registered agent, obtaining a federal employer identification number, and obtaining other necessary licenses and permits.

What is the filing fee to start a corporation in Virginia?

The filing fee to start a corporation in Virginia is $100.

Where do I file the Articles of Incorporation for a corporation in Virginia?

The Articles of Incorporation must be filed with the Virginia State Corporation Commission.

What is the minimum number of shareholders required to form a corporation in Virginia?

The minimum number of shareholders required to form a corporation in Virginia is one.

What taxes will my corporation in Virginia be subject to?

Your corporation in Virginia will be subject to income, sales, and property taxes.

Are there any other fees associated with forming a corporation in Virginia?

Yes, in addition to the filing fee, you may need to pay a license fee, a name reservation fee, and a certificate of good standing fee.

Why Virginia Corporation is So Important

One of the key reasons why Virginia Corporation is so important is the sheer scale of their impact on the local and national economy. Virginia corporations span across a diverse range of industries, from technology and healthcare to finance and manufacturing. These companies not only provide essential goods and services to consumers but also generate significant revenue and create jobs for the local workforce.

Moreover, Virginia Corporation also contributes to the innovation and growth of key industries in the state. Many of the most successful and innovative companies in the country call Virginia home, drawing top talent and investments to the region. As a result, Virginia has become a hub for cutting-edge research, development, and entrepreneurship, fostering a culture of innovation that drives economic growth and attracts top talent from across the country.

Additionally, Virginia Corporation plays a critical role in the global economy. Many of the largest and most influential multinational corporations have established a presence in Virginia, leveraging the state’s strategic location, skilled workforce, and business-friendly environment to expand their operations and reach new markets. These corporations not only generate significant tax revenue for the state but also contribute to the overall competitiveness of the American economy on the international stage.

Furthermore, Virginia Corporation is an essential driver of job creation and economic development in the region. Through their continued expansion and investment in new projects and initiatives, Virginia corporations create employment opportunities for thousands of local residents, providing stable and high-paying jobs that help sustain and grow the local economy. In addition, these corporations also support numerous small and medium-sized businesses in the state through partnerships, supply chain relationships, and subcontracting opportunities, further boosting economic growth and prosperity.

Despite their many contributions to the state and national economy, Virginia Corporation also face a number of challenges and pressures that require careful management and strategic planning. From regulatory compliance and cybersecurity risks to market volatility and international trade tensions, corporations in Virginia must navigate a complex and rapidly changing business environment to remain competitive and successful. By embracing innovation, adopting best practices, and fostering collaboration with stakeholders, Virginia Corporation can overcome these challenges and continue to drive economic growth and prosperity in the region for years to come.

In conclusion, Virginia Corporation is an essential pillar of the state’s economy, driving innovation, growth, and job creation in key industries and contributing to the overall competitiveness and prosperity of the region. By leveraging the unique strengths and opportunities of the state, Virginia corporations can continue to thrive and make a positive impact on the local and national economy for generations to come.

Conclusion

When determining which corporate form is best for you, be selective. You must know which business structure is bet-fitted for your product/service in Virginia. Consult a legal professional before you take the first step while setting up your business. Finding the ideal ratio of corporate advantages and legal protection that meets your unique needs is very important. In forming a corporation in Virginia, you need to ensure that every detail is well-formed so that your corporation will be successful. And if you have any questions, share them in the comment section below.