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Virginia has more than 780,000 small businesses, employing more than 1.6 million people, nearly half of the state’s workforce. This makes it a powerful and receptive market to start a business. But there will always be state-specific hurdles to jump when it comes to starting a business, as well as many advantages and disadvantages. This step-by-step guide will walk you through the pros and cons of starting a business in the Commonwealth of Virginia. Here’s what you have to do.
- Choose a business idea
Choosing a strong business idea may seem like the easy part, but it’s only 1% inspiration and 99%, you know. It’s not just about deciding which product or service to offer, it’s about understanding both your customer and your market.
- Know your customer. The best business ideas are based on a clear vision of who is buying from you. To gain this level of insight, you can conduct a competitive analysis of other businesses in Virginia, examining products or services offered in states similar to yours. You may also find it useful to research potential future clients and research company trends.
- Predict your profit. Before investing time and money in a new business, make sure your investment is worthwhile. Some variables can indicate whether this is true, including price, business model, distribution center, and the costs you will incur to develop your business and develop your product. The most important thing is your break point. How many products or services would you need to sell to pay your bills?
- Name your business
Naming your new business in Virginia is like introducing yourself to the state, so it’s one of the most important decisions you’ll make as an entrepreneur. Once you’re registered, it will affect many other critical decisions, including branding, marketing, and customer retention. Your name will embody all of your identity, so it is an important decision for you early on. Here are some things to consider when choosing a business name:
- Is this unique to Virginia? All business names in Virginia must be unique – you can search for all business names using the Virginia State Corporation Commission’s Professional Information System.
- Is the domain name available? Your company’s online identity is almost as important as, if not more than, its name. Therefore, you should make sure that whatever name you choose will be as logical as the URL. Is there a domain name that matches your business name? Are there other domains close to your business name? If nothing is available that matches your business name, or if other businesses have similar names and URLs, you may want to rethink your name choices.
- Is it memorable? In general, a good business name not only expresses the work of your company in a clear and honest way, it is also attractive, so that your customers can remember it and have a good feeling about it. him.
- Does it include the required suffix? If you are forming an LLC in Virginia, your company name must contain the phrase “limited liability company” or “limited liability company” or its abbreviation (LC, LC, LLC or LLC.).
Use a DBA in Virginia
If you want to add a DBA (“doing business as”) or title to your business in Virginia, also known as a business name, you will need to register with the State Corporation Commission, and you can do so . online or in paper. . type. The process depends on the region, but expect to fill out an application and pay a $10 application fee. Unlike a trade name, a pseudonym, which DBA falls under, does not have to be unique.
- Create a business plan
Before starting a business, you must have a business plan. Think of it as a basic road map that outlines your steps to success. A solid business plan should include the following:
- A detailed description of the company
- Market research
- Summary of organizational structure and management
- List of products and/or services
- Customer segmentation reports
- Marketing plan
- Logistics and service planning
- Financial planning
If you need a start, here is a free business plan template you can use as a solid foundation to build and create your own. If you need inspiration, here are some examples of good business plans.
- Choose a business plan and get started
Once you’ve decided on a name and established a business plan, you’re off to a good start. Perhaps one of your most important choices is your business structure, which will determine how your business is taxed, how easy it is to lock in an investment, and how liable you will be if things go wrong. do.
Types of business entities offered in Virginia include sole proprietorships, which are owned by one person; relationships with two or more people; companies or legal entities and their owners; and a limited liability company (LLC), which consists of a corporation and partnership.
- Private business. If you don’t connect or create a relationship, you only have one owner by default. This means that your business is yours alone and cannot be separated from you. As with partnerships and limited liability companies, they are taxed as personal income and only once a year, rather than both partnership income and personal income.
- Company LLC. If you want the convenience of running a business as a sole proprietor, but also want many of the legal protections that a corporation has, an LLC may be for you. In this case, your assets have a level of protection against creditors in case of bankruptcy and court cases if someone tries to sue you.
- C corp. If you are looking to set up your business as a separate company, you will need to set up a C corporation. These require more paperwork and take more work and money to start and maintain over time, but they provide better asset protection and give you a unique opportunity to raise money from equity.
The process you decide on for your business will determine its tax rate. All Virginia corporations are taxed at a rate of 6% of taxable income and must pay an annual filing fee ranging from $100 to $1,700. If your business is a wholesale business that sells certain products, you will also pay state sales tax, which varies depending on the type of product and whether it is sold at a distance, in a store. , or for consumption (such as food, alcoholic beverages). drinks or tobacco). For more information on Virginia business taxes, visit the official Virginia Tax website.
Get an EIN
Once you’ve decided how to register your business in Virginia, you’ll need an Employer Identification Number (EIN). This nine-digit number works similarly to a Social Security number, but the IRS in the state of Virginia has assigned it to a new entity for tax purposes. An EIN makes it easier to file federal and state taxes, and can help secure lines of credit and business credit cards.
Obtaining an EIN in Virginia is part of the statewide registration process. To incorporate your business in Virginia, you will need to file a Articles of Incorporation (for corporations) or Articles of Association (for LLCs) with the State Corporation Commission. Here’s what you’ll need to register your business with the tax authorities once it’s set up:
- Your business name and legal address
- The name and email address of the person registering online to create an account, or account information, if you have one
- Your federal EIN number
- Your North American Industry Classification System (NAICS) code, found here
- Your company type and tax form
- Name, email address and phone number of the main contact person and employee of the company (these can be two different people)
By registering online, you save time by creating an online service account that you can also pay taxes for your business.
- Obtain business licenses and permits
In Virginia, the only permit or license that any business must obtain at the state level is a sales tax form, which can be obtained here. In addition, some artists and customers may require other specific licenses and permits, which you can review here.
- Explore insurance options in Virginia
As a business owner, there are bound to be situations that are beyond your control. For all of these and more, it’s worth getting professional insurance. This helps protect your business and assets in Virginia if the unexpected happens. The State Corporation Commission has a handy PDF for determining what type of insurance your business may need. A few types of insurance in Virginia include:
- liability insurance. Protects your business against any lawsuits resulting from accident, injury or negligence.
- commercial property insurance. Covers costs related to fire, weather damage or theft.
- Commercial vehicle policy. Cover any vehicle you plan to use in your business.
- Worker’s Compensation Insurance. Workers’ compensation insurance covers labor disputes, employee injuries and workplace crimes. This type of coverage is mandatory in Virginia.
- professional indemnity insurance. Professional liability coverage protects manufacturers, retailers, distributors and dealers against lawsuits related to dangerous products.
- Cyber Liability Insurance. Covers your costs if your Virginia business has a data breach.
- umbrella cover. Extends coverage beyond the policy limits of other insurance plans.
- Understand financial matters
Starting a business costs a little money up front, but it will be worth it when you start seeing the profits coming in. In addition to insurance, you will need to rent space for a shop or office, pay to register a domain and have a website designed, place advertisements in appropriate publications and perhaps even billboards, and invest in hardware and software. You may also want well-known professionals with expertise such as lawyers and accountants, for example, to do this important work for you. It can really add up, but luckily there are quick and accessible options for seed money.
- Your market
When you’re ready to introduce your Virginia small business to the world, you’ll need a great business plan. Here are the main things to consider:
- Market research. If you understand the market, you will have a better idea of the wants and needs of your target customers.
- Advertising and promotion. Whether you post ads yourself or hire an advertising agency, you may need paid advertising to get the word out about your product or business.
- Social media. These days, social media is essential to the success of any business or brand, and managing a social media profile is a full-time job. This can include promoting your product or service across different channels including Facebook, Instagram, TikTok and YouTube to reach different audiences.
- Public relations. Following friendly media who respond to your message and can write about you in a positive way can increase visibility organically.
New business and customer retention. Good customer relations are always key, so make sure you keep them coming back and telling their friends, family and colleagues about you.