Casa » How to Start a Small Business in 2024: Simplified Guide » 11 Easy Steps to Start a Business in Virginia (2024 Guide)
CNBC’s annual “America’s Top States for Business” ranks locations based on infrastructure, cost of doing business, innovation, technology, education, and quality of life.
Virginia has won the title 5 times, more than any other state, most recently in 2021. Today, it’s a close 3rd.
CNBC says this about Virginia: “A great education system is building a smart workforce.”
The statistics back it up:
Many government agencies (the Pentagon) and Fortune 500 companies (Amazon) choose Virginia because of its rich history, location, and business-friendly environment.
But government incentives, grants, and small businesses drive the Virginian economy because 99.5% of all companies are SMBs, employing 1.6 million people.
So, if you’re fixin’ to start a business in Virginia, discover why it’s a “purdy” excellent state to do it in.
Before starting your business, you need a viable idea that suits your skills, interests, resources, and community needs.
And Virginia has plenty of options, for example:
But if you’re still unsure, here are some strategies for developing a business idea:
Validation determines whether there’s a market for your business idea, the competition level, and how much people will pay for products/services similar to yours.
You validate by asking these 5 questions and should only start your business when you have the answers:
Business idea in place; it’s time to make a plan.
It’s possible to start a business without a business plan, but you could also sail a boat without a chart and end up yonder!
Do you get what I’m saying?
Your business plan’s complexity depends on your chosen market, business structure, and whether you have employees or need funding. Most small businesses can manage with a simple one-page plan that includes these 3 crucial elements:
Your market research is crucial to your business success for 4 reasons:
Here’s where you identify the most lucrative sales channels and create strategies to maximize your investment.
For example, will you sell online, from home, or start a brick-and-mortar store?
Your answer determines your marketing strategy.
Financial plan
Your financial plan is essential for funding as it tells you how much cash you’ll need to start and run your business.
It also answers important questions like:
Choosing the wrong location is one surefire way to go out of business, especially in specific industries that rely on ‘walk-in’ street traffic, like food or retail.
But despite common belief, expensive town centers and congested high streets are only sometimes the best business location. Easy road access, parking, and proximity to public transport often distinguish between success and failure.
And every business location must:
Each of Virginia’s 95 counties and 38 independent cities have desirable business areas and district zoning laws. So, research your ideal location on the Virginia Association of Counties website, where you’ll also find your county planning department’s contact details for permits and building code regulations.
You can run a home business throughout Virginia, but each county has specific licenses and permit requirements.
Shared workspaces like Gather provide business owners with office space and networking opportunities. The facilities are excellent, affordable, and can accommodate small, medium, and large teams.
The answer might seem obvious. Right? But many businesses evolve from one to the other or use both.
So, which are you?
The last option is often the cheapest and least risky, but you’ll need to do the following:
But even non-e-commerce businesses should create some online presence, like a Google My Business listing and social media presence, to help promote your location.
Next, you’ll need a name.
Your business name must be memorable and suit your branding and advertising strategies. It should allow you to expand into other markets, fit local SEO, and be available as a domain.
Thankfully, there are steps to choosing the perfect business name and securing it in Virginia:
Now that you have your name, you can choose a business structure; don’t worry, I’ll explain why and how faster than a Virginia summer!
When you start a business, you must choose a structure; the four that suit most SMBs are a sole proprietorship, a partnership, an S corporation, and a Limited Liability Company (LLC).
Choosing the proper business structure is essential because it determines how you register your business, start-up, running costs, and tax filing obligations.
Here’s a quick rundown of all four:
Taxation is a big factor when considering business formation and structures. Here are some factors to keep in mind:
A sole proprietorship isn’t a separate legal entity; the person who owns it is the business, making them liable for all debts and litigation cases.
A general partnership is like a sole proprietorship with more than one person. A limited partnership is a separate legal entity that provides liability protection. Partners (called members) pay taxes on their income, determined by their percentage ownership or as per the LP’s operating agreement.
An S corporation avoids corporate tax and double taxation by electing the flow-through tax system, passing all profits and losses to its shareholders (owners), who pay them on their tax returns.
As a legal entity, shareholders get limited liability and can take extra payments as dividends, reducing their tax bill. To choose an S corp, you must first form a corporation or an LLC.
LLCs are separate legal entities protecting their owners’ assets from debt or litigation.
There are 2 types:
As LLCs exist by state statutes and regulations, check with Virginia’s laws and policies before forming your business.
All structures have tax advantages; your choice can depend on whether they suit your business and are worth any extra-legal obligations and costs.
Simplicity is the primary tax advantage for sole proprietors as they use the flow-through tax system, meaning profits and losses pass to the owner, who files them on their tax return.
LPs and GPs are flow-through tax entities, and members pay tax on their returns. However, limited partnerships have an added advantage as they avoid corporate double taxation while providing liability protection.
S corps also pay tax as flow-through entities, avoiding corporation tax.
But an S corp offers members further tax advantages:
The primary tax benefit of an LLC is the flow-through tax system, avoiding double taxation and members paying tax rates relative to their income.
LLC members can further reduce their tax liability using tax deductions for business expenses and the cost of forming the business.
Regardless of which structure you choose, most businesses need to set up the following to run smoothly:
Most small businesses need business banking, credit card, and accountancy services to receive and make payments, credit lines, and end-of-year tax returns.
Financial institutions vary on approval requirements, but most require the below information, and all can help you in the following ways:
A business checking account can help:
To open a business checking account, you might need articles of incorporation, business licenses, a doing business as (DBA) certificate, an employer identification number (EIN), and identification documents.
Some banks only allow non-business entities (like sole proprietors or general partnerships) with an EIN to open a business account.
Business credit cards provide essential temporary funding for many small business owners, enabling you to purchase equipment and supplies to trade when your cash flow is slow.
To get a business credit card, you’ll need the following:
There are excellent accounting software systems for SMBs that help maintain daily bookkeeping needs and reduce accountancy costs. However, many businesses need professional help to comply with quarterly and end-of-year tax requirements.
Few start-ups begin without funding; whether bootstrapping, commercial, or a grant, most need support. The excellent news is Virginia State offers small business funding and county grant/loan incentives.
You’ll need a business plan with a comprehensive financial section to apply; after that, each lending institution varies; let’s look at your options:
Bootstrapping is how many first-time entrepreneurs finance their business; it includes personal savings, loans from friends or family, home equity loans, or credit cards.
Lenders, like local banks and credit unions, are the traditional first stop for many small businesses. But you’ll need the following 4 credit c’s to get a loan:
The problem is many start-ups don’t have all the credit Cs. But that’s where the next option could help you.
The SBA supports SMBs by acting as a loan guarantee for your business with select lending institutions that match your business needs.
You can learn all about backed loans on the SBA website or research the following two Virginia SBA loan providers.
VCU provides fixed and variable low-interest small business loans for equipment, commercial mortgages, credit lines, and credit cards.
Many Virginia state and country grant and loan options help start-ups and existing business expansion of all sizes and industries, so research your location.
Virginia’s small business loan providers:
Small businesses need insurance to protect themselves against lawsuits, vehicle/property damage, theft, and commercial losses caused by natural disasters, floods, or fires.
Most are optional; some are not. For example, you don’t need commercial auto insurance in Virginia, but you must have workers’ compensation insurance if you have employees.
Here are the 5 most important small business insurance policies:
Most small businesses need permits and licenses from state and federal agencies.
The great news is Virginia doesn’t have a state-wide business license. Instead, it has permit and license requirements for specific occupations and professions.
Those include:
The average cost of a Virginia business license is $100, but figures vary by county. Permit requirements and fees also vary depending on your location and profession, so either contact your county clerk’s office or check the Virginia government websites:
The Commonwealth does, however, require new businesses to adhere to the following regulations:
The 5 taxes most U.S. small businesses pay are income, estimated, self-employment, employment, and excise tax.
Many businesses pay them at a federal, state, and local level.
Now I don’t want to be “carrying the mail,” but here’s what you need to know about the federal, state, and local taxes:
Self-employed individuals must pay the IRS self-employment (SE) tax and federal income tax.
You’re self-employed if you:
Run a business as a sole proprietor, an independent contractor, a member of a partnership, a multi-member LLC taxed as a partnership, and a single-member LLC owner taxed as a sole proprietor.
Self-employment tax is the same as Social Security and Medicare taxes (payroll) withheld from an employee’s pay but for business owners.
Federal income tax is progressive and increases with your income. Self-employed individuals must pay an estimated quarterly tax and file an annual return.
Businesses with employees must withhold income and payroll taxes (Medicare, Social Security, and unemployment taxes) from their payslips and pay their equivalent share.
For more information on federal tax, visit the Internal Revenue Service website.
And if the Federal weren’t enough, state or local governments often levy additional taxes!
Virginia specific regulations
Business taxes you might need to pay in Virginia include the following:
And all pass-through business structures must file an annual income tax return on Form 502. For more information, visit the Virginia state tax website.
Counties also charge taxes at the local level, such as sales, and use business tangible personal property and real estate taxes.
Contact your county’s Commissioner of Revenue’s Office to learn more about local taxes.
Many factors influence your small business’ success, no more than hiring the right team.
The right players must be qualified and believe in your business culture. When everyone shares values and works towards the same goals, it creates a happy, productive workplace. And that can mean greater profitability.
“Businesses often forget about the culture and suffer for it because you can’t deliver good service from unhappy employees.”–Tony Hsieh, CEO of Zappos.
Your team also influences how your customers, partners, and investors see your business. Finding them requires understanding your business needs and a structured hiring process.
People are the backbone of the business
When you start a business, it’s wise to surround yourself with people who bring extra skill sets to learn from their experiences, such as fellow business owners, experienced employees, and a local accountant.
Steve Jobs put it this way:
“It makes little sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”
These people help you navigate the tricky waters of finance, marketing, and other business essentials. They can also provide a fresh perspective on your ideas and tips so you avoid costly mistakes.
Virginia Commonwealth is an “at-will” employment state, meaning you can end your employee’s contract for any reason (except illegal ones).
However, you must comply with the Fair Labor Standards Act, the Occupational Safety and Health Act, and Virginia’s employment laws regarding termination.
Virginia also enforces a right-to-work law, so you can hire employees without unionizing, but you must comply with all state/federal laws and payroll regulations.
Virginia payroll regulations include the following:
The Commonwealth promotes employment by offering programs to help small businesses find qualified employees, financial help, and training to attract and keep the right people.
Here are two that could help you:
Not all small business owners are ready to hire employees, but that doesn’t mean you must run your business alone. You can hire contractors to help with daily business operations.
For example, you can hire an accountant on retainer to help manage your finance and tax compliance or an online marketing consultant to help promote your business across multiple platforms.
The advantages of hiring contractors over full-time employees are flexibility and cost. You can hire on a need-only basis and avoid payroll tax and employee insurance.
Virginia state allows business owners to hire employees and contractors to run operations but has strict laws regarding the misclassification of employees (saying an employee is a contractor). Breaking them can cause penalties and fines.
Business owners hiring independent contractors must inform the Virginia New Hire Reporting Center within 20 days of employment.
Your business might be the next Airbnb, but your target audience will only know with a branding strategy.
Marketing includes any activities used to sell your services or products. Advertising, like your store signage, is the most common.
Other activities include:
While they’re all different, they serve one purpose: making a sale. But remember, “marketing isn’t sales; sales result from effective marketing.”
Not all businesses need the same marketing strategies; here are six of the best:
Invite customers to opt into a mailing list or newsletter
Opt-in email marketing is as old as the hills and still the most effective, with an average ROI of 41% on every dollar spent. It works because you only email people who subscribe to your list, so they want what you’re selling.
Over time, your opt-in marketing creates a community that trusts your brand, taking sales out of the equation.
Consider making special offers to attract your first customers
Every new business needs ways to engage its audience’s attention and convince them to cross over and try its brand, and who doesn’t love a special offer or a freebie?
Some ways to lure them in:
Special offers can attract your potential customers and change their shopping habits. Once they choose your business, track which offers they used and what they bought to target them again.
Look for local businesses or brands to collaborate with
Business/brand collaboration is when two or more relative companies combine their knowledge, technology, and marketing to extend their customer reach.
A relative business is one within your marketplace rather than in direct competition. For example, a landscaper could combine with a garden center to engage an audience needing their services. In return, the landscaper recommends the garden center to all their clients.
It’s a win-win as both businesses thrive by helping one another.
You can find businesses to collaborate with by registering with your neighborhood business associations and local chamber of commerce. And researching local business listings (Google My Business) and social media groups.
Invest in word-of-mouth (happy customers attract each other)
Word-of-mouth (WOM) marketing encourages customers to promote your business based on their positive experiences.
When you leave a positive product review on Amazon or recommend a local business to a friend, that’s WOM.
It’s a proven way to build a loyal community of customers who’ll support your business.
How to use word-of-mouth marketing:
Pay attention to online reviews; ask happy customers to review you
I mentioned this a second ago, but reviews deserve more time because of their effectiveness.
You know your products or services are the best available, but potential clients don’t, so your job is to encourage reviews to ensure they do.
Here’s why:
Reviews are how you’ll create a positive reputation and trust with your target audience. If you work to get them, they’ll work for you.
Create unique, helpful content to showcase your activity
Content is anything that promotes your business, like writing, visuals, and audio. You can use them on your business website, social media posts, YouTube videos, and physical marketing materials.
Your content aims to engage your target audience and turn them into clients by resonating with their emotions and convincing them your brand meets their needs.
And you do that by providing free valuable content that, over time, makes people trust your brand.
Now that you’ve completed all the steps, it’s time to open your doors and start managing your dream Virginia business.
Here’s what to do next:
A launch event aims to introduce your business’s products/services to your community and target audience.
Your event should reflect your brand’s values, in visual style, location, and context.
Even though it’s not a sales event, launch parties are excellent for meeting prospective clients and marketing partners. They also encourage people to talk about your business, especially on social media.
How to plan a launch event:
You could land your first sale during your launch event by offering guests enticing incentives and special first-sale offers.
But don’t stress if you don’t because sales often follow when you identify your target audience, validate your idea, market it correctly, and take advantage of the many Virginia state business incentives.
That depends on your business structure. For example, you’ll pay a $100 filing fee and a $50 annual registration fee to form an LLC.
Hard, no; time-consuming, yes. To start your business in Virginia, choose your entity, register with the Virginia State Corporation Commission, and get the relevant tax ID number, licenses, and permits.
Sole proprietors can use their Social Security Number (SSN) and do not need to register their business unless using a Doing Business As (DBA).
Visit the BusinessOneStop, the Virginia Economic Development Partnership, and the Virginia gov websites to find everything you need to start a business in Virginia.
That depends on your chosen business structure and location; for a legal entity, like an LLC, follow these steps:
2. Select a business entity and register with the State Corporation Commission.
4. Hiring employees, register with Virginia Employment Commission
5. Register with Virginia’s Workers Compensation Commission.
6. Register with the Virginia Department of Taxation.
7. Regulated businesses register with the VA. Dept of Professional Occupational Regulation.
No, Virginia doesn’t have a state-wide mandatory business license, so check with your location’s county clerk’s office.
Virginia requires all business entities to have a state-registered agent with a physical address available during regular business hours.
Virginia ranks 11th for the lowest tax rates in the USA, with its local and state taxes averaging 5.75%.
However, Virginia’s business incentives, low registration, and annual fees make it an attractive destination for business owners.
At first, starting a business in Virginia might feel like climbing a mountain, but your journey has already begun, and everything you need is in this post.
Now take your next steps:
You’ll soon join the other 795,000 small businesses in Virginia.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Products
Resources
@2024 Copyright Tailor Brands