By Fernando Berrocal

You have to follow the steps outlined below to create a corporation in the Mid-Atlantic state that stretches from the Chesapeake Bay to the Appalachian Mountains of Virginia. 

1. Select a Business Name

The words that appear in your company's name in the state of Virginia must contain at least one of the following words: “Corporation”, “Incorporated”, “Company”, “Limited”, or the abbreviation "Corp.," "Inc.," "Co.," or "Ltd."

The name of your corporation must be different from the names of existing businesses on file with the Virginia State Corporation Commission's Office of the Clerk. The Virginia business name database can be used to check for the availability of names.

By filing an Application for Reservation or Renewal of a Corporate Name with the Virginia State Corporation Co., you may reserve a name for 120 days.

2. File Articles of Incorporation

By submitting Articles of Incorporation with the Virginia State Corporation Commission, your corporation becomes legally formed. The name and address of the corporation's agent for service of process; the corporation's primary office address (optional to provide); the name and address of the first board of directors; and the signature of one or more incorporators should all be included in the articles.

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The articles can be completed online and filed, or they can be provided to the Clerk's Office in PDF format for review and filing. The filing fee is calculated depending on the number of shares the corporation is allowed to issue. For up to 25,000 shares, the lowest fee is $75; for more than 1 million shares, the maximum fee is $2,525 For more information, consult the Division of Corporations' pricing schedule.

3. Appoint a Registered Agent

For service of process in Virginia, every corporation must have an agent. This is a person or entity who undertakes to accept legal documents on behalf of a client if it is issued. A Virginia resident who is an original director of the corporation or a member of the Virginia State Bar; or a corporation, Limited Liability Company (LLC) permitted to conduct business in Virginia; or a corporation authorized to do business in Virginia. An actual street address in Virginia is necessary for the registered agent.

4. Make “Bylaws” for your corporation

Bylaws are a type of internal corporate document that sets out the fundamental guidelines for running your own business. They haven't been registered with the state. Although corporate bylaws are not needed by law, you should adopt them since they set your company's operational standards and assist show banks, creditors, the IRS, and others that your company is legitimate.

In a corporate records book, save your bylaws, meeting minutes, and other key company documents. A basic three-ring binder or a business records kit ordered from a corporate kit supplier will work. Keep it in the main office of your company.

5. Appoint Directors and establish a Board of Directors

The initial corporate directors must be chosen by the incorporator (the person who signed the articles) and it will serve on the board until the first annual meeting of shareholders (when the board members who will serve for the next term are elected by the shareholders). The incorporator must submit an "Incorporator's Statement" that contains the first directors' names and addresses. The statement must be approved by the incorporator, and a copy must be kept in the corporate records book. It is not necessary to file the statement with the state.

The corporation's board of directors can have its first meeting at which they can appoint corporate officials, establish bylaws, choose a corporate bank, approve the issue of stock, set the fiscal year, and adopt an official stock certificate form and corporate seal. The incorporator or any of the directors must keep track of the directors' actions in corporate minutes. The directors should also approve the corporation's election of S corporation status if it is to be an S corporation. The minutes are generally prepared over one or two weeks and then sent to all of the directors for signature.

6. Make a Stock Issue

In exchange for their capital contributions of cash, property, services, or all three, issue shares to each shareholder. Paper stock certificates are typically issued by smaller companies. In the corporation's stock transfer ledger, enter each shareholder's name and contact information.

In Virginia, the default rule is that corporation stock has no par value. As a result, the articles do not have to indicate whether the shares have a par value. The par value of a stock is a fixed amount below which it cannot be sold; it has nothing to do with its real value.

Under state and federal securities regulations that govern the offer and sale of corporate stock, a share of stock in your company is classed as a security. Private offers, which are non-advertised sales to a small group of people, are exempt from federal law (generally 35 or fewer).

Unadvertised transactions to up to 35 investors within or outside Virginia are exempt from registration. This exemption does not need any state filings or costs. This exemption from state registration should apply to most small corporations considering a small, private offering and sale of their initial shares in Virginia.

7. Comply with Virginia Annual Report Requirements

Each Virginia corporation and foreign company authorized to do business in Virginia should file an annual report with the Clerk's Office by the last day of the 12th month following incorporation or issuance of a certificate of authority and by the same date each year after that. The annual report can be submitted online using SCC eFile or on a Corporation Commission-provided form. Provide the requested information on the Electronic Forms Request page to get a preprinted annual report form to complete and file.

8. Obtain an EIN and Pay Business Taxes

EIN: A federal employer identification number is required for your business (EIN). An “Employer Identification Number” may be obtained by filling out an online application on the IRS website. There is no fee for filing.

Department of Taxation: The Virginia Department of Taxation requires corporations to register and acquire a tax account number as well as a sales tax certificate of registration (if you need to collect retail sales or use tax). You'll also be immediately registered in a business online services account, which will allow you to file and pay taxes in the future, and also manage your Virginia Tax account. You can register either online (through the VATAX online service) or on paper (using the VATAX paper form) (typically using Form R-1).

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Are you ready to take your business to the next level? Apply to the next round of MassLight. At MassLight, we provide funding as well as a committed technical team for your startup. In exchange, we ask for equity. Do you have any questions? Please see our FAQ page for further information.

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