Starting a new business in Virginia can feel like a daunting task and can overwhelm you with “things to do.” When you are considering starting a new business, the first thing you will want to do is work on a business plan. This does not need to be overly formal or complicated but you should think through the basics – what you are going to sell, who you’re going to sell to, how you’re going to fund the new business, etc. – and ideally write the details down for future reference.
Once you have that done, you can focus on getting the new business started. Getting the process done in the correct order can really help avoid headaches and “do overs” later.
Here is the generally accepted correct order of steps to follow:
1. Form your company’s new entity – whether that is an LLC, a corporation, or a benefit corporation. The reason to do this first is that all of your future contracts, whether they are leases for commercial space, contracts with suppliers, or your initial customer contracts, should be in the name of your entity. Whether you choose an LLC, a corporation, or a benefit corporation, we can help you get it set up correctly with the maximum legal benefits.
2. Prepare your company’s initial ownership and management documentation. For corporations, that’s by-laws and organizational meeting minutes. For LLC’s, it’s an Operating Agreement. These documents protect you and legally establish the ownership of your new business.
3. Obtain a tax ID from the IRS. You’ll need the tax ID (an Employer Identification Number issued by the IRS) to open a bank account. You can apply for your tax ID online through the IRS web site but be aware that you should not apply for it until you have your LLC or corporation approved by the State Corporation Commission.
4. Open a commercial bank account in the name of your LLC or corporation. NEVER co-mingle personal money and business money – it’s a bad idea for many reasons.
5. Get your county or city business license. Most (but not all) counties and cities in Virginia require you to have a local business license prior to (or shortly after) starting business. Check with your county or city government on how to get this done.
6. Get your state tax payment information submitted. If your business involves collecting state sales tax from your customers, for instance, you will need to comply with the Virginia laws on remitting sales tax to the state. You can register with the Virginia Department of Taxation online.
When you follow the order above, things should flow smoothly as your new business starts.Spread the Word