Entrepreneurs' most frequently asked questions

The Business Information Center of the Virginia Department of Business Assistance answers more than 300 inquiries per week. Here are some of the most frequently asked questions and the center's response. Individual situations may vary and answers are provided for general guidance purposes only.

To reach the Business Information Center of the Department of Business Assistance with additional questions or for further information, call (866) 248-8814 or (804) 371-0438, e-mail , or use the live chat feature.

What licenses do I need for my business?
There is no "one size fits all" answer to this question. Every business is different and the licenses required depend on where the business will be located, the type of business and what structure the business will operate under (sole proprietor, partnership, LLC or corporation). In Virginia, a business license is issued by the locality where the business is located, but not all localities require a license for all businesses. In addition, there may be state and federal requirements for a business that might be called "licenses." One of the best online resources to determine what licenses might be required for a new business is the Virginia Business Portal. Also, the Business Information Center of the Virginia Department of Business Assistance can provide a customized list of license requirements for an individual business.

How do I get a "reseller's license" for my retail store in Virginia?
Virginia, unlike other states, does not use the term "reseller's license" or "resale certificate." In Virginia, one becomes a retailer for tax purposes by registering with the Virginia Department of Taxation to collect sales tax. The retailer provides suppliers with Virginia Tax Form ST-10, Sales and Use Tax Certificate of Exemption, to demonstrate compliance. This allows the retailer to purchase at wholesale prices without paying sales tax to the supplier. The retailer is responsible for collecting Virginia state sales tax.

I work all over Virginia. Do I need a business license from every city and county where I work?
Generally, no. You need a business license, if required, from the city or county where your business is based and from any city or county where you have a permanent office.

I'm a sole proprietor business. How do I pay income taxes?
A sole proprietor reports income from a business on the individual IRS 1040 Form by filing a Schedule C, Profit or Loss from Business. For the most part, income reported on the Federal 1040 will be the same income reported for Virginia tax purposes.

Where can I get a grant to start my business?
Contrary to radio, television and print advertising claims, there are virtually no grant programs designed to give "free" money - money that does not need to be paid back - to a person for the purpose of starting a business. While the government often gives grants, they almost always are for a specific purpose and have numerous conditions and requirements. Grants usually go to nonprofit organizations, not to individuals, and not to start up organizations without a track record.

How do I get the name of my business registered?
Anyone establishing a partnership, limited liability company (LLC), trust or corporation in Virginia through the State Corporation Commission registers the name of the business. A sole proprietor may use his/her full name as a business name without registering it, e.g., "Judith J. Jones Jewelry." A sole proprietor that wishes to use a name other than his/her full name, must register a trade name by obtaining a Fictitious Name Certificate from the local circuit court, e.g., "Judith J. Jones doing business as Judy's Jewelry." A registered business name must be separate and distinct from any name already registered. A corporation or LLC that wants to use a name other than their registered name must also obtain a Fictitious Name Certificate.

What's an operating agreement and do I need one?
An operating agreement establishes the workings of an LLC. If you have established an LLC, you need one. An operating agreement helps the LLC by guarding its limited liability status, avoiding financial and management misunderstandings and ensuring the business is governed by the rules set up by the owner(s). Even a one-person LLC needs an agreement. The operating agreement is not submitted to the state but is maintained at the business location. It is always advisable to have an attorney prepare/review an operating agreement.

Do I need "bylaws" for my corporation?
Absolutely. Corporate bylaws set out the basic rules that govern the ongoing formalities and decisions of a corporation and include such things as how and when to hold meetings of directors and shareholders and the number of votes that are necessary to approve corporate decisions. Corporate bylaws are not submitted to the state but kept at the business location. It is always advisable to have an attorney prepare and/or review corporate bylaws.

I'm applying for a business loan and was told I will need to make a "personal guarantee." What is that?
When you make a personal guarantee, you are acting as a co-signer on the loan. As a co-signer, creditors will go after you in the event that the borrower (your business) fails to make loan payments. The guarantee applies only to you, not your partners or employees, unless they also sign the loan agreement.

Can I get a business loan for 100 percent of the money I need?
Unlikely. Almost all financing programs will require you to provide from 10 to 25 percent of cash equity into any deal. One exception is the SBA Community Express Loan Program. Check with your local Small Business Development Center for more information. Generally, the less equity the borrower brings to the table, the higher the interest rate that the lender will charge.

I want to start a business selling electronics over the Internet. Do I need to collect sales tax?
Yes. You will need to register with the Virginia Department of Taxation to collect sales tax. You will charge sales tax only to customers with addresses in Virginia.

To reach the Business Information Center of the Department of Business Assistance with additional questions or for further information, call (866) 248-8814 or (804) 371-0438, e-mail , or use the live chat feature.