Form A Virginia Corporation

If you're in business or thinking of starting a business, you should form a limited liability entity for your business that will protect you from potential liability as well as provide you with tax benefits that will allow you to keep more of the money you make. If you're unsure of whether it is worth forming a Virginia corporation or Virginia limited liability company, then read The Top 5 Reasons To Incorporate or Form An LLC.

This webpage will explain the process of forming a Virginia corporation. Forming a Virginia corporation is deceptively simple which leads some entrepreneurs to become incorporation do-it-yourselfer's or to use non-attorney document prep service. If you ask a document prep service or even other lawyers that do not practice corporate law in Virginia, you may be told that all you need to do is pick a name and submit articles of incorporation on the State Corporation Commission's fill-in-the-blank form. However, there is more involved to setting up a valid Virginia corporation that will protect you when you need it most.

The value of a corporation is in the limited liability it provides its owners (aka "shareholders"). In order to enjoy that limited liability, though, the corporation must be set up and run properly. Failure to do so can result in revocation of the corporate charter or an attempt by corporate creditors to "pierce the corporate veil" and attempt to hold the shareholder's liable for the corporation's debts.

To properly form a Virginia corporation, you should:

1. Pick a name that is available and that does not infringe upon the trademark rights of anyone else. All corporate names must be different than the name of any other corporation or LLC in Virginia and must end in "corporation," "incorporated," "company," "limited," or an abbreviation of these such as "corp.," "co.," or "inc." While you can search the Virginia State Corporation Commission records for name availability, it is important to know that approval of your name by the State Corporation Commission is not legal trademark clearance of your rights to use that name. A separate search should be done to make sure the proposed name does not infringe on someone else's trademark rights. This can be done at the United States Patent & Trademark Office website. When choosing a corporate name, it's also a good idea to see whether the domain name is available.
2. Prepare and file the articles of incorporation with the Virginia State Corporation Commission. The articles must contain specific information required by the Virginia Code (see 13.1-619 of the VA Code) as a bare minimum but should often contain more provisions dealing with indemnity and other issues.
3. Nominate a Virginia registered agent for the corporation. A registered agent is the person designated on the public records as the "go to" person for official communications to the corporation. Typical examples of these "official communications" are letters from the Virginia State Corporation Commission and service of process (lawsuits, employee garnishments, etc.) from the county sheriff and process servers. Fore more information about Virginia registered agents, and our registered agent services, visit our "Registered Agent" page.
4. Draft by-laws for the corporation. This is the step most often skipped by do-it-yourselfer's. All Virginia corporations are required to have by-laws (see Virginia Code 13.1-624). The by-laws are the "rules" by which the corporation operates and should be specific to your business. They must also be adopted correctly.
5. Prepare offers to purchase stock for all shareholders, setting forth the price and number of shares to be purchased.
6. Have an Organizational meeting and prepare meeting minutes. Once you have received the Certificate of Incorporation back from the Virginia State Corporation Commission, all of the shareholders should have an organizational meeting to adopt the by-laws, approve the articles, nominate and elect officers and directors, and approve other important actions to be taken by the corporation, such as banking resolutions and insurance purchases. These important organizational documents are evidence of the proper formation of the corporation and its treatment as a separate entity, all important if a future claim is made against the corporation and/or shareholders personally.
7. Obtain an Employer Identification Number ("EIN") from the IRS and decide whether to elect to be taxed as an "S" Corporation. The default form of taxation for corporation is the "C" Corp. or "double taxation" structure under which corporate revenue is taxed to the corporation and then distributions to shareholders are taxed again at the shareholder's personal level. Most start-up businesses benefit from making the "S" tax election.
8. On an ongoing basis, the corporation should be sure to have annual shareholder and director meetings and to file the required annual report with the Virginia State Corporation Commission on time.

If you are comfortable doing all of the eight steps above, then you may want to handle the incorporation work yourself. However, if you have questions that you may not know the answer to, such as:

1. What do the by-laws need to contain and where can I get by-laws from?
2. How do I determine the number of shares the corporation should have? What are the potential effects of a certain number of shares?
3. How do I elect officers and directors for the corporation? Is there a minimum number of each that I need?
4. Do all shareholders have to pay cash for their shares? How do I determine the price for shares of the corporation? What paperwork is needed to prove ownership?
5. Does my corporation need to issue share certificates? Where do I get share certificates? Is there any reason for the corporation to hold shares back?
6. How does the corporation properly call a meeting? How does it properly give notice of a meeting and who should get notice?
7. What resolutions should be adopted by the directors during the organizational meeting and which should they not?
8. How should I sign corporate papers? Is it true that if I sign incorrectly that I can lose my limited liability? (The answer is a most definite "Yes")
9. Can shareholders demand to see the corporation's financial records? How can they do this and how must the corporation respond?
10. What is an annual report? Who receives the annual report and what are the steps taken to timely file it?

then you may want to use our incorporation services. For a low flat fee of $500.00 plus the filing fee due to the State Corporation Commission, we will:

1. Answer all of the ten questions above as well as any other questions you have concerning the formation and operation of your corporation
2. Help you with selecting a name for your corporation
3. Prepare the Articles of Incorporation
4. File the Articles of Incorporation with the Virginia State Corporation Commission
5. Prepare the By-Laws for the corporation
6. Prepare the offers to purchase stock for each shareholder
7. Prepare all of the Organizational documents and meeting minutes
8. Host the Organizational meeting and execution of all documents (assuming you're in Central Virginia and can visit our office - otherwise, the documents and detailed instructions will be sent to you)
9. Give you a customized corporate minute book containing all of the documents, including the Certificate of Incorporation and share certificates
10. Obtain your IRS EIN, if you want, and instructions on how to elect "S" tax treatment.
11. Serve as the corporation's registered agent for the first year (renewable, if you like, for subsequent years)

This service is available to you regardless of where you are located. We work with entrepreneurs and business owners all over Virginia, across the United States, and internationally. Other attorneys charge $1,000, $1,500, or more for the same service, often providing you with documents prepared by a paralegal or secretary.  If you choose us to form your Virginia corporation, all of your documents will be prepared by a Virginia lawyer.

We provide this Virginia corporate formation work for the low price of $500 because we prepare many incorporations and know the relevant Virginia corporate laws, work very efficiently, and utilize technology effectively to serve you better. If you have any questions about our services or would like to get started right now, call us at 804-290-4330 or send an email to Corporation@VARegisteredAgent.com.  

Call us today at 804-290-4330 for more information.