How Much Does an LLC Cost in Virginia? (What Fees To Expect)
Understanding the costs of forming a Limited Liability Company (LLC) in Virginia is crucial for aspiring business owners.
As an experienced Mergers and Acquisitions specialist and a Master’s Degree holder in tax law, I recognized the need for a comprehensive resource to help entrepreneurs understand the financial aspects of starting an LLC.
I conducted thorough research to compile this guide, examining official government resources, legal documentation, and expert opinions.
This article will give you an overview of the process and tell you how much it will cost to begin a Virginia LLC business entity.
Quick Summary
- The cost to start an LLC in Virginia includes a \$100 filing fee for the Articles of Organization and an annual registration fee of \$50.
- Additional expenses may include fees for a registered agent, business permits and licenses, and taxes.
- According to the U.S. Small Business Administration, the economic impact of SMBs in Virginia is substantial, with 1.6 million small business employees making up 45.4% of the state's workforce.
- I recommend using any expedited options that the state offers to make the business entity or LLC operational as soon as possible.
Cost to Start an LLC in Virginia
The cost to start an LLC in Virginia is determined by the paperwork you need to file. Here are the basic expenses that need to be covered to form an LLC in Virginia.
With 1.6 million small business employees, representing 45.4% of Virginia's workforce, as per the U.S. Small Business Administration, the significance of SMBs in the state cannot be overstated [1].
1. LLC Formation Filing Fee (\$100 - Mandatory)
The most significant expense of establishing a Virginia LLC is the \$100 filing fee to file your LLC's Articles of Organization with the Virginia State Corporation Commission [2].
You have the option to file by mail or online. However, I prefer submitting applications online since the process is more efficient and convenient.
The state of Virginia offers expedited services for online applications, which cost \$50–\$100 for next-day processing and \$200 for same-day approval.
2. Registered Agent Fee (\$80-\$300 - Optional)
A registered agent in Virginia keeps track of your annual reports, conducts service of process and receives documents on behalf of the LLC.
Most registered agent services charge \$80-\$300 annually to act as your registered agent in Virginia.
Because of my experience with business formation, I learned that selecting an LLC registered agent who complies with state requirements and provides reliable services for your Virginia LLC is essential.
"Becoming your own agent saves costs, but demands daily presence, forfeits privacy, and eliminates vacations and sick days."
- Jon Morgan, Co-Founder & Chief Editor of Venture Smarter
3. Virginia LLC Name Reservation Fee (\$10 - Optional)
Filing corporate papers for Virginia LLC name reservations is not mandatory but is recommended for immediate business registration.
If you're ready to launch your business, you can skip this step and directly file the LLC Articles of Organization, which instantly registers your name.
However, if you want to secure your desired name, you can reserve it by paying a filing fee of \$10 [3].
I actually advise clients to reserve their preferred business names before the LLC becomes operational so that they may not be taken by another business entity.
Expenses Following the Approval of Your LLC
Other costs are associated with starting an LLC in Virginia after the filing and approval of the company.
The Professional, Scientific, and Technical Services, Retail Trade, and Healthcare and Social Assistance sectors, significant contributors to the Virginia economy, combined represented 43.5% of the state's employment in 2022, according to Ibis World data [4].
1. Business Permits & Licenses (\$100 - Depending on the Business/Municipality)
In Virginia, obtaining the necessary LLC license and permit depends on the nature of your business activities and the jurisdiction you operate within.
I found it helpful that the SCC offers a Business Permits and Licenses Tool to help you identify if your LLC is required to obtain a permit or license.
The average cost of a business license in Virginia is \$100, but may vary depending on the industry and municipality.
2. LLC Annual Fees (\$50 - Mandatory)
Virginia LLCs must remit an annual registration fee to the State Corporation Commission.
The filing fee amounts to \$50 and must be paid by the end of the LLC's anniversary month in the year following its formation. Compliance with this requirement ensures the LLC's continued legal standing.
3. Operating Agreement (Optional but Recommended)
An operating agreement is a document that outlines the rules governing your LLC. It specifies the company's management structure, how profits and losses are distributed, and voting requirements.
You can draft an operating agreement on your own at no additional cost or use an online LLC formation service. They usually charge \$100 to \$200.
For clients who have budgets to spare, I recommend that you hire an attorney to draft the operating agreement to ensure its validity.
4. EIN (Free - Optional but Recommended)
I encourage business owners to obtain an EIN since it is necessary for most new companies to obtain licensing, open a bank account and hire employees.
You can obtain an EIN through the IRS or State Corporation Commission free of charge.
4. Taxes Payable To The Virginia Department Of Taxation
The Department of Taxation administers and collects state taxes, which differ depending on the business type. You can find a variety of tax guides and resources on their website to help you get started.
Some examples of taxable business activities include:
- State Income Tax: As the LLC's owner, you must pay this tax on all business profits. These earnings will be taxed through your personal tax return. The typical income tax rate in Virginia is between 3 and 5.75 percent.
- State Sales Tax: If your LLC is a seller of goods or a service provider, it has to collect sales and use taxes and then pay them to the Virginia Department of Revenue. The current state sales & use tax rate on LLCs in Virginia is 4.3% of the purchase price [5].
- Federal Self-Employment Tax: The self-employment tax in the Commonwealth of Virginia is a flat rate of 15.3 percent, paid by all LLC Business members or managers [6].
- Federal Income Tax: Federal taxes are charged on taxable income based on your earnings, the tax bracket in which your LLC operates, deductions, and filing methods.
Related Articles:
- How to Dissolve an LLC in Virginia
- How to Change the Name of an LLC in Virginia
- LLC Processing Time in Virginia
FAQs
How Much Does a DBA Cost in Virginia?
A DBA costs \$10 in Virginia, which you can submit online or on paper.
Do I Need to Pay a Fee to Form an Operating Agreement in Virginia?
You do not need to pay a fee to form an operating agreement in Virginia. Operating agreements are documents between the LLC's members that outline how the company will be operated.
References:
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-VA.pdf
- https://www.scc.virginia.gov/getattachment/6dffd2b0-e9b1-461e-af61-eb1ea11db866/llc1011.pdf
- https://scc.virginia.gov/pages/Virginia-Limited-Liability-Companies
- https://www.ibisworld.com/united-states/economic-profiles/virginia/
- https://www.avalara.com/taxrates/en/state-rates/virginia.html
- https://apps.irs.gov/app/understandingTaxes/teacher/hows_mod14.jsp
