Are you looking to form a corporation in Virginia, but you’re not familiar with the formation process? There are quite a few important steps you’ll need to take to create your Virginia corporation and maintain it, so this guide will outline the rules and regulations involved with this process.
To get started, please reference our 11-step guide below or hire a professional business incorporation service.
Rocket Tip: To see how some of the top online incorporation services stack up, here are two of our most popular comparisons.
How to Form a Virginia Corporation (in 11 Steps)
Step One) Choose a Name
One of the most important aspects of the incorporation process is naming your business. There are three major elements to consider when choosing a name:
When naming a corporation in the state of Virginia, you will need to include one of the following words or abbreviations: incorporated, corporation, limited, company, Inc., Corp., Ltd., or Co. Your corporation’s name also cannot include any words or abbreviations that indicate other business types, like the phrase “limited liability company” or the initials “LLC.” You also are not allowed to include words that refer to certain types of businesses (like “bank” or “law office”) unless your business fits those descriptions.
In addition to the legal considerations, you might want to identify your line of business or your mission in your company name. For example, you can display any closely held values in your name, like using the word “green” for environmentally friendly businesses.
A Name You’re Proud of
Keep in mind that this is your business, so you should choose a name that you’re proud of, and that you enjoy sharing with potential customers. You should also make sure it sounds good when spoken aloud, and also looks good when written down.
Check whether your preferred name is available: Visit the Name Distinguishability search on the Virginia State Corporation Commission’s eFile website to check whether it is already in use. If it’s not unique enough, you may need to tweak it or come up with a new name altogether.
Get Your Company URL
To solidify your brand and to fully embrace the company name, register your URL. You’ll be able to quickly build a company website so that nobody else can use or take it.
Step Two) Select a Registered Agent
Virginia corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation in step four.
Who can be my Registered Agent?A registered agent must have a physical address within the state of Virginia where mail and legal notices can be served during regular business hours. You can hire a service to act as your Registered Agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.
The Virginia Secretary of State says that,
every Virginia and foreign business entity authorized to transact business in Virginia is required by law to continuously maintain in the Commonwealth a registered office and a registered agent. The sole statutory duty of the registered agent is to forward to the business entity at its last known address any process, notice or demand that is served on the registered agent. A business entity may not have, at any given time, more than one person serving as its registered agent in Virginia..”
Our Recommendation: We recommend hiring a professional service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off the public record.
Rocket Tip: You can get a free registered agent service when hiring a service like ZenBusiness or Incfile to incorporate online. Check out their reviews and how it works below.
Step Three) Complete Your Articles Of Incorporation
This is THE document that formally registers your corporation with the state of Virginia.
Keep in mind that you are acting as the incorporator when you fill out and submit the Articles of Incorporation. You should sign as the incorporator before submitting the document.
|Cost to File||$25|
|Time to Complete Filing||Varies. See this link for current processing times.|
|Agency||Virginia State Corporation Commission|
State Corporation Commission
|Agency contact info for filing questions|
Step Four) Establish a Corporate Record
Corporations are required under Virginia law to document and keep a permanent record of all important company decisions.
The official corporate record may be kept at the corporation’s principal place of business, or stored in a safe location elsewhere. You should take the opportunity to set up a secure digital or physical location for storing company records as soon as possible.
Step Five) Designate a Board of Directors
The incorporator is responsible for selecting initial director(s) of the corporation. Unless initial directors were specified in the Articles of Incorporation, the incorporator should record initial director appointments in a signed document and file it to the corporate record. This document is known as the “incorporator’s statement.” A sample incorporators statement can be found here.
The initial directors (no initial directors are required in Virginia) will serve until new directors are elected at an annual shareholder meeting, or as otherwise indicated in the bylaws. The incorporator may serve as an initial director.
Step Six) Create Corporate Bylaws
Corporate bylaws set out the rules and procedures for how the corporation will operate. Some important topics typically covered in the bylaws include:
- How shareholders will conduct votes
- The total number of directors and how each director will be elected
- How often the board of directors will meet
- The types of officer roles that will be appointed
- Procedures for resolving internal disputes
Bylaws are not legally required in Virginia, but they are strongly recommended.
Bylaws help your business run smoothly, and are sometimes required by financial institutions for opening business bank accounts or acquiring loans.
Either the incorporator or the initial directors may prepare the company bylaws. The bylaws should be recorded in an internal company document, signed by the incorporator or a director, and filed to the corporate record. The bylaws are not filed with the state of Virginia.
Popular Strategies for Preparing Bylaws
- Use a free online template. Northwest Registered Agent has a great free template you can download.
- Hire a lawyer to draft the bylaws. If your business has investors, is already profitable, or has multiple co-owners, we strongly encourage you to hire a lawyer experienced in Virginia Corporate law to help you draft suitable bylaws. Use Avvo to find a Virginia attorney who can help you draft bylaws.
Step Seven) Hold First Board Meeting
After designating a board of directors and preparing bylaws, the new corporation should call for an initial board meeting. The incorporator often arranges and attends this first meeting. During the first board meeting, the initial directors should plan to cover the following topics:
- Review and approve corporate bylaws
- Designate officers to manage day-to-day business affairs
- Choose a bank
- Approve issuance of stock certificates
- Determine whether the company should elect to be taxed as a C corporation or S corporation (see step Nine for more details)
Recording Meeting Minutes: a detailed record of all key discussions and decisions during the board meeting should be prepared and distributed to all board members for their review and approval. This record is known as the “minutes”. A copy of the minutes should be sent to each director for review and filed in the company record.
Step Eight) Handle Tax Obligations
You’ll need a federal tax ID number (EIN) to operate a corporation in Virginia. You can obtain your EIN from the IRS for free, and it’s a fairly painless and simple process. An EIN enables your corporation to hire employees, file corporate taxes, open business bank accounts, and more.
A major decision for any corporation is determining whether to be taxed as a C corporation or an S corporation. Take a look at how these two formats differ:
- C Corp: The majority of corporations are C corporations, as they are subject to far fewer restrictions than S corps. With a C corp, profits are taxed at the corporate level, and again on the personal tax returns of the shareholders, resulting in what’s commonly referred to as double taxation.
- S Corp: This is only an option if your corporation has fewer than 100 shareholders, only issues one class of stock, is not owned by another business entity, and does not have any foreign shareholders. If your corporation meets these requirements, you can select the S corp’s pass-through taxation which eliminates the double taxation issue of C corps. S corp dividends are not taxable.
Businesses in Virginia are subject to a 6% corporate income tax. Additionally, depending on your business’ activities, there are a variety of other tax registration requirements (these include various farm animal and produce taxes, and taxes on things like motor fuel, tobacco, and soft drinks). You can learn about taxes for which you may be liable here.
To file for all the taxes you may need to pay, register with the Virginia Department of Taxation. Doing so will create an online account for you, where you can access business services such as determining which returns you need to file and when, filing and paying taxes, asking for assistance, and managing your tax account.
There may be additional taxes you need to pay to your city and/or county. To be sure that you don’t miss something, contact your local agencies. Here are business resources for Virginia’s biggest municipalities:
Step Nine) Obtain Business Licenses and Permits
While Virginia does not have a general business license that applies to all companies operating in the state, there are hundreds of industry-specific permits and licenses that you may need to acquire. Take a look at the state’s list of occupational permits and licenses to determine if any of them will apply to your corporation.
Much like you should check to see if your local government has tax requirements, there’s also county-level occupational licenses that you may need to acquire. Learn more at this link.
Step Ten) Acquire Insurance
Every business with employees located in the state of Virginia is required by law to obtain two different kinds of insurance policies. According to the Virginia Secretary of State, “If you hire employees, your business is required to register for unemployment insurance to operate in Virginia. Virginia also requires workers’ compensation insurance.”
You can learn more about these insurance types and how they apply to Virginia businesses by visiting the Division of Unemployment Insurance and/or Department of Workers’ Claims websites. No matter what line of business you’re in, you need these policies.
In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.
Step Eleven) Open a Business Bank Account
To operate a corporation and receive the limited liability protection that comes with it, you have to keep your personal assets entirely separate from your business assets. Due to this requirement, it’s strongly advised that you acquire a business bank account for your corporation.
Get Help Forming a Corporation
The process of incorporating in any state can be a lengthy one. If you run into any trouble along the way, remember that there are plenty of organizations that can help you navigate the incorporation process.
Online Incorporation Services
If you would like to hire an affordable business incorporation service to create your corporation for you, services like ZenBusiness and Incfile can help you out. These service providers can handle most of the formation process, while still charging much lower rates than a business attorney’s fees.
There isn’t the same level of personalization that a lawyer can provide, but online incorporation services can still be a tremendous help. The only major issue with these service providers is the fact that they can’t provide any actual legal advice, so you need to know what you want ahead of time.
Virginia Business Attorney
There are some situations where hiring a business lawyer is a preferable route to using an online incorporation service. The corporation as a business structure can be highly complicated, and if you want to have the peace of mind that every single step was taken care of by a true expert, hiring a business attorney to form your Virginia corporation is the way to go.
If you would like to pursue this route, there are some convenient services that can help you choose the right lawyer for your business. We like to use Avvo, which has extensive reviews and ratings for hundreds of Virginia business lawyers, which can make it much easier to select an attorney who has your best interests in mind, and also has the expertise to get the job done right.
In this state, the Virginia Small Business Development Center exists solely to (in their own words) “cultivate existing companies, nurture new ventures, foster the creation of jobs, and increase business profitability.” With 13 locations across Virginia, the KSBDC is ready and willing to help if you need assistance.
Another excellent resource is the Virginia chapter of the U.S. Small Business Administration. Their website has information regarding small business events, business resources, press releases, SBA programs, and more.