The Virginia Secretary of State’s office recently updated the requirements for filing a Virginia Limited Liability Company (LLC). These include filing an annual report, paying quarterly fees, and providing certain tax information. An LLC is a type of corporation that allows individuals to form a separate legal entity to conduct business activities.
An LLC must file an annual report, including a balance sheet, statement of owners’ equity, statement of revenues and expenses, and Schedule K-1. This report must be filed within 30 days following the end of each calendar quarter. If the LLC does not make a profit during a particular period, the LLC must provide a loss carryforward amount.
If the LLC makes a profit, the LLC must pay quarterly franchise taxes based on the total taxable income earned during the previous three months. The franchise tax rate is 0.5% per $100 of taxable income. For example, if the LLC had $10 million in taxable income, it would owe $500 ($50 x 12 $600).
A Virginia LLC must also provide certain tax information, such as the name of the taxpayer and address, to the IRS. Additionally, the LLC must disclose whether it is subject to federal employment withholding or state unemployment insurance taxation.
Annual Registration Fee
The filing fee for each entity type varies depending on whether the business is incorporated, and how much money it has. There are no limits on the amount of money a corporation can hold, while a business trust cannot hold more than $10 million in assets. Corporations must pay an annual registration fee of $100, while business trusts must pay $50. Limited liability companies must pay $20 per member.
If your business is incorporated, it must file its annual report during the following times:
• Incorporated entities must file their annual reports within 30 days after the close of their fiscal year.
• A domestic corporation must file its annual report on Form 1040EZ within 45 days after the close of its fiscal year. Foreign corporations must file their annual report within 45 days after the date of incorporation.
• A foreign corporation must file its annual income tax return within 15 days after the end of their taxable year.
• A foreign S corporation must file its annual information return 15 days after its shareholders’ meeting.
• A foreign C corporation must file its annual return within 15 days after their shareholder’s meeting.
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State Business Tax
Most LLCs are passthrough entities, meaning that the liability for paying federal income taxes fall on the individual members of the LLC. When an LLC chooses to be taxed as a corporation, the company itself must complete its own tax returns, including filing Form1120S. Some states require corporations to pay a franchise tax on any profits earned within the state to avoid double taxation.
State Employer Taxes
Virginia requires businesses to withhold and pay certain employment taxes, including Social Security and Medicare contributions, unemployment insurance premiums and FICA taxes. These taxes are collected by the Department of Transportation (DOT), which issues quarterly tax forms (VA-5 or VA- 15), which must be filed within 45 days of the end of each quarter.
The following table lists the types of taxes that must be withheld and reported along with the due date.
Employment Tax Type Due Date Withheld/Reported Federal Income Tax Quarterly 30 days of the end of the quarter $2,300 per employee Semi-annually 60 days of the end of 2nd month of the period $4,500 per employee Annually 90 days of the end of 3rd month of the period $9,000 per employee Unemployment Insurance Premium Quarterly 10 days of the end of every quarter $0.03 per hour Employee Contributions Monthly 4th day of the month $0.21 per hour FICA Annual 15th day of the month ($7,700 maximum)
Sales and Use Taxes
If your limited liability corporation (LLC) will sell goods to customers located within Virginia, you will need a registration number from the Virginia Department of Taxation (VAT). To obtain this number, contact the department via phone or email.
You will need to complete a form called “Registration/Inspection of Sales Agents.” Once completed, send it along with a check for $150 payable to the Commonwealth of Virginia.
Your agent must provide proof of his or her identity and address and sign the form.
After registering, you will receive a certificate of registration. Keep this document handy because you will need it to prove your compliance with state law.
The next step is to prepare and submit annual sales tax returns. For information about how to do this, see our article titled “Sales and Use Taxes” on the IRS website.
Registration in the Other States
Whether you are registering your limited liability company (LLC) in one or multiple states, it is important to understand how each state handles LLC formation and operation. Each state has different rules regarding what activities constitute “doing business” within that state. This includes things like opening and maintaining a bank account, filing tax returns, paying taxes, owning property, employing people, advertising, telephoning customers, sending mail, and selling products or services. Some states require you to file annual reports; others do not. In addition, each state has its own laws about where you must obtain a Certificate of Authority (COA), which allows you to operate legally in that state.
In many cases, your business operations won’t change regardless of where you form your LLC. However, there may be times when you want to establish a permanent office in another state or maintain a mailing address in another state. You might also want to open up a bank account in another state, hire employees in another state, or sell goods or services to customers in another state. To ensure that you comply with the law in every state, you’ll need to determine whether you must register your LLC in each state where you conduct business.
Virginia LLCs must navigate a complicated system of laws and regulations to ensure that they pay their taxes. If you’re looking to form a limited liability company, there are several things you’ll want to consider before doing so. You’ll want to ensure that you understand what type of organization you want to set up – either a partnership or a corporation – and whether you want to be treated as a pass-through tax entity or a corporate entity. This decision will affect your personal income taxes and those of your partners.
Frequently Asked Questions
Do I need a lawyer to set up an LLC in Virginia?
A lot goes into setting up a limited liability corporation (LLC), including filing Articles of Organization and paying fees. For most people, it makes sense to use a legal service provider to take care of those tasks. However, there are some situations where you may require the assistance of a licensed attorney.
How long does it take to set up an LLC in Virginia?
To form a limited liability company (LLC), you must file certain forms with the state of Virginia. These include articles of organization, operating agreement, certificate of good standing, and annual report. In addition, you must pay fees associated with each filing, including $75 for the initial filing fee ($25 per member).
The process generally takes about three to four days, although some exceptions exist. For example, choose to incorporate your LLC in Virginia via mail rather than online. You’ll have to wait longer because the state requires additional information to be submitted by mail. This includes proof of residencies, such as a utility bill or bank statement.
On average, the entire process can take approximately seven to 10 days. However, this number could increase depending on how many members you plan to add to your LLC. If you’re adding just one person to your LLC, the process typically takes about five days; adding multiple people can take upwards of ten days.
James Rourke is a business and legal writer. He has written extensively on subjects such as contract law, company law, and intellectual property. His work has been featured in publications such as The Times, The Guardian, and Forbes. When he’s not writing, James enjoys spending time with his family and playing golf.