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West Virginia, located at the crossroads of three distinct US regions (the Northeast, South, and Midwest) is an incredibly exciting place to start and run an LLC. Aside from its location, the state also offers local LLCs a variety of advantages, including low taxes, low cost of doing business, and low barrier-to-entry markets. Here’s how to start your West Virginia LLC.
What is an LLC?
A limited liability company (LLC) is a type of business entity popular throughout the US. LLCs account for more than 35% of all businesses in the country, according to the National Small Business Association. A major advantage of running your business as an LLC is that doing so provides a degree of personal asset protection—meaning, generally, you won’t be liable for the LLC’s business debts or legal claims against it. LLC owners, of which there can be multiple, are known as “members.” LLCs formed by one owner are called single-member LLCs, while those formed by more than one owner are called multi-member LLCs.
Is an LLC right for you?
The LLC is only one of a number of business structure types available to small business owners in West Virginia. To determine whether it’s the right format for you, consider the following:
- Do you have personal assets in need of protection? If so, LLC formation in West Virginia can shield most or all these assets from creditors in the event your business faces bankruptcy, or litigants, in any legal action.
- Are you looking to limit your tax liability? Unless your LLC elects to be taxed as a C corporation, it will be considered a “pass-through” entity—meaning it will be subject to a single round of taxation at members’ personal income levels. Corporations, meanwhile, are subject to so-called “double taxation”—both a tax on owners and shareholders’ incomes from the business, as well as an overall corporate tax. LLCs under default tax treatment do not pay corporate taxes.
1. Name your West Virginia LLC
Naming your LLC is one of the most important decisions you’ll make as a small business owner. A good name is critical to building sustainable brand recognition. Your business name should communicate your LLC’s function in a memorable way. And it’s crucial that it broadcasts alignment with your LLC’s overall mission and goals. There are also specific rules for naming an LLC in West Virginia:
- The LLC’s name must contain the terms “Limited Liability Company,” “Limited Company,” or its abbreviation (“LLC,” “L.L.C.,” “LC,” or “L.C.”).
- Your LLC’s name may not contain the word “Incorporated,” “Corporation,” or “Company” (by itself). For more information, consult the official West Virginia naming requirements for LLCs.
- Your LLC may not contain words that might confuse it with any federal or state government agency, like the IRS or Department of Motor Vehicles (DMV).
- An LLC name must be unique and distinguishable from any existing registered business name within the state. You can search for existing business names through the West Virginia Secretary of State’s website.
2. Create a business plan
A business plan serves as the foundation of your West Virginia LLC. A good plan will include your LLC’s name and a brief description of what you plan to sell—a product, service, or maybe both? It might also include a thorough market analysis, an outline of the organizational structure, descriptions of the products and services you plan to market, profiles of your target customers, and plans for marketing, logistics, and finances.
3. Get a federal employer identification number (EIN)
A federal employer identification number (EIN), also known as a federal tax ID, is a nine-digit number assigned to businesses by the Internal Revenue Service (IRS) to track tax obligations. Think of it like a Social Security number for your LLC. An EIN is required for any West Virginia LLC that plans to have employees. You can obtain one online through the IRS website, free of charge.
4. File West Virginia Articles of Organization
To get your West Virginia LLC officially up and running, you must file formation documents with the Secretary of State’s office known as Articles of Organization. Information you can expect to provide in the articles include:
- The LLC's name and address
- Contact information for a registered agent
- Members’ contact information
- The LLC’s effective date and duration
- Whether the LLC is managed by its members or a manager hired by the LLC
- The LLC’s business purpose
- Whether the LLC is veteran-owned
A $100 filing fee must be paid upon submission of the articles, but is waived if owned by a veteran. Thereafter, you must also file an LLC annual report with the state, along with a $25 filing fee.
5. Choose a West Virginia registered agent
West Virginia law requires that you appoint a registered agent for your LLC. A registered agent is an individual or professional service that accepts responsibility for receiving legal correspondence and other official documents on your LLC’s behalf. In West Virginia, your registered agent must be at least 18 years old and a resident of the state. A PO box is not an acceptable mailing address for your registered agent. The agent must be available to receive service during normal business hours.
6. Obtain a business license and permits
The West Virginia State Tax Department is in charge of issuing permanent business registration licenses, also known as a business registration certificate. Certain industries are also subject to licensing in West Virginia—such as general contracting, elevator maintenance, or bedding/upholstery manufacturing. Your local West Virginia county clerk or city government office can provide additional information as to what business license or permit may be required of your LLC at the local level.
7. Understand West Virginia business taxes
LLCs in West Virginia can be taxed as corporations, limited liability partnerships, or single-member LLCs—like a sole proprietorship. Depending on the type of business structure you’ve chosen for your LLC, you will have different tax obligations.
- Personal income taxes. Regardless of how you choose to form your LLC—as a pass-through tax entity or as a corporation—you and any other LLC members will ultimately pay taxes on income earned through the LLC at the personal-income level. The West Virginia personal income tax rate is between 3% and 6.5%, depending on where you fall on the income spectrum.
- Corporate taxes. If electing to form an LLC as a corporation, the LLC will first pay taxes on all profits generated before being distributed as dividends to shareholders. Then, expect to be taxed again at the shareholders’ personal income levels. In West Virginia, the corporate tax rate is 6.5%.
Other special taxes in West Virginia to take into consideration are:
- Sales and use tax. The state sales tax in West Virginia is 6% on any tangible goods, except food or food ingredients intended for human consumption.
- Local taxes. West Virginia municipalities have authority to local taxes in their own jurisdictions (such as a local sales tax, or a local liquor tax). For a list of municipalities and their respective sales tax rates, check the Tax Division’s website.
- Excise tax. West Virginia imposes >excise tax on certain restricted goods, including gasoline (about 15% of the price per gallon), tobacco products (12% of wholesale price), soft drinks (1% per 16.9 fluid ounces), and medical cannabis (10% of gross receipts).
8. Prepare an LLC operating agreement
LLC operating agreements are legal documents that outline the manner in which an LLC will conduct business. Though not a requirement, an operating agreement can still provide great direction for internal operations and accountability. At a minimum, areas to cover in your operating agreement include:
- Your West Virginia LLC’s name and primary address
- How long you plan to run the LLC
- Information on the LLC’s registered agent
- Information about the Articles of Organization
- The business’s purpose and mission statement
- An organizational chart listing members and their respective investments in the LLC
- How profits and losses will be divided between LLC members
- The process for admitting new members and offboarding outgoing ones
- An overall management plan for the LLC
- Various indemnification and liability provisions
9. Examine business insurance options in West Virginia
Unforeseen losses can spell disaster for your West Virginia LLC. While LLCs do offer a degree of personal asset protection, you may still want to purchase insurance for any gaps in coverage. Types of insurance a West Virginia business should consider include:
- Workers’ compensation. All West Virginia businesses with employees are statutorily required to carry workers’ compensation insurance, or workers’ comp, which covers workers for injuries and/or illnesses suffered on the job.
- General liability insurance. General liability insurance covers your business for any legal actions resulting from accidents, injuries, or negligence.
- Commercial property insurance. This type of insurance protects your business from costs associated with fire or weather damage, or theft.
- Products liability insurance. Protects manufacturers, wholesalers, distributors, and retailers from liability in connection with unsafe products.
- Cyber liability insurance. With this coverage, businesses are protected from costs associated with suffering a data breach.
The Small Business Administration maintains a list of types of insurance your West Virginia LLC may need.
10. Understand financial considerations
In addition to insurance, you will have to make other investments in your fledgling West Virginia LLC. These costs might include: rent toward a physical retail, office, or storage space; a professionally designed website; advertising; computers, software, and other business technology. You may also want to hire one or more lawyers, accountants, or other professionals. These costs can add up. Luckily, there exist accessible, fast options to obtain solid startup funding.
11. Market your LLC
A good marketing plan for your West Virginia LLC will cover these key elements:
- Market research. It’s necessary to understand your LLC’s target customers and markets), which can be accomplished through thorough market research.
- Advertising and promotion. Traditional advertising can still be key to getting the word out about your new West Virginia LLC. You can design ads yourself and purchase ad space, or hire an agency to do it for you.
- Social media. Having a successful business today means implementing a social media marketing strategy and maintaining a robust presence across platforms including Facebook, Instagram, YouTube, and more. By publishing content consistently that aligns with your brand, your company can be in a better position to reap rewards: wider visibility and growth in customer base, among other benefits.
- Public relations. Develop strong relationships with media outlets, both in West Virginia and around the country, that can organically increase your LLC’s standing across customer communities.
- New business and customer retention. Leverage your marketing materials, digital tools, and social media presence to build genuine relationships with customers. This can turn them into repeat customers, and encourage them to spread the word to friends, family, colleagues, and neighbors.
Starting an LLC in West Virginia FAQ
How much does it cost to form an LLC in Virginia?
It costs at least $100 to set up your LLC in West Virginia, in addition to at least $25 annually to file reports with state authorities.
Do you need a registered agent for your LLC in West Virginia?
The state requires that you appoint an adult West Virginia resident as your registered agent in order to legally establish and operate your LLC in the state.
How do state taxes work for LLCs in West Virginia?
Unless your LLC elects to be taxed as a corporation, earnings will only be taxed a single time, at the personal-income level of LLC members.