LLCs are an excellent structure for many reasons and can benefit your organization. Starting one in West Virginia is also a simple process when you have the right information at your fingertips.
With a deep understanding of West Virginia's business regulations and legal requirements, our expert team has compiled the necessary steps and resources to successfully start your Limited Liability Company LLC.
In this guide, you’ll learn about LLC formation in West Virginia. We'll go over each step and the requirements to enable you to establish your West Virginia LLC easily and according to the state’s regulations.
Quick Summary
To start a Limited Liability Company (LLC) in West Virginia, choose a business name, hire a registered agent, file the Articles of Organization, and obtain an EIN
- Different types of LLCs in West Virginia, such as single-member, multi-member, and series LLCs, offer various benefits and flexibility for business owners
- The benefits of West Virginia LLCs include limited liability, pass-through taxation, and flexible management
What Is A West Virginia LLC?
A West Virginia LLC refers to a limited liability company formed under the laws of the state of West Virginia. It offers limited liability protection to its owners.
This means that the business owner's personal assets are protected in the event that the company is sued. LLCs also provide a lot of flexibility in terms of management and taxation.
There are three types of West Virginia LLCs:
- Single-member
- Multi-member
- Series LLCs
The type of LLC you choose will depend on the number of owners, the business structure, and the taxation method you find most suitable for your business needs (S or C corporation) [1].
A single owner owns single-member LLCs, the simplest type of LLC (much like a sole proprietorship).
Multi-member LLCs have two or more members and offer more flexibility than single-member LLCs. By default, these business entities are taxed like partnerships. Series LLCs are a new type of LLC that was created in 2017.
They offer liability protection for each "series" within the company, which can be helpful for businesses with multiple divisions or subsidiaries.
If you're unsure whether to choose a single or a multiple-member type of LLC for your business, you can consult a business lawyer to help make the decision.
Steps to Follow When Forming a West Virginia LLC
Here is a step-by-step guide you’ll follow to form your West Virginia LLC.
1. Choose An LLC Name
Choosing a business name for an LLC in West Virginia doesn’t have to be complicated.
These are the simple steps you can take when it comes naming your LLC:
- Look up an LLC in West Virginia - make sure the name is unique and available on the state's website by searching through their business search engine tool (this will also ensure your chosen name complies with all other rules)
- Check your local county's business office for any rules or regulations they have regarding naming a business.
- Once you've double-checked to ensure the business name is available, it will be time to complete a formal document with the state. This can be done through an online service, so no complicated forms and fees are involved.
To avoid confusion, naming requirements for West Virginia LLCs stipulate that a business name must include the words "limited liability company" or abbreviations of these terms.
Restricted terms include "bank," "insurance," and other similar words. Words that can be associated with a government agency can't be used either.
You can visit the West Virginia Secretary of State business portal to get more information for your LLC name requirements [2].
Suppose your selected LLC name is not available on the state website. In that case, you can file a form with the West Virginia Secretary of State Business Division and pay a $100 filing fee to reserve it for 120 days.
If the business is already running, it cannot be changed once the state approves it.
2. Hire a West Virginia Registered Agent
The state of West Virginia requires all LLCs to appoint a registered agent or a registered agent service.
A registered agent is an entity or an individual that agrees to receive documents and other mail on behalf of the limited liability companies.
Many businesses choose their attorneys, accountants, insurance agents, property managers, etc., as their registered agents due to an existing business relationship.
You can opt to hire a professional registered agent service in West Virginia if you don't have anyone to appoint as your agent.
These business entity services are designed to receive and forward legal documents on behalf of their clients. It includes the operating agreements and State tax department-related papers.
When choosing a registered agent service, thoroughly research the company. Make sure they are reputable and have a good track record.
An agent must:Â
- Have a physical address in West Virginia
- Be of legal age and integrity
- Be available during normal business hours
- Have the authority to accept legal documents on behalf of the business
You must complete the Appointment of Registered Agent form to appoint an agent. This form can be found on the West Virginia Secretary of State's website [3].
3. File West Virginia LLC Articles of Organization
West Virginia Articles of Organization are the document that legally creates a limited liability company in West Virginia. They must be filed with the West Virginia Secretary of State's office. The filing fee is $100.
The Articles of Organization must include the following:
- The name of the LLC
- The registered agent for the LLC
- The principal office address for the LLC
Without the Articles of Organization, the West Virginia LLC does not exist. Therefore, it is important to file them as soon as possible so your business is protected under West Virginia law.
The Secretary of State's office offers an online filing system that makes creating a limited liability company in West Virginia easy and fast.
The West Virginia LLC processing time for online filings is usually a few business days. However, you can opt for expedited filing to create the LLC even faster.
The Secretary of State's office sends confirmation emails when online filings are complete.
If you chose expedited processing, an additional email is sent confirming that your filing was received by the West Virginia Secretary of State's office and processed within 24 hours.
The cost of expediting fee will vary depending on whether you want your West Virginia LLC registration to be completed within the next hour ($500), within the next 2 hours ($250), or the following day ($25).
4. Draft Your LLC Operating Agreement
Operating agreements are not required in West Virginia but are highly recommended. An operating agreement is a document that spells out the rights and responsibilities of your West Virginia LLC members.
This document can help prevent member disputes and ensure everyone is on the same page. The law will govern how your LLC is run if you do not have an operating agreement.
Operating agreements specify:Â
- How business decisions are made
- How profits and losses are allocated among the members
- Whether member investments will be returned in case of withdrawal or dissolution
- Who has the authority to sign contracts on behalf of the LLC (and their duties and responsibilities are)
The WV default rules govern your LLC in the Limited Liability Company Act without an operating agreement in West Virginia.
While these rules provide a framework for how an LLC should operate, they can be quite restrictive and may not reflect the wishes of all the members.
If you want to customize your LLC's operations, you must create and agree to an operating agreement. This document is not filed with the Secretary of State but should be kept in your LLC's records.
5. Obtain An EIN
Before you can set up an LLC bank account, you will need to obtain an EIN, also known as a Federal Employer Identification Number, Employer Identification Number, or Federal Tax Identification Number.
This unique nine-digit number will be used to identify your LLC with the Internal Revenue Service and its bank account for tax purposes. EIN is equally critical if you plan to hire employees or contract with other businesses.
You can go through the IRS website or call them directly to apply for an EIN. The application is free of charge, and the EIN will be issued immediately.
To fill out your application, you must provide the name of the LLC as it appears on your bank account, your business address, and information for each owner (combine all owners if married).
6. Open A Business Bank Account
After setting up your operating agreement, opening an LLC bank account is important in setting up your LLC. This account will help track your business expenses and income and can also help you qualify for certain tax breaks.
When choosing a bank, be sure to compare the fees and features offered by different institutions.
Some banks offer free checking accounts for small businesses, while others may charge a monthly maintenance fee.
Many different types of accounts are available to LLCs, and you'll need to decide which is most appropriate for your business needs.
For example, you might consider opening a "business savings account" or a "commercial checking account," depending on how frequently you conduct business using the account.
A separate business bank account is critical because you might pierce your corporate veil if you don't separate personal assets from business assets.
That means that your personal creditors could go after your business assets if something goes wrong.
To avoid commingling personal and business expenses, be sure to keep all business finances and transactions separate from your personal accounts.
7. Obtain a business license
Business licenses are required by West Virginia law for all businesses. However, the requirements vary by city and county.
There will be different types of licenses, depending on whether or not you choose to work with employees or just yourself.
A business registration certificate is the most common type of license in West Virginia. This license is obtained from the Secretary of State's One Stop Business Portal and can be used in all cities throughout West Virginia.
The local government regulates local business licenses, which can vary greatly from one locality to another. Make sure you contact your local municipality for specific information about obtaining a license in your area.
A professional limited liability company in West Virginia will probably need additional permits to conduct business in the state.
Once you have all the necessary permits and licenses, keep them up-to-date and display them prominently on your business website.
West Virginia LLC Taxes
A business entity in West Virginia is required to pay West Virginia business taxes.
LLCs in West Virginia pay their own business income tax, making it easier for small businesses. As an LLC, you must file your federal and state taxes on a personal tax return.
A few different business tax rates in West Virginia are based on the amount of income your LLC makes.
Generally, LLCs are regarded as pass-through entities, which means their profits and losses are "passed through" to the individual LLC members [4]. The members will then report this information on their personal income tax returns.
This is different from a C-Corp taxed separately from its owners.
Sales tax applies to LLCs selling goods and services at a flat rate of 6% [5]. The West Virginia State Tax Department oversees all sales tax filings and payments.
Property tax is assessed on the value of business property in West Virginia. The rate varies depending on the county, and several exemptions may apply.
There are a few other taxes your LLC might be subject to, so it's important to speak with a business accountant or tax specialist to ensure you're staying up to date with West Virginia LLC taxes.
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What are the Benefits of West Virginia LLCs?
LLCs are a great option for many businesses because they offer several benefits that other business structures do not. Some of the key benefits of LLCs include:
- Limited liability for owners: This is one of the biggest benefits of an LLC. Owners are shielded against personal liability for the debts and obligations of the company. If the company goes bankrupt, the owners are not responsible for paying its debts.
- Pass-through taxation: LLCs are known as "pass-through" entities, meaning that the profits and losses of an LLC pass directly to their owners' personal income taxes. Because of this, business owners are not obligated to pay double taxation on company earnings like they would with a C Corporation or S Corporation.
- Flexible management: LLCs offer a high degree of flexibility regarding management structure. Owners can choose to manage the company themselves or appoint managers on their behalf. This gives business owners much control over how their company is run.
If you are considering starting a West Virginia LLC, this business structure is a great option to consider.
What are the Downsides of West Virginia LLCs?
Limited liability companies in West Virginia have a few downsides you have to consider before making a final decision.
First, you might not be eligible to form an LLC in West Virginia if you are a corporation. This means that anyone using their company's name must have permission from the West Virginia Secretary of State of Corporations before doing so.
Secondly, the cost of setting up an LLC in West Virginia is higher than in other states. Annual fees also need to be paid, and the process of filing taxes can be more complicated for LLCs than corporations.
Finally, there are restrictions on the types of activities an LLC in West Virginia can engage in. For example, an LLC cannot engage in banking or insurance activities.
However, an LLC is probably your best option if you plan to open a business in West Virginia and will be the only owner. It gives you many of the same advantages as a corporation.
FAQs
Do West Virginia LLCs Need Business Insurance?
Most West Virginia businesses will need general liability insurance that guarantees their owners' and employees' personal liability protection.
If you are running a professional LLC in West Virginia, business insurance is a must because it can cover property damage, bodily injury, and personal injury.
What is an Agent of Process in West Virginia?
A West Virginia agent of the process is another term for a West Virginia process server or a registered agent. They deliver legal documents on behalf of a party to a lawsuit, usually the plaintiff or their attorney.
How Do I Get a Certificate of Existence in WV?
You can obtain the Certificate of Existence for your LLC in West Virginia by filing a simple form with the West Virginia Secretary of State. The filing fee for this service is $10 and is valid for one year from your incorporation date or until you get an annual report filed.
Conclusion
Starting an LLC in West Virginia is straightforward, but it can lead to costly mistakes if anything is skipped.
If you are starting your own business and want the security of being incorporated while saving money on taxes for yourself or your company, setting up a limited company should be one of your first steps.
To help you avoid any potential pitfalls that may arise when starting an LLC, we recommend that you consult with ZenBusiness.
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ZenBusiness
Reference
- https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
- https://business4.wv.gov/
- https://www.zenbusiness.com/west-virginia-registered-agent/
- https://www.corpnet.com/blog/what-is-a-pass-through-entity/
- https://tax.wv.gov/Business/SalesAndUseTax/Pages/SalesAndUseTax.aspx
