Basics About the Limited Liability Company in Virginia

A Limited Liability Company in Virginia, or LLC, may or may not be the best choice for you if you are self-employed or starting a business. Much depends on the volume of business you are anticipating, and whether or not you are planning to run the business yourself, or take on a partner or hire employees, and/or raise investor capital by issuing shares, membership units, and more. While there are few reasons not to form some type of legal entity for your business, there are many more reasons why you should – and why a LLC may be your best choice.

An All-Purpose Entity

A Limited Liability Company in Virginia is the most flexible legal business entity even more so than a Sole Proprietorship – but has the advantage of allowing you to shield your personal assets from lawsuits and creditors, should the business run into problems.

By creating this kind of entity, you will be able to run your business in almost any way that is suitable for you. You may operate similar to a Sole Proprietor, but also take on other members as partners, raise investment capital through the sale of LLC membership units (analogous to the stock offered by major corporations), form an employee-owned company, or create some other type of structure.

If you are a writer, independent software engineer, free-lance consultant or an entertainer with multiple income streams and these streams add up to a substantial amount, you may enjoy significant tax benefits by running all of this income through the entity. If you need assistance, your accountant or tax professional can advise you on this matter.

A corporation on the other hand must operate within fairly narrow parameters as defined by law.

Simplicity

If you value simplicity, or want to spend more time running the business and less time filing forms, this is definitely the way to go. Here’s what Nolo’s Guide to Starting and Running a Small Business has to say on the subject:

"…the relative simplicity and flexibility
of the LLC make it the better choice. This
is especially true if your business will hold property, such as real estate, that's likely
to increase in value."

Here’s a good way to look at it: forming an LLC in Virginia is generally a simple, straight-forward process. Unlike an S or C Corporation, there is no need to hold endless board meetings and keep meticulous records of those meetings. Any profits made by the business can be distributed in any way the members decide is fair (subject to some IRS limitations).

On the other hand, shares of corporations must by law be distributed to shareholders based on the actual number of shares they hold – not based on any material contributions (i.e., “sweat equity”) they may have made. By forming a Limited Liability Company in Virginia, you stand to keep substantially more of what you earn.
 

Learn More About Forming a Virginia Limited Liability Company

Learn More about Forming a Virginia Corporation