Choose a Business Type and Unique Business Name For LLC in Virginia

Decide on a Business Structure

What types of companies can I register in Virginia?

When starting a business, you have to decide on its structure. If you look at the options available to you, it can get quite confusing as to what is right for you. So, how can you choose what works for you? To make this decision straightforward, we have covered the main forms of entities as follows:

Sole Proprietorship

Under this structure, you and the business are the same and there is no separation between the two. If you are alone in a business operation, the law generally regards you as a sole proprietor. There are advantages that stem from this ownership. For one, you have control over the decisions and can make them without having to consult other people. Secondly, you enjoy all the returns. On the downside, you are personally liable for any debts that accrue from the business. If anyone opts to sue you or you rack up debts from suppliers, they can come after what you own. That means that your home and other assets are up for grabs. When starting a business, this liability may not seem like a big issue. However, once you start making good money and have invested in assets, this structure can come to haunt you.

Partnership

If you want to go fast, go alone, and if you want to go far, you should go with others. This mantra holds well in this structure where two or more people come together to pursue a business venture. The principle here is simple. You pool your resources and whatever comes of it is distributed among the partners. As per the law, when two or more people work on a business together, they become partners. That means that if they generate profits or suffer losses, these are shared consequences.

Partnership can be general or limited. In general setups, the partners have no protection. If any of them makes a mistake that costs them or gets them sued, they all pay for it. They can thus lose their assets. In a limited setting, people are only liable for their stake in the business. They can only lose that much, making this the preferred setup where protection is necessary.

To make the running of this entity easy, partners should come up with an agreement. It should cover the management, sharing of profits and losses, the liability of the partners and other matters that are detrimental to the success of the venture.

Corporation

As we have seen, the lack of separation can greatly cost the business owner. A corporation comes in to solve this headache in a few ways. For one, business owners come in as shareholders, rather than partners. Their shares determine how liable they are in the event that they get into legal troubles. That means that what they personally own will not come to harm. This setup is also continuous and can run for decades on end such that the owners can leave their shares to their dependants over several generations. Also, transferring of shares is quite easy.

Given the benefit of this setup, you might wonder why not many people opt to go down this road. Well, some shy away owing to the paperwork involved, as well as assumptions that the legalities can get in the way of business.

In the state, there are two corporations you can form: C and S. C structures work best for publicly traded companies as they do not limit who can get a share in the company. These shares are easy to sell. On the downside, shareholders pay taxes on two levels. S structures, on the other hand, are more like partnerships and have tax shelter opportunities. On the downside, there is a limit as to how many people can join such a setup. Also, the members must be US citizens, which pushes some people out. So, what other option remains?

Limited Liability Company (LLC)

And finally, we get to the structure we will help you start throughout this article. From the above examples, you have seen that minor disadvantages can spell doom for the investor. An LLC comes in to solve most of these issues.

It gives you the benefits of a corporation in that you can decide how you pay taxes, thus limiting your expenses. Also, the liability of the members is at a low such that personal assets remain safe. Additionally, this structure can continue in perpetuity and can be the legacy you leave behind. As much as you need to register this entity, the required processes are straightforward and do not need much formality.

How an LLC and a Corporation are Different?

LLC vs. Corporation

So, what should you choose between an LLC and a corporation when it comes down to it? Let’s look at these choices in a few different aspects.

• The first is liability. Both options offer their members/ shareholders limited liability when it comes to business-related debts. That’s a win for both cases.
• The second option is the tax structure. Under an LLC, you can choose how you will pay your taxes, enabling you to benefit from pass-through options. Corporations on the other hand get taxed on their profits as well as their owners’ dividends.
• The last consideration is how much work it takes to keep the business going. An LLC has few formal requirements and as long as you pay your taxes and file the necessary filings, you should be fine. Members can decide on how they want to run the business without facing intrusion from the authorities. That is not the case with a corporation, where members must hold meetings to comply with the law.

Why is LLC the best option for fast company formation?

We have covered most of the reasons why people opt to form LLCs compared to other business entities. However, we can break them down as follows:

• LLC owners write the rules. You get to choose the rules, devoid of government intrusion, as long as your activities are legal
• Less formality. You do not have to keep up with recording minutes and holding meetings to be compliant
• Avoid double taxation. You can choose how you will file your returns and can change your structure to fit that of other entities. Also, you will not pay taxes on profits as well as personal income.
• Protecting personal assets from litigation. You will not lose your personal assets if you incur business debts or get sued

The best way to decide which structure is the best for you is to engage professionals such as accountants and attorneys. They can look at the nature of your work and financial obligations and advise you accordingly.

Naming Your Business

How to create a unique business name for LLC in Virginia

The first step in starting your business is settling on a name. When selecting unique business name ideas, you have to consider two things:

• It should appeal to your target market. In recent times, catchy names are taking the forefront and you can benefit from engaging your creative side.
• It should be within the bounds of the law. As much as creativity is important, you should ensure that it adheres to the given stipulations to ensure it goes through the approval processes.

What does llc mean after a company name?

Below are the guidelines to ensure your name gets approved:

• The name should contain the words ‘limited liability company’ or ‘limited company’. If not, you should use suffixes such as LC, LLC, L.C. and L.L.C. More often than not, most business owners work with LLC. Suppose you want to go with the name XXB, you can play around with the suffixes to see what works the best e.g. XXB L.C.
• The name should not have any words that might have people mistaking it for another entity. For example, when you name your business XXB L.C, people looking at it would know that it is an LLC. However, if you name it XXB Corp., people might think that you are running a corporation. This confusion is not acceptable and your name will not go through the approval business.
• The name should not imply that you are in a professional business. For example, if you name your business XXB Bank, people might think you offer banking services even where this is not the case. Other naming to avoid include insurance, trust, federal, national and United States. Please note that implication that you have federal affiliations could land you into legal trouble. Avoid this in naming as well as the subsequent operation of the business. There is another way to go about this, though. If you truly are in a professional business, you should include a professional in your setup and show supporting documentation.

What words cannot be used in a company name

To make sure you do not use prohibited names, you can go through this comprehensive list to stay on the right track.

Uniqueness

You might have followed the above rules, only for the name to get rejected owing to similarity with other entity names. If you do not ensure uniqueness, you will go to file your articles of organization and the commission will reject the name. Given that the filing fee is non-refundable, it would be a waste of money, not to mention time spent in preparation. Here is how you can ensure your name goes through:

• You can get the LLC with the similar name to allow you to use the name. The problem with this is that you will probably have to pay a hefty price for rights of use or will not get the approval. Instead of doing this, you can employ the next strategy:
• You can do a name search

Company Name Search

There are many ways to check if a name is in use, thus enabling you to tell if you need to find an alternative:

• You can have your attorney do this for you. However, this approach will cost you a pretty dime.
• You can go online and search for your name in a unique business name generator or database tool, checking if any other LC has used it. The best option is one which shows you similar names even in other states. Additionally, check if anyone is using an associated URL, as well as if anyone has a similar business on social media. You might not think much of these avenues now but once you start social network marketing, you will want exclusive rights to the name. Finally, look into if anyone has trademarked the name, to avoid getting sued when your business has taken off.

Want to choose the best name for your future LLC? Or maybe you want to Reservation name while the documents for business registration are being prepared? Use the services Registered Agent

Name Reservation

What is a Business Name Reservations?

Reserving your name allows you to ensure nobody else can use it. It enables you to hold the name for 120 days, and you can extend this reservation for another 120 days if you wish.

How much does it cost to reserve a business name in Virginia?

Filing costs $10, which is non-refundable.

How long can I reserve a business name in Virginia?

Processing reserve a business name in Virginia takes 5-7 days to complete.

Where do I apply for a company reservation in Virginia?

To reserve your name, you need to fill out the form and file it as follows:

Online

On the state website

Mail

Send the form to

Corporation Commission
Office of the Clerk
P.O. Box 1197
Richmond, Virginia 23218-1197

If everything checks out, you will receive a confirmation, enabling you to go about other steps with peace of mind that your name is safe.

A ‘Doing Business As’ Name (DBA)

You might want to conduct business using another name other than your legal name. In this case, you would need a DBA. For this, you need to follow the guidelines as discussed above. Also, you should register your business first as you will need to include information on the LC while filing the DBA. Filing options include:

Online

Done on the state website

Mail

Send a complete DBA form to:

State Corporation Commission
Clerk’s Office
P.O. Box 1197
Richmond, VA 23218-1197

Filing costs $10, which is non-refundable.

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Frequently Asked Question

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