Archive for the ‘Virginia corporations’
In almost every situation where you need to file something with the Virginia State Corporation Commission, a filing fee must be submitted, too. The filing fees will vary based on what type of entity you have (LLC versus corporation) and the type of filing you're making. For Virginia LLC's the most common filing fee is the $100 fee to form a new Virginia LLC or register a foreign (out of state) LLC. LLC's, whether formed in Virginia our out of state, also pay an annual renewal fee of $50 per year to maintain good standing in Virginia.
Corporation filing fees in Virginia are more complicated because many, including the filing fee for forming a new Virginia corporation or registering a foreign-formed corporation, depend on the number of authorized shares of stock in the corporation. The fee schedule for corporation's that are registering in Virginia for authority to transact business can be found on our site. You will need to know how many shares of stock your corporation is authorized to issue (which is different than how many shares have actually been issued). That information will be in your Articles of Incorporation (aka Certificate of Incorporation in some states, such as Delaware).
Although it may feel like it sometimes, the Virginia State Corporation Commission doesn't charge you for everything that you submit to them. You can change your registered agent or your principal office address at no cost, for example.
Before filing anything with Virginia, be sure you have the correct filing fee so that your paperwork does not get returned to you.
Once you have your Virginia corporation legally established or your out of state corporation authorized to do business in Virginia, there are two things you need to do on an annual basis to keep that good standing:
- Pay your annual renewal fee to the Treasurer of Virginia. The amount of the annual renewal fee is calculated based on the number of authorized shares of stock your corporation has, which is typically found in your Articles of Incorporation. The lowest fee is $100 per year (for 5,000 or fewer authorized shares of stock) and increases from there. The fee schedule can be found on the Virginia State Corporation Commission web site.
- File your annual report that updates the State Corporation Commission on the location of your principal office (can be anywhere in the world) and the identity of your directors and officers.
Your Virginia registered agent will receive both your annual renewal invoice and your annual report form each year so make sure you have a good one. If you don't pay the renewal fee or file the annual report form on time your authorization to transact business in Virginia will be terminated.
Following up on our discussion of what a PLLC and a PC are, the next logical question is: “when do I have to form as a PLLC or a PC?”
Certain professions, when they choose to form as a separate entity, are required by their regulatory Boards to form as a PLLC or PC. Examples include medical doctors, lawyers, and certified public accountants.
Other professions have the option to either form as a PLLC/PC or as an LLC/corporation based on the wishes of the owners. Examples include professional engineers, occupational therapists, audiologists, and nurses.
You can see a list of all of the different professions that potentially can be a "professional" entity in the Virginia Code.
So if your business involves providing a heavily regulated service (hint: likely if you need a license to practice your profession) then the first thing you should do is to check with your profession’s regulatory Board to see if they require you to operate as a “professional” version of an LLC or corporation or give you the choice to do so.
You may have heard of a PLLC, PLC, or a PC or seen them appended to the end of a company name and wondered what they are. If so, this is the article is for you. PLLC (or PLC) stands for "professional limited liability company" while PC refers to a "professional corporation." Both are separate legal entities, separate from their owners (members for a PLLC/PLC and shareholders for a PC). In Virginia, they are the form of entity required for certain heavily state regulated professions where either state law or the regulatory bodies of the specific profession require their practitioners to form as a PLLC or PC. Examples of such professions are medical doctors, lawyers, certified public accountants, professional engineers, architects, and certain other health care providers and practitioners of the healing arts.
The key difference between PLLC’s/PC’s and a normal LLC/corporation is that the PLLC and PC do not provide the owners with limited liability protection for their own acts of professional malpractice related to the services they provide. This means that if your doctor commits an act of medical malpractice while treating you, they cannot hide behind the veil of limited liability protection when you make a claim against them. This is for public policy reasons to protect the general public from harm.
So you may be asking yourself, why would a doctor, lawyer or CPA form an entity at all if they are not able to get limited liability protection like other businesses? For two reasons: (1) the prohibition on limited liability protection only applies to acts of professional malpractice. If you slip and fall in your doctor’s waiting room that is not medical malpractice – that’s just negligence and your doctor would be personally protected from that claim. And (2) for the tax benefits that operating as an entity allows (namely, the S corp. election).
The laws and rules regarding PLLC’s and PC’s are extremely state-specific so be sure to check your particular state’s laws, especially if you’re outside of Virginia. And if you would like to create a PLLC or a PC correctly, we can help (just use our LLC order form or corporation order form).
If you're starting a new Virginia business then the two basic forms of business entity available to you are the corporation and the limited liability company (LLC). A common question is "what are the differences?" In Virginia, there are actually important similarities between a corporation and an LLC so it's useful to discuss those similarities first.
Virginia LLC's and Virginia corporations share three important attributes:
- The owners of a Virginia corporation (shareholders) and a Virginia LLC (Members) are not liable for the debts and obligations of the business. In other words, the owners have limited liability protection and, with a few exceptions, their assets are not at risk if there is a problem with the business.
- Better tax treatment is available for a Virginia corporation and a Virginia LLC through the small business tax election, better known as the "S corp." election. This election, which is available to LLC's, too, despite the shorthand name, allows for the legal avoidance of some of the self-employment taxes assessed against business profits.
- Portions of a Virginia corporation (shares) or a Virginia LLC (membership interest) are freely transferable, either in part or in whole. This means you can sell part of the business while retaining an interest for yourself or you can transfer 100% control to pass on the business seamlessly (aka as a going concern).
So how do Virginia corporations and Virginia LLC's differ? In a few different ways:
- The filing fees are different. All Virginia LLC's pay a flat fee of $100 upon formation and $50 per year regardless of how they are structured or how many owners there may be in the LLC. A corporation, on the other hand, pays a filing fee and renewal fee that depends on the number of authorized shares of stock of that corporation, starting at a minimum filing fee of $75 and a minimum annual renewal fee of $100. In the long run, an LLC is cheaper to keep in good standing.
- There can be less formality with an LLC compared to a corporation. An LLC can waive annual meetings in its Operating Agreement while a corporation is required by law to have annual shareholder meetings and board of directors meetings and keep meeting minutes of those meetings (even when there is only one owner).
- There is more privacy with a Virginia LLC compared to a Virginia corporation. There is no public listing of the members (owners) of a Virginia LLC and assuming you appoint a third party as your registered agent, your personal name and address may not be available publicly. A Virginia corporation must disclose the names and addresses of their directors and officers and update those names and addresses every year on an annual report form.
It’s important to look at your business plan and weigh the pro’s and con’s of these differences to make the right choice for you.