Small businesses account for 99.5% of all businesses in Virginia. And the state boasts a high business survival rate, ranking #1 in the ratio of business opening to business deaths.
Will your idea for a service business be the next great Virginia success story? Learn how to start a business in Virginia with our step-by-step guide.
Checklist: start a business in Virginia
- Create a business plan
- Name your business
- Check zoning requirements
- Choose a business structure
- Register your business
- Open business bank accounts
- Fund your new business
- Arrange business licenses and permits
- Get business insurance
- Automate back office tasks
- Understand your tax obligations
- Build a team
How to start a business in Virginia
1. Create a business plan
Careful planning is the best way to stay focused on your goals as your service business takes off. Starting a business can get hectic, so a business plan is essential to keeping your startup operation on track.
Your business plan can help you:
- Validate your business idea
- Calculate startup costs
- Define business goals
- Analyze and outperform your competition
- Define your potential customers
- Devise a marketing strategy
- Identify additional revenue streams
- Secure startup funding
First time writing a business plan? Download a free business plan template from the Small Business Administration (SBA).
2. Name your business
If you’re going to operate a sole proprietorship, you can use your full legal name as the business name. Otherwise, you’ll need to register a business name that’s memorable, not already in use, and compliant with Virginia’s business naming rules.
How to name a business in Virginia
- Check availability. Run a name check availability search the Virginia State Corporation Commission (SCC) website and the US Trademark Database.
- Claim the name. If the name is available, claim it when you register your business with the Secretary of State.
How to reserve a business name in Virginia
You can reserve a business name in Virginia for 120 days by filing Form SCC631 with the SCC and paying a $10 filing fee.
3. Check Virginia zoning requirements
Check with your local governments to acquire the appropriate zoning information that applies to your business. In Virginia, zoning is administered by municipalities and counties; the state government does not control zoning. For example, if your business address is in Richmond, you will need to consult the City of Richmond Zoning Administration Office.
Zoning laws affect what kinds of work can be done at any given physical address—even if you run a mobile business or home-based business—so don’t skip this step.
4. Choose a business structure
Every business in Virginia has to elect a legal structure. Also known as a “business entity type,” a business structure impacts business formation, taxation, growth, and so much more.
You can choose from any of the following business entity types in Virginia:
- Sole proprietorship
- General partnership
- Limited partnership (LP)
- Limited liability partnership (LLP)
- Limited liability company (LLC)
- S corporation
- C corporation
Many small businesses commonly operate as limited liability companies (LLCs), thanks to the added layer of personal liability protection and tax flexibility the entity provides. Still, it’s wise to work with a CPA or business formation service to determine the best business structure for your business goals.
Check out our guide to business structure types for more information on the pros and cons of each business entity.
5. Register your business
It’s time to make your business official. In Virginia, you can register a new business online via the Virginia SCC’s website.
Here are some key steps you can expect during the business registration process:
- Elect a registered agent. This individual or service is responsible for receiving and distributing legal communications on behalf of your business.
- File registration forms and pay filing fees. Registration forms and fees will change depending on your business entity type.
- Get a Federal Employer Identification Number (FEIN). A FEIN or EIN is a federal tax registration number that you can apply for online via the IRS. You’ll need it to pay business taxes, set up business bank accounts, and hire employees.
- Business tax registration. You’ll need to register with the IRS and the Virginia Department of Taxation to file and pay business taxes. You can register online using the VATAX online services or by completing registration form R-1. Once you have completed registration, you will receive a Virginia Tax account number, which you have to include on tax returns, payments and other tax filings.
Business formation can be a tricky process (think: paperwork, confusing jargon). Unless you know what you’re doing, hire a CPA or business formation service to take care of this process for you.
6. Open business bank accounts
Most registered businesses are legally required to keep personal assets and business finances separate by opening a dedicated business bank account. Even though sole proprietors and general partners can manage business funds in personal bank accounts, it’s still a good idea to manage business finances in dedicated business accounts.
Consider the following business bank accounts for your new business:
- Business checking account. For day-to-day transactions running a business, a checking account will be necessary.
- Business savings account. Use this account to store any withheld taxes and business savings that you can use for emergencies.
- Business credit card. Build your business’s credit score over time with a business credit card. Just be sure to pay it off in full each month.
Every type of financial institution (major banks, credit unions, and neo banks) has its own set of advantages. Assess your choices and carefully select the institution that best supports your business’s needs.
7. Fund your new business
Your business plan should give you a decent idea of how much capital you need. If you don’t have enough money in your savings account to fund the business yourself, you’ll need to raise extra money.
If you’re curious about state-specific funding programs, take a look at the Virginia Small Business Financing Authority, the state’s financing agency that can provide loans directly to small businesses.
There are plenty of other small business funding options in Virginia:
- Virginia small business grants
- SBA loan
- Small business loans from a bank
- Personal loans from friends and family
- Equity partners
Certain businesses could also raise capital from Virginia-based angel investors:
8. Arrange business licenses and permits
Virginia doesn’t require business owners to obtain a state business license. But certain permits and licenses may be needed depending on your niche and the nature of your business.
Make use of the following resources to identify which ones you’ll need:
- Federal. Check the SBA's Licenses and Permits guide.
- State. Like many states, some professions and industries are regulated by licensing boards, all of which are managed by the Department of Professional and Occupational Regulation.
- Local. Contact your local county clerk or chamber of commerce and inquire about municipal licenses and permits.
9. Get business insurance
It’s federal law that companies with one or more employee(s) must obtain worker’s compensation and unemployment insurance. But in addition, services businesses should also consider other types of insurance to gain even greater protection.
Consider the following coverage for your small business:
- Professional liability insurance. Covers losses related to property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance. Covers property damage to business-owned properties and possessions due to fire, theft, or natural disaster.
- Disability insurance. Provides short-term benefits to employees sidelined by an illness or injury.
- Automobile insurance. If your business uses a vehicle as part of its operations, then getting this type of insurance coverage is standard procedure.
Unforeseen events at the workplace occur every day so investing in the proper insurance can go a long way. Work with an attorney or licensed insurance agent to determine which types of small business insurance you need.
10. Automate back office tasks
Dealing with admin can distract you from growing your business. The right business software can make your entire operation more efficient.
Consider streamlining the following tasks with business software:
- Invoicing. Durable’s free invoicing tool can assist you in creating professionally done invoices in seconds. Accept credit card payments online and make life easier for you and your customers..
- Bookkeeping and accounting. Doing the books can get pretty tedious. Accounting software like Xero (paid) or Wave (free) can make your life a lot easier.
- Review management. Reviews are a free and effective form of digital marketing. Having to reach out to customers for feedback though can be tiring. Let Durable’s free review management tool handle it for you.
- Customer relationship management. With CRM software, you can easily sift through a customer’s purchase history, last interactions, and ultimately find out which customers you need to penetrate to drive profit.
- Scheduling. If your business requires scheduling appointments with customers, use Calendly or MeetFox to make booking an easier process for everyone.
11. Understand your tax obligations
Stay away from unnecessary penalties or legal headaches by fulfilling all your tax obligations—the kinds of tax and tax rates that are applicable to your business, filing deadlines, and more.
Key tax obligations for Virginia businesses include:
- Income tax. Sole proprietors and general partnerships owners pay business income tax on their personal tax returns. Owners of other business structures file and pay corporate income tax in a separate return.
- Sales tax. Generally, all sales, leases, and rentals of tangible personal property in or for use in Virginia, as well as accommodation and some taxable services, are subject to Virginia sales and use tax, unless an exemption or exception is established.
- Withholding tax. If you employ staff, you must withhold income tax from their wages. File your returns on Form VA-5 using eForms (VA-5 Quarterly eForm), your Business Account or Web Upload.
Check out Virginia’s business taxation guide for more details on business taxation in Virginia. Hiring a CPA to help you outline and meet all of your business’s tax obligations will add to your startup costs at first—but it will pay dividends over time.
12. Build a team
As your small business grows, you may want to expand your operation by adding to your team. Consider hiring independent contractors at first—it’s a lot easier than hiring employees.
When it’s time to hire a part- or full-time employee, make sure that you’re compliant with all employment laws and labor laws at state and federal levels.
Here are some key employer responsibilities in Virginia:
- Get an EIN. All businesses must have an EIN in order to hire employees.
- Comply with state labor laws. The Virginia Employment Law Guide outlines all the important guidelines for new hires–required notices and signs, wages, discrimination and much more.
- Verify each employee’s eligibility. Before you can officially onboard an employee, have them fill out an employment eligibility form (Form i-9) to verify their work status in the United States.
- Comply with Virginia’s New Hire Reporting program. Virginia employers are required to report newly hired employees and re-hired employees with the Virginia New Hire Reporting Center within 20 days of their hire or rehire date.
Once your Virginia business is registered, stick around and give Durable a try. Durable is an all-in-one platform with everything you need to start, run, and grow a service business. Build your business website in minutes, and make invoicing, customer management, and review management a breeze.
Try Durable today—it’s free!