Last updated: February 25, 2026
Virginia consistently ranks among the best states for business in the U.S., and for good reason. With a diverse economy spanning government contracting, technology, agriculture, and services, the Commonwealth offers strong infrastructure, a well-educated workforce, and a business-friendly regulatory environment. Virginia’s LLC formation costs are among the lowest in the nation at just $100, and the annual registration fee is only $50.
That said, Virginia has its own requirements that new business owners need to understand – from the State Corporation Commission (SCC) filing process to a 5.3% combined minimum sales tax rate, workers’ compensation rules that kick in at three employees, and industry-specific licensing through the Department of Professional and Occupational Regulation (DPOR). This guide walks you through every step using information from official Virginia government sources.
How to Start a Business in Virginia (Step by Step)
Step 1: Choose Your Business Structure
Your business structure determines your personal liability, tax treatment, and ongoing paperwork. The most common options in Virginia:
- Sole Proprietorship – Simplest to start, but you’re personally liable for all business debts. No state filing required (just a fictitious name certificate if using a DBA).
- LLC (Limited Liability Company) – Most popular choice for small businesses. Protects personal assets, offers flexible tax treatment, and is straightforward to form and maintain in Virginia.
- Corporation (S-Corp or C-Corp) – More formal structure with shareholders, directors, and officers. Better for businesses seeking investors.
- Partnership – For businesses with two or more owners. Options include general partnership (GP), limited partnership (LP), or limited liability partnership (LLP).
For most small businesses, an LLC is the right choice. Virginia makes it affordable – $100 to form and just $50/year to maintain.
Step 2: Register Your Business with the State
LLC Formation via the State Corporation Commission (SCC)
Virginia business entities are registered through the State Corporation Commission (SCC) at scc.virginia.gov. Online filings are handled through the Clerk’s Information System (CIS).
| Item | Cost |
|---|---|
| Articles of Organization filing fee | $100 |
| Total to form a Virginia LLC | $100 |
| Annual Registration Fee | $50/year |
| Fictitious Name Certificate (if using DBA) | $10 |
How to file:
- Go to the SCC Clerk’s Information System and file Articles of Organization online
- Choose a business name that includes “LLC,” “L.L.C.,” or “Limited Liability Company” – check name availability through the SCC business entity search
- Designate a registered agent with a physical Virginia address – this can be yourself, another Virginia resident, or a registered agent service
- Pay the $100 filing fee by credit card for online filing
- Online filings are typically processed the same business day or next business day
Annual Registration Fee
Virginia LLCs must file an annual registration fee of $50 with the SCC each year. The due date is the last day of the month in which your LLC was originally formed. You can file online through the CIS portal. Failure to file results in a $25 late fee and eventual administrative dissolution.
Operating Agreement
Virginia law does not require an LLC operating agreement, but having one is strongly recommended. It outlines member rights, profit/loss sharing, management structure, and what happens if a member leaves. Keep it with your business records – it does not need to be filed with the SCC.
Fictitious Business Name (DBA / Trade Name)
If you operate under a name different from your LLC’s legal name, file a Certificate of Assumed or Fictitious Name with the SCC ($10). The filing does not expire or require renewal. You can file online, by mail, or in person.
Federal EIN (Employer Identification Number)
After forming your LLC, apply for a free EIN from the IRS at IRS.gov. You’ll receive it immediately when applying online. You need an EIN to open a business bank account, hire employees, and file taxes.
Step 3: Get Required Licenses & Permits
Local Business Licenses
Virginia does not have a single statewide general business license. Instead, most cities and counties require a local business license (sometimes called a BPOL – Business, Professional and Occupational License). Requirements and fees vary by locality – check with your city or county Commissioner of the Revenue.
Industry-Specific Licenses
Many industries require state-level licenses from specific agencies. The Department of Professional and Occupational Regulation (DPOR) handles contractor, cosmetology, and tradesman licenses. The Department of Criminal Justice Services (DCJS) regulates private investigators and security firms. See our industry-specific guides below for detailed requirements.
Step 4: Register for State Taxes
Virginia State Income Tax
Virginia has a graduated state income tax with four brackets:
| Taxable Income | Rate |
|---|---|
| $0 – $3,000 | 2% |
| $3,001 – $5,000 | 3% |
| $5,001 – $17,000 | 5% |
| Over $17,000 | 5.75% |
LLC members report their share of LLC income on their personal Virginia tax return. The standard deduction is $8,750 for single filers and $17,500 for married filing jointly (2025 tax year).
Virginia Sales Tax
If your business sells taxable goods or services, you must register for a sales tax account with the Virginia Department of Taxation.
- State sales tax rate: 4.3%
- Mandatory local rate: 1% (all localities)
- Additional local rates: 0%-1.7% depending on locality
- Combined range: 5.3%-7% (most areas are 5.3%)
- Groceries and personal hygiene items: 1% reduced rate
- Registration: Free through Virginia Tax Online Services
You’ll receive a Certificate of Registration (Form ST-4) after registering. Most businesses file monthly or quarterly.
Employer Taxes (If Hiring Employees)
If you hire employees, register with the Virginia Employment Commission (VEC) and the Department of Taxation for payroll taxes:
- Unemployment Insurance (UI) Tax: New employers start at approximately 2.5% plus add-ons. Experience-rated range: 0.1%-6.2%. An administrative fee of 0.05% on taxable wages also applies.
- Withholding Tax: Register with the Department of Taxation to withhold state income taxes from employee paychecks
Report new hires to the Virginia New Hire Reporting Center within 20 days of the hire date.
Step 5: Get Business Insurance
Workers’ Compensation Insurance
Virginia requires workers’ compensation insurance for employers with three or more employees. The threshold is broadly defined – part-time, seasonal, and temporary workers all count toward the total.
| Status | Requirement |
|---|---|
| 3 or more employees | Workers’ comp is mandatory |
| 1-2 employees | Not required (may opt in voluntarily) |
| Agricultural employers with 4+ full-time workers | Workers’ comp is mandatory |
| Domestic workers in private homes | Exempt |
| Subcontractors in the same trade | Count toward your employee total |
Penalties for non-compliance: Up to $250 per day uninsured, with a maximum penalty of $50,000 plus costs. The Virginia Workers’ Compensation Commission enforces these requirements.
General Liability Insurance
While not always legally mandated, general liability insurance is practically essential for most businesses. Many clients, landlords, and government contracts require proof of coverage. Industry standard: $1 million per occurrence / $2 million aggregate.
Virginia Business Guides by Industry
Every industry has different licensing, permit, and insurance requirements. Choose your business type for a detailed breakdown of everything you need in Virginia:
- How to Start a Cleaning Service in Virginia – Insurance, bonding, sales tax, and cost breakdown
- How to Start a Food Truck in Virginia – Health permits, fire marshal inspection, commissary requirements, and local vendor permits
- How to Start a Daycare in Virginia – VDOE licensing, background checks, staff ratios, and training requirements
- How to Start an HVAC Business in Virginia – DPOR contractor license, tradesman certification, EPA requirements, and insurance
- How to Start a Hair Salon in Virginia – DPOR cosmetology license, salon permit, exam requirements, and costs
- How to Start a Landscaping Business in Virginia – VDACS pesticide certification, business license, and workers’ comp
- How to Start a Private Investigation Business in Virginia – DCJS registration, training, experience, bonding, and insurance
Virginia Business Resources & Official Links
| Resource | What It’s For |
|---|---|
| Virginia State Corporation Commission (SCC) | LLC/Corp formation, entity search, annual registration |
| SCC Clerk’s Information System (CIS) | Online business filings and entity search |
| Virginia Department of Taxation | Sales tax, income tax, withholding tax registration |
| Virginia Employment Commission (VEC) | Unemployment insurance tax registration |
| Virginia Workers’ Compensation Commission | Workers’ comp requirements and employer resources |
| Dept. of Professional & Occupational Regulation (DPOR) | Contractor, cosmetology, and tradesman licensing |
| Dept. of Criminal Justice Services (DCJS) | Private investigator and security firm licensing |
| Virginia Department of Health (VDH) | Food service permits, health inspections |
| Virginia New Hire Reporting Center | Report new employees within 20 days |
| IRS EIN Application | Free federal tax ID number |
Frequently Asked Questions
How much does it cost to start an LLC in Virginia?
The filing fee for Articles of Organization with the State Corporation Commission is $100. After that, you pay an annual registration fee of $50. If you need a fictitious name (DBA), that’s an additional $10. Combined with a free federal EIN, your total first-year cost to form a Virginia LLC is around $150-$160 – one of the lowest in the country.
Does Virginia have a state income tax?
Yes. Virginia has a graduated state income tax with four brackets: 2% on income up to $3,000, 3% on $3,001-$5,000, 5% on $5,001-$17,000, and 5.75% on income over $17,000. LLC members report their share of LLC income on their personal Virginia tax return.
What is the sales tax rate in Virginia?
The combined state and mandatory local sales tax rate is 5.3% in most of Virginia (4.3% state + 1% local). Some localities add additional local taxes, bringing the combined rate up to 7% in certain areas. Groceries and personal hygiene items are taxed at a reduced rate of 1%.
Is workers’ compensation required in Virginia?
Workers’ compensation is required for businesses with three or more employees. Part-time, seasonal, and temporary workers all count. Subcontractors in the same trade also count toward your total. Penalties for non-compliance include fines of up to $250 per day (maximum $50,000). Agricultural employers need coverage at four or more full-time workers.
What is the annual registration fee for a Virginia LLC?
Virginia LLCs pay an annual registration fee of $50 to the State Corporation Commission. It’s due on the last day of the month your LLC was originally formed. You can pay online through the SCC Clerk’s Information System. A $25 late fee applies if you miss the deadline.
Do I need a business license in Virginia?
Virginia does not have a single statewide business license. However, most cities and counties require a local business license (BPOL) from the Commissioner of the Revenue. Many industries also require state-level professional licenses through agencies like DPOR, DCJS, or the Department of Health. Check your specific locality and industry requirements.
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