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Taxation
Register with the state for all applicable taxes
Are you thinking about starting a new
business in Virginia? If so, there are several things
you must do before opening your doors, including registering
with the Virginia Department of Taxation for taxes that
will apply to your business. The department's Web
site has all the information
you need to ensure that you are fulfilling your tax obligations
to the commonwealth.
Registration
Before doing business in Virginia, you must first register
with the department for the taxes that may relate to
your business. In addition, you must obtain an Employer
Identification Number (EIN) from the Internal Revenue
Service to use as your taxpayer identification number.
To find out more about paying business taxes in Virginia,
visit the agency's Web site and review "Tax Facts" under
the "Publications" heading. More than half
of the new businesses registering in Virginia do so
electronically on the Web site.
ONLINE
ASSISTANCE |
Visit
the state’s business Internet
portal -- a central point for business assistance,
information and inquiries.
The portal consolidates information about Virginia’s
various business support services such as loans,
work force development and licensing in one site. |
Sales and use tax
Retailers must collect and pay sales tax on all retail
sales or leases of tangible personal property unless
they hold a valid exemption certificate. When the seller
does not collect the sales tax on the purchase, the
buyer is required to pay a use tax on the purchase
unless the use of the property is exempt.
Withholding tax
If federal law requires an employer to hold taxes from
any payment, then Virginia withholding is also required
and the employer must register for withholding tax.
Depending on the amount withheld, payments to the department
are due semi-weekly, monthly or quarterly.
FORMING
A NONPROFIT |
For
those motivated by the desire to support charitable
causes or activities, forming a nonprofit organization
is a way to turn a call to serve into action. A
nonprofit is established just like a for-profit
enterprise, with the additional step of applying
for tax-exempt status with the Internal Revenue
Service (IRS).
In Virginia, a nonprofit
must be either a non-stock corporation or a limited
liability company (LLC). A registration with
the Virginia Department of Agriculture and Consumer
Services is also required for fundraising. Nonprofits
must obtain a local business license, if required,
and register with the Virginia Department of
Taxation.
A nonprofit organization
becomes tax-exempt, allowing individuals and businesses
who donate to deduct their gifts on their federal
tax returns, by filing an application to become
classified as a 501(c)(3) organization. This is
accomplished by filing IRS Form 8718, User Fee
for Exempt Organization Determination Letter Request,
and IRS Package 1023, Application for Recognition
of Exemption. For instructions on filing these
forms, read IRS Publication 557, Tax-Exempt Status
for Your Organization.
All IRS forms can be obtained
by calling (800) TAX FORM or downloaded.
The Business Information
Center of the Department of Business Assistance
will e-mail anyone interested in forming a nonprofit
a step-by-step explanation with live links to numerous
resources and all required forms and instructions.
Call 1-866-248-8814 to request nonprofit instructions
or e-mail. |
Corporate income tax
Corporations registered with the State Corporation Commission,
whether a Virginia corporation or an outside company
doing business in the state, must file a corporate
income tax return with the department. The corporate
income tax rate is 6 percent of the company's federal
taxable income. Virginia allows many tax credits, including
credit for the creation of new jobs, expenses incurred
for providing on-site daycare, costs associated with
job retraining and the cost of recycling equipment.
Use online services to file and pay your taxes
The department's Web site gives Virginia businesses the
power to complete many tax transactions over the Internet.
There is no software to download or purchase, and the
services are available seven days a week, 24 hours
a day. You may register your new business, file and
pay your taxes, and access your return and payment
records at any time. Online processing reduces errors
and is fast, convenient, free and safer than sending
tax information through the mail. To get started, log
on to the agency's Web
site.
Other state taxes
There are other state taxes that may also apply to your
business: aircraft and watercraft sales and use, beer
and wine cooler excise tax, cigarette tax, forest products
tax, litter tax, soft drink excise tax, tire tax, etc.
To find out more, review "Tax Facts" under "Publications" on
the Web site.
Local taxes
The major local taxes include a business tax, a real
estate tax, the machinery and tools tax and a tangible
personal property tax. In addition, some localities
levy a consumer's tax on utility purchases. In Virginia,
counties and cities are separate taxing entities. Depending
on its location, a company will pay either county or
city taxes.
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