How to Start a Business in Virginia: Legal, Tax & Licensing Essentials

Starting a business in the State of Virginia requires navigating legal requirements, tax registrations, and financial decisions that can have a long-term impact on your success. At Wendroff & Associates, we help entrepreneurs at every stage, from idea to execution and growth, streamlining processes and helping you make confident business decisions.

This guide outlines the key steps to getting your business up and running in Virginia, from registration to tax setup and compliance.

1. Choose the Right Legal Structure & Understand the Tax Impact

Your business structure affects how you’re taxed, what forms you’ll need to file, and whether your income is taxed once or twice. In Virginia, most small businesses choose from:

• Sole Proprietorship: Easiest to form, but income is taxed on your personal return, and there’s no liability protection.
• LLC (Limited Liability Company): Offers personal liability protection. By default, if there is only one owner, the company is a sole proprietorship. If there is more than one owner, the company is a partnership by default. You can also elect to be taxed as an S Corp, which may reduce self-employment taxes. Income from the sole proprietorship, partnership, and S Corp is taxed on your personal return. You can also elect to be taxed as a C Corporation, which is explained below.
• S Corporation: Avoids double taxation and can reduce self-employment tax on owner compensation, but has stricter rules and filing requirements.
• C Corporation: Profits are taxed at the corporate level, then again when distributed as dividends. Suitable for businesses planning to reinvest profits or raise venture capital.
• Partnership: Similar to LLC in tax treatment, but involves a formal agreement between two or more owners.

We can help you weigh the pros and cons based on your revenue model, risk exposure, and long-term plans. Click the Free Consult button below to schedule a discussion.

​​You can also download our Business Structure Comparison Chart for a quick overview of legal and tax considerations, along with pro tips, for each entity type.

*Consult with your lawyer for legal liabilities, protections, and implications.

2. Choose a Name & Register Your Business with the State of Virginia

Start by choosing a business name that complies with Virginia’s naming rules and reflects your brand. You can search for name availability using the Virginia SCC Name Check tool.

Once you’ve chosen your name, you’ll need to register your business entity with the Virginia State Corporation Commission (SCC). This involves filing Articles of Organization for LLCs and Articles of Incorporation for Corporations.

You can file the Articles of Incorporation with the Virginia State Corporation Commission online or by mail.

If you’re using a fictitious name (DBA), you must also register it with your local circuit court and file it with the SCC.

We recommend securing your name early, along with domain names and social handles, to avoid potential branding conflicts down the road.

3. Obtain a Federal EIN

An Employer Identification Number (EIN) from the IRS is essential for opening a business bank account, hiring employees, and filing taxes. You can apply online through the IRS website in just a few minutes—and it’s free.

4. Register with Virginia Tax

You’re required to register with the Virginia Department of Taxation if your business will:

• Sell or lease taxable goods or services
• Withhold taxes for employees
• File corporate or pass-through entity income taxes

Use the Virginia Business Registration System to register for state taxes. As of July 1, 2024, new businesses must register online unless they meet limited exceptions.

Depending on your business activity, you may need to register for:

• Retail Sales and Use Tax
• Employer Withholding
• Corporate or PTE Income Tax
• Litter Tax, Vending Machine Tax, or other industry-specific taxes

Once registered, you’ll receive your Virginia Tax account number and, if applicable, your sales tax certificate. You can manage filings and payments through your Business Online Services account.

5. Obtain Local Virginia Business Licenses and Permits

Most cities and counties in Virginia require businesses to apply for a Business, Professional and Occupational License (BPOL). Your BPOL fee is usually based on projected or actual gross receipts.

In addition to BPOL, many localities also assess a Business Personal Property Tax (BPPT) on tangible assets your business owns, like computers, office furniture, and equipment. These must be reported annually, even if no tax is due.

Requirements vary by locality, so check with your city or county’s Commissioner of the Revenue listed here.

Learn more about BPOL and BPPT taxes in Virginia here.

If your business involves food, alcohol, construction, childcare, or other regulated activities, you may need to obtain additional permits.

6. Open a Business Bank Account and Separate Your Finances

Keeping your business and personal finances separate isn’t optional – it’s foundational. A dedicated business checking account streamlines your bookkeeping, supports your liability protection (especially for LLCs and corporations), and makes tax time easier.

Ask us about setting up a cloud-based bookkeeping system and support that grows with your business.

7. Understand Your Ongoing Tax and Filing Obligations

Once you’re up and running, you’ll have recurring responsibilities:

• File federal and state tax returns annually (or quarterly, depending on your structure)
• Pay estimated taxes if you’re self-employed
• File BPOL renewals with your locality
• Collect and remit sales tax if applicable
• File payroll taxes and W-2s if you have employees

Missed deadlines can lead to penalties and interest. Our team can help you set up systems to stay ahead of your filing obligations. Start by reviewing our 2025 Tax Deadlines Guide for key dates to keep on your radar.

Next Steps to Building a Smart Financial Foundation for Your Business

Starting a business comes with a steep learning curve, but you don’t have to do it alone. Wendroff & Associates partners with entrepreneurs to simplify tax and accounting decisions, allowing you to focus on growing your business.

From choosing the right structure to setting up a compliant bookkeeping system, to automation and CFO-level insights, we’re here to help you start and stay strong. Our business services include:

• Business Tax Preparation
• Bookkeeping Services
• Outsourced CFO Services
• Business Budgeting & Forecasting
• Tax Planning & Strategy
• Technology & Automation Consulting

Contact us using the “Free Consult” button below to schedule a consultation, and let’s map out your next steps to success.