HOW TO FORM A CORPORATION IN VIRGINIA
Should I incorporate my business?
Making the decision to incorporate is an important step in your business adventure. The corporation was the first legal business entity in the United States and, because of its longevity, the “Inc.” comes with prestige and power. In general, investors prefer corporations and, if you plan to take your company public, incorporating is the first step.
That being said, with power comes responsibility. Corporations are subject to more rules and regulations compared to an LLC. A corporation must elect a board of directors, issue shares, hold an annual shareholder meeting, and pay corporate taxes.
What does it take to incorporate my business in Virginia?
The first step to incorporate your company in Virginia is filing the Articles of Incorporation with the Virginia State Corporation Commission (SCC). Then, to establish and maintain your corporation, you will need to:
- Obtain an EIN
- Draft and finalize corporate bylaws
- Hold an organization meeting
- Open a business banking account
- Apply for any necessary licenses or permits
- Hold an annual shareholders meeting
- File an annual report
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Virginia SCC Filing Fee
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If you want to venture forth towards incorporation alone, here’s a road map to help with your success. If you change your mind, Virginia Registered Agent LLC is here to help with all your business incorporation needs.
HOW TO INCORPORATE IN VIRGINIA:
A DO-IT-YOURSELF GUIDE
TO FORMING YOUR LLC
IN VIRGINIA, USA
Completing the Articles of Incorporation
To incorporate your company, you must file the Articles of Incorporation with the Virginia State Corporate Commission (SCC). You can download a PDF of this document online from the Virginia SCC website, or you can file all required information online, through the eFile system.
Regardless of the filing method, you must provide the following information:
- The Name of Your Corporation
You must choose a name for your corporation that is different from any other registered business entity in Virginia. If your name is not distinguishable, your filing will be rejected. Check and see if your corporate name is unique by visiting the Virginia Name Distinguishability Check website.
You corporate name must also include an identifying term that indicates that the company is a corporation, such as:
Corporation or Corp.
Incorporated or Inc.
Company or Co.
Limited or Ltd.
- How Many Shares of Common Stock the Corporation is Authorized to Issue
You are required to provide the number of shares of common stock that the corporation will be issuing. If you plan to issue over 25,000 shares, your charter fee will increase incrementally based on the number of shares. If you plan to issue shares in more than one class of stock, you are required to provide that information to the Virginia SCC on the Articles.
- The Name of the Registered Agent
All legal business entities in Virginia are required to elect a registered agent. A registered agent is a third party individual or entity that receives legal correspondence on behalf of the company. The registered agent must have a physical street address in Virginia.
If you want to select an individual as a registered agent, that individual must either be an initial director of the corporation, or a member of the Virginia State Bar.
However, you can select to have an entity serve as your registered agent. In that case, the entity does not have to be a director of the corporation or be a member of the Virginia State Bar—they only have to be legally authorized to conduct business in Virginia.
Virginia Registered Agent LLC provides 365 days of registered agent service for $49.
- The Address of the Registered Agent
You are also required to provide the registered office address, which is identical to the address of the initial registered agent.
- The Name and Address of the Initial Director(s)
You are required to provide the names and addresses of the initial directors of the corporation. This information will be made public record once it is filed.
Filing the Articles of Incorporation
Once you have provided the required information, an incorporator must sign the Articles of Incorporation and file them either in person, by mail, or online.
To file the Articles of Incorporation by mail, send the completed document and a check payable to “Virginia SCC” to:
State Corporation Commission
PO Box 1197
Richmond, VA 23218-1197
Remember, do not send cash through the mail. If you are filing the Articles of Incorporation by mail, you have the option to expedite the filing for an additional fee. To expedite your filing, you must include a completed copy of the Expedited Service Request Form.
If you plan to file by in-person, or via courier, deliver the completed Articles of Incorporation and payment to:
State Corporation Commission
Clerk’s Office, First Floor
1300 E. Main St.
Richmond, VA 23219
When you file in-person, you have the option to expedite your filing. To expedite your filing, the Articles of Incorporation must be delivered without an envelope with the expedited service request form on top, or deliver in an envelope that is clearly marked, “FORM SCC21.2 ENCLOSED.”
If you choose to complete the incorporation process online, there are two options:
- Complete the process using SCC eFile
- Upload a PDF of the Articles of Incorporation for review
SCC eFile (Recommended)
You can incorporate your company in real-time, online, using the Virginia SCC eFile system. To begin, you will be prompted to create an account. Once you create an account, you can log in and enter the required information. Once that is complete, click the “Pay and File” button to proceed and complete the filing.
Upload a PDF
You also have the option to submit a PDF of the Articles of Incorporation for filing. To do so, visit the SCC eFile Document Submission website. The same fees and options to expedite are available for this method.
Fees & Processing Times
It takes 1-3 weeks to process Articles of Incorporation submitted via mail, in-person, or online as a PDF—unless you choose to expedite the filing service.
If you choose to expedite, there is an additional $100 fee for next-day service. Same-day service requires an additional $200 fee.
Corporations formed using Virginia’s SCC eFile system are processed in real-time, so expediting is not necessary.
Establishing & Maintaining Your Corporation
To get your corporation up and running, you will need to complete the following steps.
Draft & Finalize Corporate Bylaws
Bylaws are a critical and important element of a corporation. The bylaws document is the agreement between the directors and shareholders that provides the policies and procedures regarding the big-picture operations of the company. In addition to the big picture elements, technical topics such as how to become a shareholder, voting rights of shareholders, where and when the annual shareholder meeting will be held, and the initial contributions of shareholders are addressed as well.
Hold an Organization Meeting
The organization meeting is the first meeting of the corporate directors and shareholders. During this meeting, the board of directors is elected, shareholder certificates are issued, and the bylaws are adopted as official.
Open a Business Banking Account
An important characteristic of a corporation is the separation of the assets of the directors and shareholders from the debts and liabilities of the corporation. To achieve this separation, it is critical that you open a corporate business banking account. Typically, opening a business banking account requires an EIN and a copy of the finalized bylaws.
Apply for Any Necessary Licenses or Permits
Depending on the industry of your corporation, you may need licenses and permits to operate legally. You can check and see what licenses or permits you may need by visiting the Virginia Department of Professional and Occupational Regulation website.
Hold an Annual Shareholder Meeting
Corporations are required to hold annual shareholder meetings during which any director elections occur and shareholders are provided with relevant business information. The date and location of this meeting will be provided in the corporate bylaws. Shareholders are not required to attend this meeting and can vote via a proxy, if they have corporate voting rights.
File a Corporate Annual Report
Corporations are required to file an a corporate annual report in the Office of the Clerk on or before thirty days after the date of their incorporation anniversary. There is no fee to file this report and it can be filed completely online only if there are no changes to director or officer information. If there have been changes, you must complete a separate filing. If the report is not submitted by the due date, your corporation will loose its good standing status. If the report is not received within four months of the due date, the corporation’s existence will be terminated.
If you are filing a paper copy of this report, you must request a copy of the document by visiting the Virginia SCC Annual Reports website. You can send completed forms to:
State Corporation Commission
PO Box 1197
Richmond, VA 23218-1197
Or deliver them in-person to:
State Corporate Commission
Clerks Office, First Floor
1300 E. Main St.
Richmond, VA 23219
Pay an Annual Registration Fee
All Virginia corporations are required to pay an annual registration fee. This fee is based on how many shares the corporation has authorized and can range from $100 to $1,700. For more information on the fee schedule, you can check out the Annual Corporation Requirements document.
This fee is due on or before 30 days after the anniversary of the incorporation. If you do not pay this fee, your corporation will receive a penalty equal to 10% of the annual registration fee or $10-whichever is the greater amount. If this fee is not paid in four months, your corporation will be terminated.
You can pay the annual registration fee online through the eFile system or in-person at the Clerk’s office.
FREQUENTLY ASKED QUESTIONS
ABOUT INCORPORATING IN VIRGINIA
Can I serve as my own registered agent in Virginia?
Yes, you can—only if you are a resident of Virginia and an initial director of the corporation or a member of the Virginia State Bar. However, if you serve as your own registered agent, you are required to provide your personal information on the Articles of Incorporation-which means that your information will be public record.
Do I need to live in Virginia to incorporate my business there?
No—it is not required that you live in Virginia to incorporate your business there. The only requirement is that the registered agent listed on the Articles of Incorporation is either a resident of Virginia or is an entity authorized to conduct business in Virginia.
How can I contact the Virginia SCC?
The Virginia SCC is open Monday through Friday, from 8:15 AM to 5:00 PM. You can contact the office via phone or email:
Phone: (804) 317–9967
What is the charter fee?
The charter fee is a fee based on the amount of shares that the corporation has authorized. For corporations authorizing between 1 and 25,000 shares, the fee is $50 in addition to the $25 filing fee. For more information, take a look at the Virginia Charter Fee / Entrance Fee Schedule for Domestic and Foreign Corporations document.
How will my Virginia corporation be taxed?
Virginia corporations are subject to the 6% corporate tax rate. However, you may elect that your corporation to be identified as an S-corp (which is considered a “pass-through entity”) by filing Form 8832 titled, “Entity Classification Election” with the IRS.
What is an S-corp?
An “S-corp” is an identifying term used by the IRS to notate how your corporation is taxed. S-corps are still corporations, however, they are considered pass-through entities and do not have to pay the corporate tax rate. Instead, the profit of the corporation is passed onto shareholders and then taxed as personal income.
Not every corporation can obtain S-corp status. To be eligible, your corporation must be domestic, have only individual shareholders (no corporations or partnerships), have only one class of stock, have no more than 100 shareholders, and be an eligible corporation.
What is the difference between a Virginia LLC and a Virginia Corporation?
Corporations and LLCs are both legal business entities and provide members or shareholders limited liability. However, corporations come with more formalities and regulations.
For example, LLCs are not required to hold shareholder meetings, elect a board of directors, or keep meeting minutes. Also, unlike corporations, LLCs are not required to submit an annual report.
However, corporations are more attractive to investors and have more opportunity to raise capital. In fact, many investors are not permitted to invest in LLCs because they lack the structure and formality that a corporation provides.