A Virginia LLC and a Virginia corporation are both recognized legal entities under Virginia law. Both types of legal entities provide their owners with the same level of limited liability protection. However, the Virginia LLC is a different type of legal entity. A Virginia corporation is an incorporated legal entity which has specified corporate features such as stock a stock ownership structure, an established governance structure (Board of Directors), and imposed corporate formalities required for running a Virginia corporation. A Virginia LLC provides a much simpler governance structure and does not legally require that the Virginia LLC comply with as many formalities as a Virginia corporation. The Virginia LLC also allows the owners of the LLC to decide amongst themselves how they want their Virginia LLC to be governed and operated. Accordingly, the Virginia LLC is a much more flexible structure to accomodate any small business. A Virginia LLC by default is also taxed differently from a Virginia corporation. However, a benefit of a Virginia LLC is that the owners can choose to have the LLC taxed as a corporation. What this means is that the LLC can take advantage of all the state law benefits of a Virginia LLC over a Virginia corporation and, if, a corporate tax structure is best for a specific situation, the LLC can also benefit from choosing among both tax structures. Virginia corporations are an older type of entity meaning they have been around much longer. The Virginia corporate statute imposes a set governance structure for a Virginia corporation. Virginia corporations are required to have Board of Directors and meet certain formalities.

The answer to this question depends on the facts and circumstances of each business situation. Only a professional adviser such as an attorney or CPA accountant can help you with this after learning all the details of your business endeavor. The number of LLCs formed each year for small businesnow greatly surpasses the number of corporations formed each year. This is because the LLC was specifically created to offer all the benefits and advantages or corporations and partnerships but without the disadvantages of those other entities. However, there are times when a corporation is the better vehicle for your business. Some examples include if you plan on taking your business public someday or if you are going to bring in sophisticated equity investors who may insist on a corporation. Many times if you plan on having two classes of equity, it may be less costly to structure this equity structure using a corporation. One area where there is a lot of misconception is the area of taxation. Some CPAs may recommend a C corporation or an S corporation for tax purposes in particular business situations. But many of them do not know that a Virginia LLC can elect to be taxed as a C corporation or an S corporation. In other words, if the reason to choose a Virginia corporation over a Virginia LLC is tax driven, please know that you can still form a Virginia LLC and get all the state law advantages and also elect to have your Virginia LLC be taxed as a corporation for income tax purposes. Make sure that your chosen CPA is up to date on LLCs and their tax benefits as you will often find they are not . . . choose one that is. This choice alone can save you lots of money!

In Virginia, the answer is yes though not all states have conversion provisions in their legal entity business laws. Virginia does have a conversion provision which imposes specific requirements and filings. This is an area where it is recommended you seek professional legal and tax advice as you want to be sure the conversion is done properly and there may be tax consequences.