Steps to Create a CorporationHere is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Virginia. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Virginia State Corporation Commission, Office of the Clerk website, which has useful information and resources.
1. Choose a business name for the corporation and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
- Virginia law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd." Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply).
- You can check the availability of a corporate name by contacting the Clerk's Office of the Virginia State Corporation Commission at (804) 371-9733 or (866) 722-2551.
- Although you are not required to do so, consider registering your business name as a federal and/or state trademark.
2. Recruit and/or appoint a director or directors for the corporation.
- Under Virginia law, a corporation must have at least one director.
- Virginia does not set a minimum age requirement for directors.
- Directors need not be residents of Virginia or shareholders of the corporation, unless the articles of incorporation or bylaws so require.
3. Prepare and file articles of incorporation with the State Corporation Commission of Virginia.
- The State Corporation Commission, Office of the Clerk website provides a simple, fill-in-the-blank form for articles of incorporation, with instructions. The filing fee is $25, plus and there is a charter fee of $50 for each 25,000 shares of stock (or fraction thereof) authorized in the articles. It is unlikely that your small business will need to authorize more than 25,000 shares, so the total fee ordinarily will be $75. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.
- Note that the form asks you to list the name(s) and address(es) of the individual or individuals who will serve as the corporation's initial board of directors.
4. Create the corporation's bylaws.
- There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.
- The bylaws should indicate the number of directors that will constitute the corporation's permanent board of directors, if that number is different from the number indicated in the articles of incorporation.
5. Hold an organizational meeting.
- See the general section on forming a corporation for details. You can find the Virginia statute relating to the organizational meeting at Va. Code. § 13.1-623.
6. Issue stock certificates to the initial owners of the corporation.
- See the general section on forming a corporation for details. The Virginia statutes relating to issuance of stock certificates are located in Va. Code § 13.1-647 and Va. Code § 13.1-648. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received in cash, property, or services) for each share of stock.
7. Obtain any required local licenses.
- See the general section on forming a corporation for details.
8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.
- Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
- If you have an employee or employees in Virginia (including corporate officers), you need to apply for a VEC (Virginia Employment Commission) account number. You can do this via the Online Services for Businesses website, which can also register you for other business taxes (if applicable).
- Whenever you hire an employee in Virginia, you must inform both the IRS and the State of Virginia. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Virginia New Hire Reporting website.
- If you have three or more employees in Virginia, you need to carry workers' compensation insurance. The Virginia Workers' Compensation Commission administers the program.
- As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
- Virginia's current income tax rate for corporations is 6% of Virginia taxable income.
9. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.
- Every year, the State Corporation Commission will mail the corporation's registered agent the Annual Assessment Packet. This packet contains a pre-printed Annual Report form and a notice of annual registration fee assessment. There is no filing fee for the Annual Report. The registration fee assessment depends on the number of shares the corporation is authorized to issue. For corporations authorized to issue 5,000 or fewer shares, the fee is $100. If your corporation is authorized to issue more than 5,000 shares, you should look at the fee schedule on the Annual Corporation Requirements page.
- Virginia requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Va. Code § 13.1-770 and Va. Code § 13.1-771.
- Va. Code § 13.1-774 requires Virginia corporations to make certain annual financial statements available to shareholders of the corporation upon request.
- An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
- To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Virginia. There is no additional paperwork that must be filed with Virginia to obtain "S" status.