How To Start a Business in Virginia: 10 Easy Steps

Rural Virginia has some unique challenges—such as access to public transportation, skilled workers, and infrastructure—according to business advisers with the Greater Roanoke & New River Valley SBDC. Still, there are thriving entrepreneurial ecosystems and wraparound support for entrepreneurship that’s accessible across the Commonwealth. These are benefits that have garnered national attention: Virginia is ranked number two in CNBC’s America's Top States for Business in 2023.

This step-by-step guide will take you through the pros and cons of starting a business in the Commonwealth of Virginia. Here’s what you need to do.

Start a business in Virginia

1. Choose a business idea
2. Name your business
3. Create a business plan
4. Choose a business structure
5. Get an employer identification number (EIN)
6. File the necessary paperwork and register your business
7. Obtain a business license and permits
8. Examine insurance options in Virginia
9. Understand financial considerations
10. Market your business

1. Choose a business idea

Choosing a solid business idea requires a clear vision of your target audience and the needs of the market. As you brainstorm business ideas, it’s worth considering the types of businesses that are especially likely to find ready customers in Virginia.

According to Greater Roanoke & New River Valley SBDC business advisers, here are some of the best types of businesses to start in the state:

• Outdoor recreation. Virginia has a plethora of natural beauty from mountains to the ocean, rivers and parkways, vibrant destinations throughout the state, the advisers note. In this space, there are ample opportunities for industry collaboration, environmental conservation, and community engagement.
• Technology. Virginia has a thriving technology industry sector throughout the state, plus increased opportunities for remote workers to live more affordably and have an improved quality of life.
• Agriculture. Agriculture offers a wide range of opportunities for small businesses in Virginia—from traditional farming and food production to agri-tourism, value-added products, and agricultural technology, the advisers explain.

Once you have an idea what type of business you want to run, conduct a competitive analysis of comparable small businesses, analyzing what products or services are offered in Virginia that are similar to yours. You may also find it beneficial to research industry trends.

2. Name your business

Naming your new Virginia business is like introducing yourself to the state. Your business name also affects other crucial decisions, including branding and marketing. Here are a few considerations when choosing a business name:

Is it unique in Virginia?

All business names in Virginia must be unique—you can conduct a search of business names using the Virginia State Corporation Commission’s Clerk’s Information System.

Is the domain name available?

Make sure to choose a domain name that makes sense as a URL. Ask yourself key questions:

• Is there a marketable domain name available that aligns with your chosen business name?
• Are there other domains too similar to your chosen business name?

If nothing is available that aligns with your business name—or other businesses have names and URLs that are too similar—you may want to reconsider your name choice.

Is it memorable?

Generally, a good business name not only announces your entity’s function clearly and truthfully, but it’s also catchy so your customers are likely to remember and have positive feelings about it.

Does it include the required suffix?

If you form an LLC in Virginia, your company name must contain the phrases “limited company” or “limited liability company,” or its abbreviations:

• LC
• L.C.
• LLC
• L.L.C.

Similarly, a corporation’s legal name must include any of the following:

• Corporation
• Incorporated
• Company
• Limited

Alternatively it can include the appropriate abbreviation:

• Corp.
• Inc.
• Co.
• Ltd.

Using a DBA name in Virginia

If you want to apply for a DBA (“doing business as”) or an alias to your company in Virginia, you’ll need to register with the Virginia State Corporation Commission, which you can do online or using paper forms. Procedures depend on the county, but expect to fill out an application form and pay a filing fee of $10.

3. Create a business plan

Before you start a business you have to have a business plan. Think of it as a necessary road map that plots out your steps to success. A solid business plan includes the following:

• Executive summary
• Detailed company description
• Market analysis
• Outline of organizational and managerial structure
• List of products and/or services
• Customer segmentation report
• Marketing plan
• Logistics and operations plan
• Financial plan

One of the most important considerations is your break-even point: What number of products or services would you have to sell to cover your costs?

4. Choose a business structure

After choosing a name and making a business plan, one of your most critical choices is deciding your business structure. This will determine how your company is taxed, how easy it is to lock down investments, and how liable you are if something doesn’t go according to plan.

The types of business structures offered in Virginia include:

• Sole proprietorships, which are owned by one person only
• General partnerships, which have two or more owners
• Corporations, which are legal entities separate from owners
• Limited liability companies (LLCs), which contain elements of both corporations and partnerships

Sole proprietorship

If you don’t formally incorporate or form a partnership, by default you have a sole proprietorship. This means your business is owned solely by you and is inseparable from you. As with partnerships and most LLCs, money earned by sole proprietorships is taxed once as your personal income, rather than dually as corporate income and personal income.

General partnership

General partnerships are business entities where two or more people share ownership and management responsibilities. Each partner has a say in decision-making, and profits and losses are shared.

Corporation

If looking to form your business as an entity entirely separate from yourself, then consider forming a C corporation or S corporation. This requires significantly more paperwork and takes more work and expense to get off the ground and maintain over time. However, it offers stronger personal asset protection and provides you with a unique opportunity to raise capital through stock.

LLC

If you want the benefits of running a simpler business entity like a sole proprietorship but also are looking for many of the same legal protections corporations enjoy, an LLC might be for you. In this case, your personal assets are afforded a level of protection against creditors in bankruptcy and legal judgments if anyone attempts to sue you.

Which structure you decide for your business determines its tax rate. All Virginia corporations are taxed at a rate of 6% of taxable corporate income, and they must also pay an annual registration fee ranging from $100 to $1,700.

If your business is a retail operation that deals in certain goods, you will also have to pay the state’s sales tax, which varies depending on the type of good and whether it is sold remotely, in a shop setting, or for consumption (such as food, alcoholic beverages, or tobacco). For more information on Virginia business taxes, visit the government website Virginia Tax.

Forming a corporation in Virginia

LLC formation services are the easiest way to form a business entity in Virginia. These services help you with the legal side of things and also assign you a Registered Agent. Registered Agents act as your official point of contact within the state.

Two simple services include:

• ZenBusiness: A popular formation service with fast turnaround and has served over 500,000 businesses. It offers a $0 option plus state fees. ZenBusiness also has excellent customer support and offers extras like free operating agreement templates and registered agent services. 
• LegalZoom: A highly reputable LLC formation serviced that's served over 4 million businesses. It also offers a $0 option plus state fees. It also offers attorney consultations, business document templates, and assist with getting an EIN. 

5. Get an employer identification number (EIN)

Once you’ve decided how to name and file your Virginia business, it’s time to get an employer identification number.

This nine-digit number functions similarly to an individual's Social Security number, but it’s assigned to new organizations by the IRS. An EIN enables you to file taxes at the federal and state levels, and it can also help secure lines of credit and open a business bank account.

You can apply for an EIN in a few ways:

• Online: The quickest and easiest way to apply for an EIN is online through the IRS website. The process is straightforward, and you will receive your EIN immediately after.
• Mail: You can also complete Form SS-4 and mail it to the IRS. It takes longer, usually around 4 weeks by mail.
• By phone: Call the IRS Business & Specialty Tax Line at (267) 941-1099 from 6 AM to 11 PM Eastern Time.

6. File the necessary paperwork and register your business

If you’re starting a corporation or an LLC, you’ll need to file either Articles of Incorporation (for a corporation) or Articles of Organization (for an LLC) with the State Corporation Commission. Here’s what you’ll need to register a business with the tax authorities once it’s been formed:

• Your legal business name and address
• The name and email of the person filing online to create an account, or the account information, if you already have one
• Your federal EIN number
• Your North American Industry Classification System (NAICS) code
• Your business’s entity type and tax type
• Name, email, and phone number of the business’s primary contact and responsible party (these may be two different people)

By registering online, you also save time by creating a business online services account through which you may also pay taxes for your business.

7. Obtain a business license and permits

In Virginia, the only permit every business needs to get at the state level is a sales tax certificate. In addition, certain craftspeople and tradespeople may need more specific types of licensing and permits, such as:

• Professional and occupational licenses
• Zoning and land use permits
• Building permits
• Alcoholic beverage license
• Home occupation permit
• Sign permits

8. Examine insurance options in Virginia

As a business owner, you will inevitably face circumstances beyond your control. For such circumstances, it’s beneficial to have business insurance to help protect your Virginia business and assets. The State Corporate Commission has a handy guide available to determine what types of insurance your business might need. A few types of insurance in Virginia include:

• Liability insurance. General liability insurance protects your business against any lawsuits resulting from accidents, injuries, or negligence.
• Commercial property insurance. This insurance covers the costs associated with fire or weather damage or theft.
• Commercial auto policy. Commercial auto insurance covers the cost of damages to a work vehicle, as well as related legal bills and medical expenses.
• Workers’ compensation coverage. Worker's compensation insurance covers treatment for employee injuries sustained on the job, rehabilitation costs, and lost wages. This type of insurance is mandated in Virginia.
• Professional liability insurance. Professional liability insurance protects manufacturers, wholesalers, distributors, and retailers from lawsuits associated with unsafe products.
• Cyber liability insurance. If your Virginia business has a data breach, cyber liability insurance can help (it’s more comprehensive than data breach insurance).
• Umbrella insurance. Umbrella insurance extends coverage to exceed policy limits of other insurance plans.

9. Understand financial considerations

Starting a business can be costly upfront. Aside from buying insurance, you may need to:

• Rent office or storefront space
• Pay for domain name registration and website design
• Place ads in publications or on outdoor advertising such as billboards
• Invest in business equipment and POS systems or ecommerce software

You may also want to hire trustworthy professionals with business expertise, such as lawyers and accountants.

10. Market your business

When you’re ready to unveil your Virginia small business, you’ll need a comprehensive marketing strategy. Here are key elements to consider:

• Market research. If you do your research and understand the market, you’ll have more insight into your target customers’ wants and needs.
• Advertising and promotion. Whether you place ads yourself or hire an agency to handle your advertising, you may want to consider paid advertising to get the appropriate messaging across about your product and/or business.
• Social media. You can promote your products or services to diverse audiences across multiple social media platforms including Facebook, Instagram, TikTok, and YouTube.
• Public relations. Building relationships with the public and media outlets is the goal of public relations. Adopting this strategy can be an asset to increase your visibility organically and strengthen positive news about your business.
• New business and customer retention. Genuine relationships with customers are key, so make sure to increase customer retention through word-of-mouth marketing tactics that spread the word about your business to friends, family, and colleagues of existing customers.

Tips For starting a business in Virginia

The Greater Roanoke & New River Valley SBDC business advisers offer these tips and best practices to set your business up for success:

1. Connect with the Virginia SBDC to provide technical assistance, support, and guidance throughout your business ownership journey.
2. Build your relationship currency to cultivate and strengthen authentic connections with those around you—including people in your professional networks, company, and business circle (such as bankers).
3. Seek support and guidance from your local economic development team, planning & zoning team, and/or regulatory agency early and often.
4. Be comfortable being uncomfortable with asking for technical assistance, guidance, and support.
5. Focus on cash flow management, which can significantly impact every aspect of your business.
6. Don’t underestimate the significance of deeply understanding your target customers, completing thorough market research, and validating your product/service. Together, they are keys to your success.

*This post is for information only. You are responsible for reviewing and using this information appropriately. This content doesn’t contain and isn’t meant to provide legal, tax, or business advice. Requirements are updated frequently and you should make sure to do your own research and reach out to professional legal, tax, and business advisers, as needed. Businesses outside of Virginia will have different steps and requirements. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy, and any other applicable policies.