Do you want to open a new business in Virginia but don’t know where to begin?
We understand the struggle. Having a business is the dream, but to get there, you’ll need to go through a lot of red tape.
Luckily, our guide will cover everything you need to know.
We’ll walk you through the whole process and even discuss if it’s a good idea to start a Virginia business.
By the end of this guide, you’ll know exactly how to start a business in Virginia, so stick around.
- How Profitable Is Owning a Business in Virginia?
- What You’ll Need to Start a Business in Virginia [& Associated Costs]
- Why You Should Consider Starting a Business in Virginia as a Side Hustle
- How to Start a Business in Virginia in 6 Simple Steps
- Things to Consider When Building a Business in Virginia
- INSPIRATION: Business in Virginia Ideas
- Frequently Asked Questions
- Similar Businesses to Consider Starting
- Wrapping Up
How Profitable Is Owning a Business in Virginia?
According to the United States Small Business Administration, Virginia state business owners earn $54,830 on average each year.
That’s higher than the median income of $36,470 in the same state.
Costs like taxes, employee wages, and rent all affect how much profit you can make. These are factors that change depending on which state you’re in!
Each state has its own business climate, economy, and financial accessibility, and the state of Virginia ranked 18th in the Forbes list of best states to start a new business in 2023.
That number puts it in the upper 40% of all states. To us, this means that it’s worth considering opening your business there.
What You’ll Need to Start a Business in Virginia [& Associated Costs]
How much you spend on starting a new business depends on the nature of the business.
If you plan on opening one that needs heavy machinery, your costs will add up.
For uniformity, we’ll only include costs up to establishing the business entity.
Please remember to add the cost of your equipment and supplies later on!
- Employees: The minimum wage in Virginia is $12 per hour as of 2023. This is higher than the minimum wage of $7.25 per hour in some states. Expect to be paying your employees at least $480 per week if they work for 8 hours for 5 days.
- Rent: The average rent for office spaces for a month in Virginia is $35.08 per square foot. It’s more affordable than a lot of other places. For example, nearby Washington, DC has a rent of $595 per square foot!
- Licensing Fees: Depending on the business type, you can have a registration fee of $75 to $100 in Virginia. License fees will cost you from $15 up to hundreds of dollars. The price is different per city. It’s also affected by your expected profit.
- Utilities: Water and electricity bills in Virginia have an average cost of $862.09 per month for commercial establishments. This was according to the Energy Information Administration.
These are some of the costs you’ll be paying monthly as a small business owner in Virginia.
It’s important to plan for the amount of money you’ll need for upkeep.
Do I Need a License or Certificates to Start a Business in Virginia?
Not everyone needs a Virginia business license, but you still have to get a state license.
Those who operate without licenses will get fined $5,000 as a first warning and $10,000 for succeeding violations.
It’s best to register with the Virginia State Corporation Commission and with the Virginia Department of Taxation.
Why You Should Consider Starting a Business in Virginia as a Side Hustle
Out of all the states you can choose to open a business, what makes Virginia stand out? Here are some of the reasons.
- Great Workforce: Virginia’s strongest selling point is its solid education system, with 47.6% of its workforce being college educated. This means it’ll be easier for you to find qualified employees for your business.
- Stability During a Pandemic: Virginia is one of the best states for businesses, even amidst the pandemic. It’s the only state that won CNBC’s top states five times, showing the resilience of its business climate.
- Inclusivity Through the Virginia Employment Commission: Many businesses are pushing for diversity, and Virginia is one of the states preventing discrimination. This is good because large companies oppose states without inclusivity, which disrupts the economy.
- Low Business Costs: Virginia has the lowest corporate income tax out of all nearby states. It has maintained the rate at 6% for 50 years.
How to Start a Business in Virginia in 6 Simple Steps
Virginia is an ideal state for business formation, so how do you begin?
Here are the steps you need to take:
Step 1. Pick a Location and Business Name
Picking the right location and business name will impact your costs and profits in the long run.
- The amount of your sales tax can change depending on your city!
- Your business name should be unique from other Virginia business names. It’s possible to get protection for it up to the federal level.
Step 2. Decide on a Business Structure
Your first order of business should be deciding on a business plan and coming up with a business structure.
These will affect your daily operations and income.
There are five structures to choose from. These are sole proprietorship, general partnership, limited liability company, corporation, or cooperative.
- Sole Proprietorship: A sole proprietorship will let you have complete control over your business. You don’t produce a separate business entity, so your assets can get affected.
- General Partnership: This is for two or more business owners. A subset of this is the limited partnership, where one partner has unlimited liability. Another is the limited liability partnership, where all partners have limited liability.
- Limited Liability Company: A Virginia LLC is a combination of a partnership and a corporation. It separates the business entity from your assets. Yet, your profits can get transferred to your income. It gives you the ability to avoid corporate taxes.
- Corporation: If you have a Virginia corporation, it could be the best way to protect your personal liabilities. The downside is that it’s more costly and it requires detailed record-keeping.
- Cooperative: A cooperative is a business that’s operated for the benefit of its users.
Step 3. Register Your Business
There are many nuances to registering a business, depending on your business structure.
If your business is an LLC, corporation, or partnership, you need to appoint a registered agent within your company.
They’ll be the ones to receive all the legal documents and official papers.
Many businesses also choose to get a registered agent service instead.
For those with an S corporation, you’ll have to file with the Internal Revenue Service.
You can consult with the Virginia Department of Small Businesses to help with your registrations.
Step 4. Receive Your ID Numbers
After registration with the IRS, you can now get your federal employer identification number.
You’ll need this to hire employees, pay taxes, and open a business bank account.
You’ll also receive a state ID tax number, which protects sole proprietors from identity theft.
Step 5. Apply For Permits
You’ll need a combination of federal business permits and state permits. The issuing agency of your permit is affected by your business activity.
Your Virginia business license depends on your location within the state.
Many of these licenses expire over time, so you’ll have to keep track of them!
Step 6. Get Insurance and a Business Bank Account
You’ll need a business bank account once you start receiving money for your business.
With this, you may even be able to get a small business loan.
After opening an account, it’s a good idea to get insurance. Business insurance and liability insurance will protect you from risks.
Things to Consider When Building a Business in Virginia
What are the things you have to consider before opening a business in Virginia? Here are a few of them.
Can You Run a Business in Virginia by Yourself?
Yes! You can be a business owner by starting a sole proprietorship.
As of 2022, there are 644,341 businesses in Virginia without employees. Of these, 267,000 are women-owned.
These numbers tell us that it’s possible to start a business in the state by yourself.
Does Virginia Help Small Businesses?
Yes. Virginia has a small business development center that gives counseling and training to help your business grow.
They will help you get more capital and provide you with the tools you need.
There are also state incentives from the local women’s business center and the small business administration.
What Are the Disadvantages of a Virginia Business?
Healthcare and the cost of living are high in Virginia.
You might want to consider these since they’ll add to your expenses and take from your savings.
According to the United States News Affordability Rankings, Virginia is in 28th place for the cost of living.
INSPIRATION: Business in Virginia Ideas
Here are a few businesses you might want to start in Virginia.
- Handyman Business: Virginia is one of the wealthiest states in America. Because of this, you might want to cater to them with a top-notch handyman business. You can offer pool services, smart device installation, or interior painting.
- Catering Business: Capitalize on celebrations with a catering business. Food will always be a necessity and you won’t run out of customers if you do it right.
- Vending Machine Business: As one of the most educated states, Virginia has plenty of colleges and universities. You can sell to college students using vending machines!
Frequently Asked Questions
Do All Businesses in Virginia Need a Business License?
You don’t need a business license if your business activity is regulated by a federal agency.
Most likely, your business will fall under one of its categories.
If your business isn’t on the list, and you’re doing business using your legal name, you can avoid registering.
Is Virginia a Good State for Business?
Yes. Virginia is one of the top states for business because of its good economic development.
Other selling points are the infrastructure, support from the state, location, and education.
The state ranked first in CNBC’s top states for businesses list of 2021.
It’s also 18th on the Forbes list of best states to start a business in 2023.
Similar Businesses to Consider Starting
Want to look at other locations to open your business? You may want to look at these articles.
- How to Start a Business in Florida: Find out if Florida is the best state for opening your business.
- How to Start a Business in Texas: Discover how you can open a business in Texas!
- How to Start a Business in California: Is California the best place for a business? Learn about it here.
Starting a business can be quite daunting, and it’s difficult to pinpoint instructions on how to start a business in Virginia.
Hopefully, we made it easy for you and you got some inspiration from our post.
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