The state of Virginia currently recognizes a number of different business structures, such as limited liability businesses (LLCs). Limited liability companies are not corporations, even though the name may seem similar. An LLC is a legal entity that can organize for profit and pay taxes on its own. LLCs have few regulatory requirements than most corporations, and owners are not protected from personal liability for the company's debts. However, an LLC might be useful for some business owners. An overview of the advantages and disadvantages of owning an LLC in Virginia follows.
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One advantage of an LLC is that it allows owners to avoid double taxation. Because income and expenses come only from the business, owners of an LLC are not required to pay corporate taxes on their personal income or assets. This is one reason why many first-time business owners choose to form an LLC instead of a corporation. Business owners also do not have to report their income or profits, even if they are substantially higher than their home-based salaries. Also, during the early stages of planning how to start an in Virginia, it is often advisable to seek the help of an accountant, who can help ensure the formation of an efficient Limited Liability Company. This will also help minimize the amount of money needed to be paid for the services of an accountant.
Another advantage of incorporating an LLC in Virginia is that it provides more control than most other types of business entities. Because owners of LLCs can control the management of the business, they have greater ability to make strategic decisions and take aggressive actions, such as selling the company. In addition, unlike most types of business entities, an LLC does not have to pass through the state House or Senate, which can limit its ability to make changes to the laws in any given area.
How to Start an LLC in Virginia
The fourth step on the way to start an in Virginia is to find out whether the business entity will need to obtain a Virginia sales tax license. Virginia requires all new businesses to file a certificate of authority with the secretary of state. This certification informs the secretary that the business is properly organized and qualifies for a Virginia sales tax rate. In addition, if the in Virginia, a new business must also receive a business license, which is valid for three years and is required to be renewed periodically.
Although all businesses must obtain a certificate of authority before submitting their application for certification, some small business entities are exempt from these requirements. Some examples of this include non-profit organizations, partnerships, corporations, LLCs, and partnerships. It is best to discuss your personal circumstances with a qualified accountant to determine if you meet these criteria and if so, if your Virginia small business entity will qualify for a certificate of authority.
If you decide that you do qualify for these exemptions, your next step is to file an application with the treasurer of Virginia. Your filing fee will be included in your Virginia income statement. The next step on your journey on how to start an in Virginia is to hire a qualified Virginia business attorney who can help you complete the forms and submit them to the appropriate government agencies. You can save money on this step if you are prepared, have all the necessary paperwork ready, and have a highly experienced attorney to guide you through the process.
When you have completed all the steps described above, your next step is to obtain a certificate of authority. To qualify for a certificate, you must ensure that you have a limited liability company. You can request a list of available Virginia limited liability company filings at the Virginia Corporation Commission's website. Once you obtain your certificate, your company can operate as a sole proprietorship or as a partnership. It is important to understand that filing a limited liability corporation in Virginia requires paying a filing fee and may also require completion of an administrative procedure.
Once you have obtained your certificate of authority, your next important business step is to prepare an Operating Agreement. An operating agreement is an agreement that sets out the terms and conditions of your limited liability company. An operating agreement is also required by the Virginia limited Liability Company statute. Be sure that you select an operating agreement that is drafted in plain English and has no surprises for new or existing partners.
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