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If you're in business or thinking of
starting a business in Virginia, you should form a Virginia limited liability entity for your
Virginia business that will protect you from potential liability as well as provide you
with tax benefits that will allow you to keep more of the money you make.
If you're unsure of whether it is worth forming a Virginia corporation or
Virginia limited liability company, then read The Top 5 Reasons To Incorporate
or Form An LLC.
If you know a corporation is right for you
and want to get started now, please click here to see how quickly and easily you can be up and running with your new Virginia corporation.
This page will explain the process of
forming a Virginia corporation.
Forming a Virginia corporation is
deceptively simple which leads some entrepreneurs to become incorporation
do-it-yourselfer's or to use non-attorney document prep service or their accountant. If you
ask a document prep service or even other lawyers that do not practice corporate
law in Virginia, you may be told that all you need to do is pick a name and
submit articles of incorporation on the State Corporation Commission's
fill-in-the-blank form. However, there is more involved to setting up
a valid Virginia corporation that will protect you when you need it most.
The value of a corporation is in the
limited liability it provides its owners (aka "shareholders"). In order to
enjoy that limited liability, though, the corporation must be set up and run
properly. Failure to do so can result in revocation of the corporate
charter or an attempt by corporate creditors to "pierce the corporate veil" and
attempt to hold the shareholder's liable for the corporation's debts.
To properly form a Virginia corporation,
Pick a name that is available and that
does not infringe upon the trademark rights of anyone else. All corporate
names must be different than the name of any other corporation or LLC in
Virginia and must end in "corporation," "incorporated," "company," "limited," or
an abbreviation of these such as "corp.," "co.," or "inc." While you can search the
Virginia State Corporation Commission records for name availability, it is
important to know that approval of your name by the State Corporation Commission
is not legal trademark clearance of your rights to use that name. A
separate search should be done to make sure the proposed name does not infringe
on someone else's trademark rights. This can be done at the United
States Patent & Trademark Office website. When choosing a corporate
name, it's also a good idea to see whether the domain name is available.
Prepare and file the articles of
incorporation with the Virginia State Corporation Commission. The articles
must contain specific information required by the Virginia Code (see
13.1-619 of the VA Code) as a bare minimum but should often contain more
provisions dealing with indemnity and other issues.
Nominate a Virginia registered agent for
the corporation. A registered agent is the person designated on the public
records as the "go to" person for official communications to the corporation.
Typical examples of these "official communications" are letters from the
Virginia State Corporation Commission and service of process (lawsuits, employee
garnishments, etc.) from the county sheriff and process servers. Fore more
information about Virginia registered agents, and our registered agent services, visit our "Registered Agent" page.
Draft by-laws for the corporation.
This is the step most often skipped by do-it-yourselfer's. All Virginia
corporations are required to have by-laws (see
Virginia Code 13.1-624). The by-laws are the "rules" by which the
corporation operates and should be specific to your business. They must
also be adopted correctly.
Prepare offers to purchase stock for all
shareholders, setting forth the price and number of shares to be purchased.
Have an Organizational meeting and prepare
meeting minutes. Once you have received the Certificate of Incorporation
back from the Virginia State Corporation Commission, all of the shareholders
should have an organizational meeting to adopt the by-laws, approve the
articles, nominate and elect officers and directors, and approve other important
actions to be taken by the corporation, such as banking resolutions and
insurance purchases. These important organizational documents are evidence
of the proper formation of the corporation and its treatment as a separate
entity, all important if a future claim is made against the corporation and/or
Obtain an Employer Identification Number
("EIN") from the IRS and decide whether to elect to be taxed as an "S"
Corporation. The default form of taxation for corporation is the "C" Corp.
or "double taxation" structure under which corporate revenue is taxed to the
corporation and then distributions to shareholders are taxed again at the
shareholder's personal level. Most start-up businesses benefit from making
the "S" tax election.
On an ongoing basis, the corporation
should be sure to have annual shareholder and director meetings and to file the
required annual report with the Virginia State Corporation Commission on time.
If you are comfortable doing all of the
eight steps above, then you may want to handle the incorporation work yourself. However, if you have questions that you may not know the answer to, such as:
What do the by-laws need to contain and
where can I get by-laws from?
How do I determine the number of shares
the corporation should have? What are the potential effects of a certain
number of shares?
How do I elect officers and directors for
the corporation? Is there a minimum number of each that I need?
Do all shareholders have to pay cash for
their shares? How do I determine the price for shares of the corporation?
What paperwork is needed to prove ownership?
Does my corporation need to issue share
certificates? Where do I get share certificates? Is there any reason
for the corporation to hold shares back?
How does the corporation properly call a
meeting? How does it properly give notice of a meeting and who should get
What resolutions should be adopted by the
directors during the organizational meeting and which should they not?
How should I sign corporate papers?
Is it true that if I sign incorrectly that I can lose my limited liability? (The
answer is a most definite "Yes")
Can shareholders demand to see the
corporation's financial records? How can they do this and how must the
What is an annual report? Who
receives the annual report and what are the steps taken to timely file it?
then you may want to use our incorporation
services. For a low flat fee of $750.00, which includes the filing fee due to the
State Corporation Commission, we will:
Answer all of the ten questions above as
well as any other questions you have concerning the formation sand operation of
Help you with selecting a name for your
Prepare the Articles of Incorporation
File the Articles of Incorporation with
the Virginia State Corporation Commission
Prepare the By-Laws for the corporation
Prepare the offers to purchase stock for
Prepare all of the Organizational
documents and meeting minutes
Host the Organizational meeting and
execution of all documents (assuming you're in Central Virginia and can visit our office)
Give you a customized corporate minute
book containing all of the documents, including the Certificate of Incorporation
and share certificates
Provide you with instructions on how to
immediately obtain your IRS EIN and
instructions on how to elect "S" tax treatment.
Serve as the corporation's registered
agent for the first year (renewable, if you like, for subsequent years)
This service is available to you
regardless of where you are located. We work with entrepreneurs and
business owners all over Virginia, across the United States, and
internationally. Other attorneys charge $1,000, $1,500, or more for the
same service, often prepared by a paralegal or secretary. If you choose us
to form your Virginia corporation, all of your documents will be prepared by a
Virginia lawyer. We provide this Virginia corporate formation work for the low price of $750 because we prepare many incorporations, are very efficient,
and utilize technology effectively to serve you better. If you have any
questions about our services, call me at 804-290-7990 or send an email to
Ready to get started? Click here to form your Virginia
corporation quickly and correctly.
Need a Virginia Registered Agent? Check out
our Virginia Registered Agent page.
Call me today at 804-290-7990 for
Law Office of
Bernard C. Dietz, PC
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