One question I get a lot is: "what is the correct order of things to do when starting a new business?"  While there is no perfect one-size-fits-all answer, there is a generally accepted way of doing things. 

Here is the order that I typically recommend:

1. Form your LLC or corporation.  The reason to do this first is that all of your future agreements, whether they are leases for commercial space, contracts with suppliers, or your initial customer contracts, should be in the name of your entity.  Not sure whether you need to form a LLC or corporation?  Then read this article first: http://www.dietzlawfirm.com/5reasonstoincorporate.htm.
2. Obtain a tax ID from the IRS.  You’ll need this to open a company bank account and you can’t apply until you have your LLC or corporation approved by the State Corporation Commission.
3. Open a bank account in the name of your LLC or corporation.  NEVER comingle personal money and business money - it’s a bad idea for many reasons.
4. Get your county business license.  Every business needs to obtain a business license when starting out - check with your county or city government on how to get this done.
5. Get your state tax payment information submitted.  If your business involves collecting state sales tax from your customers, for instance, you will need to comply with the Virginia laws on remitting sales tax to the state.

When you follow the order above, things should flow smoothly as your new business starts. 

I have discussed how to form a Virginia LLC and Virginia corporation before, which is definitely a hot topic.  But I also get questions from company owners regarding how to properly "shut down" or dissolve their limited liability company or corporation. The process is similar for both types of entities but has some differences worth noting.

If you would like to shut down your Virginia LLC, the first step is to wind up the affairs of the LLC.  This involves collecting all of your outstanding accounts receivables (money that is owed to you), paying all of the LLC’s bills (money the company owes to others - wages, vendor invoices, rent, etc.), and distributing the excess (or profits) to the LLC members per the terms of your Operating Agreement.  Once that is done, the LLC files Articles of Cancellation with the Virginia State Corporation Commission.  The Virginia SCC will process the Articles and send back a Ceritificate of Cancellation stating the effective date of termination.  Once you have that, the LLC is done.  Be sure not to do any business under the LLC name after that point.

If you would like to shut down your Virginia corporation, you start by filing Articles of Dissolution with the Virginia State Corporation Commission.  Once you have filed Articles of Dissolution, the only activity allowed to be done by the corporation is the "winding up" of its affairs.  Like with an LLC above, this means amounts due to the corporation are collected and bills are paid.  Once this is completed, the corporation files Articles of Termination with the Virginia SCC that end its existence.  The Virginia SCC will then return a Certificate stating the effective date of termination to you and the corporation no longer exists.

The above information just relates to the organizational issues involved with terminating your existence.  There are also tax issues that must be dealt with as part of this process, which a good CPA should be able to help you navigate.

Forbes Magazine’s latest issue proclaims Virginia as the #1 state for businesses for the second year in a row.  The article states that Virginia finished in the top 10 in four of the six main categories that Forbes tracks, with a pro-business regulatory environment, strong labor conditions, great growth prospects, and a high quality of life.

You can read all of the Virginia ranking specifics on the Forbes web site .

Every once in a while I am asked questions regarding the possiblity of converting a Virginia corporation to a Virginia LLC.  Corporate owners sometimes want the benefit of the relaxed requirements of operating an LLC (no required annual meetings, no required annual report, less expensive SCC renewal fees, etc.) but don’t want to go through the hassle of dissolving their corporation and reforming as an LLC because of the expense, difficulty, legal risks, etc. 

The answer is that you may convert your Virginia corporation to a Virginia LLC without shutting down and starting all over (see VA Code section 13.1-722.9 if you don’t believe me).  To accomplish this, you must file Articles of Conversion which need to contain a detailed conversion plan for your stock (how you’re going to convert the stock of your corporation into membership units of the LLC).  You must also include Articles of Organization for the resulting LLC as an attachment. It’s a bit complicated to get all of these documents done correctly, so you may want to use the services of an attorney that has done this before to get it done properly and efficiently.

One of the nice benefits of converting rather than shutting down and forming a new LLC is that under the Virginia Code (section 13.1-722.13), there was no interruption of the company (and therefore your limited liability never lapsed).

One thing to note, as well, is that it works the other way, too - a Virginia LLC can convert to a Virginia corporation (see VA Code Section 13.1-1010.4). Not sure why you would want to do that, though…