Following up on this post regarding different forms of tax treatment for LLC’s, I thought it would be helpful to briefly discuss who can elect S corp taxt treatment.  Because of all of the benefits of S corp tax treatment for Virginia LLC’s and Virginia corporations, the IRS has certain rules regarding who may take those benefits.  If you’re a Virginia LLC or Virginia corporation, you may elect S corp tax treatment:

1. If you file Form 2553 with the IRS within their time deadline (generally within 2 months and fifteen days of formation or the beginning of the year);
2. If you have no more than 100 shareholders (owners);
3. If all of those shareholders are individuals, estates, or certain exempt organizations;
4. If all of the shareholders are US residents (no nonresident alien shareholders allowed);
5. If the company has only one class of stock (meaning every shareholder/owner has equal distribution rights);
6. If the company is not engaged in one of the named ineligable types of businesses (banking, insurance, etc.);
7. If your corporation or LLC has or adopts certain calendar year tax years; and
8. all of the shareholders/members consent to the S corp tax election.

If your company satisfies all of those requirements, then you can enjoy the benefits of S corp taxt treatment.  The Form 2553 that you file to elect S corp tax treatment can be found at the IRS website here and the instructions for the Form 2553, which have more details on the requirements and process, can be found here (both forms open as a pdf).

How do you find out whether the name you want to use for your new Virginia LLC or Virginia corporation is available?  There are two ways:

1. You can check online by accessing the Virginia State Corporation Commission’s online database (called the Clerk’s Information System) located at http://www.scc.virginia.gov/division/clk/diracc.htm (look for the blue button in the middle of the page).  Check the "Name Search All Entities" box and then enter in potential names you would like to use; or
2. Call the Clerk’s Office at 804-371-9733 or toll free (if you’re in Virginia) at 866-722-2551 and ask the Clerk to check for you.

Look for the exact name or a confusing similarity with an existing Virginia LLC or Virginia corporation to avoid having your Articles returned to you.

When you form a Virginia LLC or Virginia corporation, you must name a registered agent and registered office.  Why?  The answer is because of the nature of corporations and LLC’s as separate entities.  In order to deal with these separate entities, we need to connect a real, breathing person to them for official purposes.  This person is the registered agent and all corporations and limited liability companies registered in Virginia are required to have a Virginia resident agent on record with the Virginia State Corporation Commission. 

A registered agent is an individual that receives "official" mail and deliveries on behalf of a corporation or limited liability company. "Official" mail and deliveries generally means communications from either the Virginia State Corporation Commission or from a Court through service by the county sheriff (of a lawsuit, garnishment for an employee, etc.).

There are restrictions on who can be your registered agent and where your registered office may be located.  A shareholder or LLC member may be a registered agent.  A licensed Virginia attorney may be a registered agent.  Your registered agent needs to be located in Virginia at a location that has a street address and where the agent is generally available during business hours.  This means P.O. Boxes, UPS Store boxes, and the like cannot serve as your registered office. 

I serve as the registered agent for more than a hundred Virginia companies and would be happy to discuss this inexpensive service ($125 per year) with you.  Check out my Virginia registered agent website for more details.

Yes!  If you operate a charity in Virginia, you must first register with the state before soliciting contributions.  The Virginia Code requires that before you start soliciting funds from Virginia residents you first register with the state and pay the required filing fee. 

If you’re planning on soliciting charitable donations from more than one state, however, you can file a unified registration statement to save time.  To learn more about unified registration statement, you can visit this site.