The Business Information Center of the Virginia Department of Business Assistance answers more than 300 questions a week. Here are some of the most frequently asked questions. These responses are general and individual situations may vary. To reach the center, call (866) 248-8814 or (804) 371-0438, e-mail or use the live chat feature at http://www.vdba.virginia.gov.
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 the business’ operating structure (i.e. sole proprietor). In Virginia, a business license is issued by the locality in which 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 specific business license.
• Virginia Business One Stop: By entering some information about your business, this online program will generate a list of licenses you’ll need for your business. http://www.virginia.gov/bos/index.html.
• The Virginia Business Portal at http://www.business.virginia.gov is a good resource to help determine which business licenses you’ll need.
• The Business Information Center of the VBDA can also provide a customized list of license requirements. http://www.vdba.virginia.gov
How do I get a “reseller’s license” for my retail store in Virginia?
Businesses in Virginia do not need a “reseller’s license.” A business becomes a retailer for tax purposes in Virginia 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 typically need a business license from the locality where your business is based and from any city or county where you have a permanent office.
I’m a sole proprietor. How do I pay income taxes?
A sole propriertor reports income from a business on the individual IRS 1040 Form by filing 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?
Be wary of advertising claims that guarantee “free” money, or money that does not need to be paid back. There are virtually no programs that give out “free” money. 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 or startup organizations without a track record.
How do I get the name of my business registered?
Anyone establishing a partnership, limited liability company, trust or corporation through the State Corporation Commission must register the name of a business. A registered business must be different from any name already registered.
A sole proprietor may use his or her full name as a business without registering it, i.e., “Judith J. Jones Jewelry.” But if the sole proprietor wants to use another business name, he or she must register a trade name by obtaining a Fictitious Name Certificate from the local circuit court, i.e., “Judith J. Jones doing business as Judy’s Jewelry.”
A corporation or LLC that wants to use a name other than a registered name must also obtain a Fictitious Name Certificate.
What’s an operating agreement and do I need one?
If you have established an LLC, you need one. An operating agreement establishes the workings of an LLC. The agreement helps the LLC guard its limited liability status, avoid financial and management misunderstandings and ensure the business is governed by the rules set up by the owner or owners. Even a one-person LLC needs an agreement.
It is kept at the business location and you should have an attorney prepare or review the agreement.
Do I need “bylaws” for my corporation?
Yes. Corporate bylaws set out basic rules and decisions of a corporation and include guidelines such as how and when to hold shareholders meetings and the number of votes necessary to approve decisions. Bylaws are kept at the business location. Businesses should consider having them prepared or reviewed by a lawyer.
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. That means creditors will go after you if your business fails to make loan payments. The guarantee applies only to you or other partners who 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 pays, the higher the interest rate will be.
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.