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Virginia has more than 780,000 small businesses, employing over 1.6 million people—close to half of the state’s private workforce. That makes it a particularly dynamic and welcoming market to start a business. But there will always be state-specific hurdles to jump over when it comes to starting a company, along with many perks and advantages. This step-by-step guide will take you through the pluses and minuses of starting a business in the Commonwealth of Virginia. Here’s what you need to do.
Start a Business in Virginia
1. Choose a business idea
Choosing a solid business idea may seem like the easy part, but it’s only 1% inspiration and 99%, well, you know. It isn’t just about deciding what product or service you’re going to offer, it’s about understanding both your customer and your market.
- Know your customer. The best business ideas are based on a clear vision of who is buying from you. To gain this level of understanding, you could conduct a competitive analysis of Virginia’s other businesses, analyzing what products or services are offered in the state that are similar to yours. You may also find it beneficial to survey possible future customers and research industry trends.
- Predict your profitability. Before you spend time and money on a new venture, make sure it’s worth your investment. Certain variables can confirm whether this is true, including price, business model, distribution venues, and the costs you’ll take on to build your business and manufacture your product. The most important consideration is your break-even point. What number of products or services would you have to sell to cover your costs?
2. Name your business
Naming your new Virginia business is like introducing yourself to the state, so it’s one of the most important decisions you’ll make as an entrepreneur. Once you’ve got your name down, it will also affect several other crucial decisions, including branding, marketing, and customer retention. Your name will encompass your whole identity, so it’s definitely an important decision for you early on. Here are a few things to consider when choosing a business name:
- Is it unique in Virginia? All business names in Virginia must be unique—you can conduct a search of all business names using the Virginia State Corporation Commission’s Clerk’s Information System.
- Is the domain name available? Your business’s online identity is almost as important as—if not more important than—its name, so you’ll want to make sure whatever name you choose, it’ll make sense as a URL. Is there a marketable domain name available that aligns with your chosen business name? Are there other domains too close to your chosen business name? If nothing is available that aligns with your business name, or other businesses have names and URLs that are too similar, you may want to reconsider your name choice.
- Is it memorable? In general, a good business name doesn’t just announce your entity’s function clearly and truthfully, it’s also catchy, so your customers are likely to remember it and have a positive feeling about it.
- Does it include the required suffix? If you form an LLC in Virginia, your company name must contain the phrases “limited company” or “limited liability company,” or its abbreviations (LC, L.C., LLC or L.L.C.).
Using a DBA in Virginia
If you want to apply a DBA (“doing business as”) or an alias to your company in Virginia—also known as a trade name—you’ll need to register with the State Corporation Commission, and can do so online or using paper forms. Procedures depend on the county, but expect to fill out an application form and pay a filing fee of $10. Unlike with business names, fictitious names, which DBAs fall under, do not have to be unique.
3. Create a business plan
Before you start a business you have to have a business plan. Think of it as a necessary road map that plots out your steps to success. A solid business plan will include the following:
- Executive summary
- Detailed company description
- Market analysis
- Outline of organizational and managerial structure
- List of products and/or services
- Customer segmentation report
- Marketing plan
- Logistics and operations plan
- Financial plan
If you need a place to start, here’s a free business plan template you can use as a strong foundation to build off of and make your own. If you need inspiration, here are some good business plan examples.
4. Choose a business structure and get started
Once you’ve chosen a name and made a business plan, you’re still just getting started. Perhaps one of your most critical choices is your business structure, which will determine how your company is taxed, how easy it is to lock down investments, and how liable you are if something doesn’t go according to plan.
Types of business structures offered in Virginia include sole proprietorships, which are owned by one person only; partnerships with two or more owners; corporations or legal entities separate from owners; and limited liability companies (LLCs), which contain elements of both corporations and partnerships.
- Sole proprietorship. If you don’t formally incorporate or form a partnership, by default you have a sole proprietorship. This means your business is owned solely by you, and is inseparable from you. As with partnerships and most LLCs, they’re taxed as your personal income and only once a year, rather than on corporate income and on personal income.
- LLC. If you want the benefits of running a simpler business entity like a sole proprietorship, but also are looking for many of the same legal protections corporations enjoy, LLCs might be for you. In this case, your personal assets are afforded a level of protection against creditors in bankruptcy and legal judgments if anyone tries to sue you.
- C corp. If you’re looking to form your business as an entity entirely separate from you, you’ll want to form a C corporation. These require significantly more paperwork, and take more work and expense to get off the ground and maintain over time, but they offer stronger personal asset protection and provide you with a unique opportunity to raise capital through stock.
What structure you decide for your business will determine its tax rate. All Virginia corporations are taxed at a rate of 6% of taxable corporate income, and must also pay an annual registration fee ranging from $100 to $1,700. If your business is a retail operation that deals in certain goods, you will also have to pay the state’s sales tax, which varies depending on the type of good and whether it is sold remotely, in a shop setting, or for consumption (such as food, alcoholic beverages, or tobacco). For more information on Virginia business taxes, visit the government website Virginia Tax.
Obtain an EIN
Once you’ve decided how to name and file your Virginia business, you’re going to need an employer identification number (EIN). This nine-digit number functions similarly to an individual's Social Security number, but it’s assigned to new organizations by the IRS and by Virginia state for tax purposes. An EIN makes it easier to file taxes at the federal and state levels, and can also help secure lines of credit and business credit cards.
Incorporating in Virginia
Obtaining an EIN in Virginia is part of the overall state incorporation process. To incorporate your business in Virginia you’ll need to file Articles of Incorporation (for a corporation) or Articles of Organization (for an LLC) with the State Corporation Commission. Here’s what you’ll need to register a business with the tax authorities once it’s been formed:
- Your legal business name and address
- The name and email of the person filing online in order to create an account, or the account information, if you already have one
- Your federal EIN number
- Your North American Industry Classification System (NAICS) code, found here
- Your business’s entity type and tax type
- Name, email, and phone number of the business’s primary contact and responsible party (these may be two different people)
By registering online, you also save time by creating a business online services account through which you may also pay taxes for your business.
5. Obtain a business license and permits
In Virginia, the only permit or license every business needs to get at the state level is a sales tax certificate, which can be obtained here. In addition, certain craftspeople and tradespeople may need more specific types of licensing and permits, which you can look up here.
6. Examine insurance options in Virginia
As a business owner, there will inevitably be circumstances out of your control. For all those and more, it’s helpful to have business insurance. This helps protect your Virginia business and assets if something unexpected happens. The State Corporate Commission has a handy PDF available for determining what types of insurance your business might need. A few types of insurance in Virginia include:
- Liability insurance. Protects your business against any lawsuits resulting from accidents, injuries, or negligence.
- Commercial property insurance. Covers the costs associated with fire or weather damage, or theft.
- Commercial auto policy. Covers any vehicle you plan on using as part of your business.
- Workers’ compensation coverage. Worker's compensation insurance covers internal employee disputes, employee injury, and victims of crimes in the workplace. This type of insurance is mandated in Virginia.
- Professional liability insurance. Professional liability insurance protects manufacturers, wholesalers, distributors, and retailers from lawsuits associated with unsafe products.
- Cyber liability insurance. Covers your costs if your Virginia business has a data breach.
- Umbrella insurance. Extends coverage to exceed policy limits of other insurance plans.
7. Understand financial considerations
Starting a business costs quite a bit of money upfront, but it’ll be worth it when you start to see profits rolling in. Aside from insurance, you’ll likely need to rent space for a storefront or office, pay to register a domain name and have a website designed, place ads in appropriate publications and perhaps even billboards, and invest in equipment and software. You also may want to hire trustworthy professionals with expertise as lawyers and accountants, for example, to do this critical work for you. It can really add up, but fortunately, there are quick, accessible options for startup funding available.
8. Market your business
When you’re ready to introduce your Virginia small business to the world, you’ll need a great marketing strategy. Here are the key elements to consider:
- Market research. If you understand the market, you’ll have more insight into your target customer’s wants and needs.
- Advertising and promotion. Whether you place ads yourself or hire an agency to handle your advertising, you may want to consider paid advertising to get the message across about your product or business.
- Social media. These days, social media is critical to the success of any company or brand, and managing social media profiles is a full-time job. That may involve promoting your products or services on multiple channels, including Facebook, Instagram, TikTok, and YouTube to reach diverse audiences.
- Public relations. Keeping up with friendly media outlets who are receptive to your news and can write about you positively can increase your visibility organically.
How To Start a Business in Virginia FAQ
What do you need to incorporate a business in Virginia?
To start a business in Virginia, you have to file the Articles of Organization if you want to start an LLC, or the Articles of Incorporation if you want to start a corporation. Both are filed with the State Corporation Commission. You will also need to get a federal EIN number to register your business with both state and federal tax authorities
Does Virginia require a statewide business license?
No, Virginia does not have a statewide business license although some counties and municipalities do require business licenses. The Commonwealth of Virginia does require licenses for some regulated professions, such as healthcare, education, and finance.
How much does it cost to register an LLC in Virginia?
The fee to file the Articles of Organization to register your LLC in Virginia is $100. The state also charges $10 to reserve a business name.