Perhaps you’ve developed the next big idea, and you’re ready to be your own boss. What stands between you and the launch of your new venture is a dizzying array of federal, state and local taxes and regulations. Fortunately, there are many business groups designed to help you launch or grow your business. They will help you wade through the necessary registrations and refine your business model.
New to the commonwealth is the Virginia Department of Business Assistance’s Business One Stop system. The site can be accessed from the VDBA’s Web site at http://www.vdba.virginia.gov. Users answer a few questions about their business, and the system develops a customized, step-by-step list of permits and licenses needed and resources that can help. It will also include links to necessary forms.
Business One Stop is currently a free service. Expect an enhanced, more powerful tool that will include a nominal fee on or about July 1, 2009. Call 1-866-248-8814 for more information.
In addition, you can also do the following to get information on applicable forms and licenses:
Call the VDBA at (866) 248-8814 to customize a list of “things to do.”
Use the Virginia Business Portal at business.virginia.gov to use the “do-it-yourself” tool.
Visit the Business Registration Guide at http://www.scc.virginia.gov/clk/begin.aspx for a complete reference guide to forms needed to establish a business in Virginia. Your business will only need a few of the forms.
The to-do list:
Choose an operating entity
Before you register a business you must select an operating entity. There are several types to choose from, each offering different taxation and liability conditions. A basic description is below, but the chart on the next page offers more details. A tax lawyer and accountant can help you understand the implications of which business model could work best for you.
1) Sole proprietorship: This is the simplest form of business organization. In most cases, you may need only an occupational license or permit. You are responsible for any liabilities, and income is taxed on an individual’s return.
2) Partnership: This arrangement includes two or more people. Partners are responsible for all liabilities. Income flows to partners through their individual tax forms based on their share of the partnership. A limited partnership is similar, but one owner is a general partner, while others are limited partners, reducing their liabilities.
3) Corporation: A corporation creates a new entity, which is taxed separately from its shareholders. This entity insulates business founders, because they are not responsible for the company’s liabilities. Corporations can sell shares to stockholders. The main disadvantage of this entity is that income is taxed twice, once as corporate earnings and a second time as income for the shareholders.
4) Limited liability company (LLC): LLCs combine the flexibility of partnerships, but liability protection of corporations. LLCs are separate entities than the business owners, shielding the owner from liability.
Access the Business One Stop
Use the Virginia Department of Business Assistance’s convenient online system to create a list of required registrations, licenses and permits for your business. http://www.virginia.gov/box/index.html.
Naming your business
Know what you want to name your business? Check whether the name you want is available with the State Corporation Commission at http://www.scc.virginia.gov/division/clk, or call (804) 371-9967. Avoid names that could be confused with national brands. Large companies aggressively protect their brands.
Register with the State Corporation Commission
Most companies are required to register with the SCC. Contact the SCC if you plan to do business under your business name or a trade name (commonly called a “dba” or “doing business as”), to sell securities, to use a trademark or to operate a franchise. Visit http://www.scc.virginia.gov/division/clk, or call (804) 371-9967.
Create a business plan
Putting together a detailed business plan is vital to organize and clarify your business’ missions, market, finances and the benefits you can provide to consumers. Keep your mission statement brief and to the point. Include potential problems and how you plan to finance your company. Update this document when necessary.
Find financing Businesses will need some sort of startup costs. You’ll need to collect capital. See page B9 for details.
Check local requirements
Contact the locality where you want to base your business to learn what licenses are required. Also, contact the local planning/zoning department to make sure your property is zoned for specific business activities. For example, an at-home daycare business may require a zoning amendment and restricted hours.
Register for Virginia taxes
All Virginia businesses must register with the Virginia Department of Taxation. Contact the department at http://www.tax.virginia.gov or by calling (804) 367-8037. You will need to have a federal tax employer identification number (EIN) from the Internal Revenue Service. Visit http://www.irs.gov to request a SS-4 form need to get an EIN number. More information on taxes is available on page B12.
Virginia Unemployment Insurance
If you hire employees, you will need to pay unemployment insurance tax. The Virginia Employment Commission will assign your business an account and send you an Employee Handbook. This will explain reports, notices, requests for information and other communications you will receive from the VEC. For more information, visit http://www.vec.virginia.gov/vecportal.
All Virginia companies are required to comply with state and federal labor laws and safety regulations. For guidance, contact the Virginia Department of Labor and Industry at (804) 371-2327