Setting up an LLC is the first step in your journey to start a business venture. The State of West Virginia is an excellent choice, especially if you are a start-up. The State provides many financial aids for your business.
For example, the West Virginia Economic Development Authority offers loans to eligible LLCs at low-interest rates to help the company finance its fixed asset requirements.
This article will guide you through all the steps involved in successfully incorporating an LLC in West Virginia.
Naming Your West Virginia LLC
The first step in your journey toward setting up an LLC in West Virginia is to name the LLC. You must select a name that is appropriate for your business. A good name will help your LLC to have brand value in the market. It will also help the customers quickly identify your business from among the competition.
Make sure that the name you choose for your LLC in West Virginia is unique, apt, and something that will strike a chord with your customer base. West Virginia requires specific mandates that you must meet when naming your LLC.
If you are setting up an LLC in West Virginia, the name of your business should have the words “limited liability company” or “limited company” or the abbreviation “L.L.C.,” “LLC.,” “L.C.,” or “LC” in it. In addition, you may use the abbreviation “Ltd.” and “Co.” to indicate the words “Limited” and “Company,” respectively.
According to §31B-1-105 of Chapter 31B of the West Virginia Code, the name of the LLC in West Virginia should be unique and must not resemble the name of any existing entity that has been permitted to conduct business in the State of West Virginia.
The name you select for your LLC should not give the impression that your entity is a government agency. Therefore, you cannot use terms like “F.B.I.” or “Treasury.”
Similarly, usage of certain words, like “Bank,” or “University,” is restricted and involves obtaining the written consent of concerned authorities and additional paperwork and compliance requirements.
To understand the naming rules prevailing in West Virginia, you can read the State’s Name Availability and Requirements.
Does Your Business Require a DBA?
A DBA (doing business as) enables you to operate your LLC under a different name. In the State of West Virginia, DBA is referred to as a “trade name.” A trade name is best used for branding purposes. But remember that the trade name alone does not protect your personal assets. To avail of the protection of limited liability, you need to form an LLC.
You may have registered your company as “Pizza and Burgers L.L.C.” However, you do not want to use the same name for commercial purposes and instead want to use “Resto Café” as the name of your business. You can do so by applying for an Assumed Name.
Option 1: Apply for a DBA OnlineApply Online – OR –
Option 2: Apply for a DBA In-PersonDownload Form
Address for Filing – Charleston Office:
One-Stop Business Center
1615 Washington Street East Charleston
North Central WV Business Center
200 West Main Street Clarksburg
Eastern Panhandle Business Center
229 E. Martin Street Martinsburg
Expediting Fees: $25 – 24-hour processing $250 – 2-hour processing $500 – 1-hour processing
Doing a Name Search and Name Reservation
Before finalizing a name for your LLC, you must ensure that the name you selected is not similar to an existing business. You can use West Virginia’s Business Entity Search website to see if the name you want for your LLC is available. You should properly check the name selected for your LLC to avoid rejection later on.
If you are not ready to incorporate your LLC immediately, you can reserve your chosen name. In West Virginia, you can book a name of your liking for your LLC. You have to apply with the Secretary of the State for this purpose. The application should include the following details:
- Applicant’s name
- Applicant’s address
- The name that the applicant wishes to reserve for the LLC.
Once the Secretary of State has reviewed the application, the name shall be reserved, for 120 days, in the name of and for the applicant’s exclusive use. There is also an option for the applicant to extend the reservation period for a further period of 120 days.
Reserve Your Name by MailDownload Form
One-Stop Business Center
1615 Washington Street East
Charleston, West Virginia 25311
Registering your business domain
The internet is becoming increasingly popular every day. Most people read internet reviews and look for an online presence before purchasing a product or service. A well-designed website may aid in acquiring new customers.
Your website address is how the customers find your business online. Therefore, it is vital to ensure that your business has a website address that matches the name you selected.
Choose a Registered Agent in West Virginia
A registered agent can be either a person or a corporate entity. You are required to appoint a registered agent for your West Virginia LLC. The registered agent acts as the liaison for your LLC and shall be the point of contact with the Government authorities. In West Virginia, a registered agent is referred to as “an agent for service of process.”
The laws in West Virginia mandate that every LLC appoints an agent for the service of process. The agent will be responsible for receiving all official communication at the LLC’s behest, including notifications about tax and service of process in case of a lawsuit against your LLC. The idea behind requiring the appointment of a Resident Agent is that in all time-sensitive matters, the correct party is notified in the LLC.
An agent for service of process is required to be available during regular business hours. The agent shall be responsible for receiving communications addressed to the LLC. On receiving such communications, the agent shall be required to forward them to appropriate people within your LLC.
The laws in the State of West Virginia mandate a registered agent be elected at the time of formation of the LLC. The details of the registered agent should be provided in the incorporation documents you file with the State.
A registered agent appointed by you should provide written consent by duly filling and signing the application form.
Who Can Be an Agent for Service of Process?
The requisites for holding the position of an agent for service of Process in West Virginia are dealt with under the provisions of §31B-1-108 of Chapter 31B of the Uniform Limited Liability Company Act. An agent for service of process should be:
- Over the age of 18
- Having a street address in West Virginia
- Available during regular business hours at the address provided by you to receive any communications addressed to the LLC.
As per the West Virginia Code, an agent for service of process may be any of the following:
- An individual State resident or
- Another LLC or a foreign corporation/company that has obtained permission to do business in West Virginia.
Individual v. Registered Agent Service
You can be the registered agent of your LLC, or you may choose to appoint any of your friends or family. Alternatively, you may also opt for a professional registered agent service. Selecting yourself as the agent for service of process may not be advisable for all businesses. Using a professional registered agent service has many advantages.
Having a professional registered agent service ensures that you don’t fail to duly respond to any notice or other communication that may be sent to your LLC. They remind you when your returns and other filings are due and help ensure you don’t miss any deadlines.
Additionally, because a registered agent must disclose their address and other information, engaging a registered agent service will protect your privacy.
Also, having a registered agent service allows you to focus your time and energy on growing your business rather than worrying about missing any communication from the State or a deadline.
File the Articles of Organization for your West Virginia LLC
Articles of Organization, in West Virginia, is a legal document needed to form and legally incorporate your LLC officially. It is to be filed with the office of West Virginia’s Secretary of State. Once this is completed, your LLC is registered and is recognized in the eyes of the law.
You can complete this procedure by following three simple steps. The first step is for you to acquire a copy of the document. You may do this by creating an account in West Virginia’s One Stop Business Portal or manually obtaining the form.
The next step is for you to fill out the Articles of Organization form. You should duly complete the form by filling out details related to the following:
- Name of your entity and the type of your entity
- Agent for Service of Process
- Organizer Information (name and addresses)
- The effective date of the Articles of Organization and the duration of your LLC
- Governing Authority (details of Manager, if any, or in case you don’t have Manager, details of at least one member who shall manage the LLC)
- Liability of Members
- Purpose of your Business
- Eligibility for Veteran-Owned Status (in which case your LLC is entitled to certain benefits)
The final step is for you to file your Articles of Organization with the office of West Virginia’s Secretary of State. You can do the same either online or by submitting a copy of the duly filled form through email, fax, in-person, or by mail.
Option 1: File Your Articles of Organization OnlineFile Online – OR –
Option 2: File Your Articles of Organization by Mail/fax/email/in-personDownload Form
Address for Filing – Charleston Office:
One-Stop Business Center
1615 Washington Street East Charleston
North Central WV Business Center
200 West Main Street
Clarksburg, WV 26301
Eastern Panhandle Business Center
229 E. Martin Street
Martinsburg, WV 25401
Fax: (304) 558-8381
For expedited service, the State charges an additional fee of $25 for 24-hour processing, $250.00 for two-hour processing, and $500.00 for one-hour processing.
Public Notice of Formation
As of now, the State of West Virginia does not have any provisions pertaining to a mandatory public notice of formation for your LLC.
Creating an Operating Agreement for Your West Virginia LLC
An operating agreement is a legal document. It lays down the rules of your LLC’s internal operation and functioning. It also provides a framework concerning the duties of members of the LLC and its managers. An operating agreement acts as a guiding force in matters of the day-to-day functioning of the LLC.
Although an LLC is not required by State law to have an operating agreement, it is highly recommended. An operating agreement eliminates the possibility of misunderstanding among members regarding profit/loss distribution and other matters of management of your LLC.
There are no prescribed templates for an operating agreement in West Virginia, and you may draft one according to the needs of your business. However, irrespective of the nature of your business, it shall be advisable for your operating agreement to cover the following matters:
- Organization Details
- Duties of Members and Managers
- Management and Voting
- Capital Contributions
- Division of Profit and Losses
- Bookkeeping Procedures
- Procedure for adding new members
- Requirements concerning Meetings and Procedures thereof
Writing the Operating Agreement Yourself vs. Hiring a Service
You can create your operating agreement, or you can purchase templates that you can customize to draft the operating agreement of your LLC. It is, however, recommended that you seek the help of an attorney or a professional in preparing your operating agreement.
Experts in the laws of West Virginia, these attorneys or professionals will help you draft an operating agreement that suits the needs specific to your business model. Also, a professional, who creates such agreements regularly, may be aware of which elements of the agreement are problematic and could lead to a disagreement. As a result, the professional can draft a more air-tight operating agreement for your LLC.
Limits of Operating Agreement
There are no specific formats for an Operating Agreement. However, it cannot include any matters prohibited under the law, such as restricting access to records by its members, waiving the obligation of good faith and fair dealing, etc.
Obtaining an EIN for your West Virginia LLC
EIN (Employer Identification Number or Federal Identification Numbers or FEINs) is an identification number allotted by the IRS. The IRS uses it to identify an operating business entity for taxation purposes.
It will also be needed for opening a bank account, filing tax returns, and hiring employees. The IRS issues an EIN, and you can apply for it online or through the mail.
File Annual Report for your LLC in West Virginia
An annual report is a legal document you must file with West Virginia’s Secretary of State. Every LLC that is operating in West Virginia is required to file the annual report mandatorily.
The due date for filing your Annual Report is the first of July. The first report is, however, due on the year immediately after the year in which your LLC was incorporated. The Annual Report should lay down information about your LLC, such as the details of managers, members authorized to sign filings, address details, details of the agent of process, etc. The State charges a filing fee of $25.
If you fail to file your Annual reports within the deadline, your LLC will be required to pay a late fee of $50. Additionally, your LLC faces the risk of being shut down by the authorities.
Tax Liability for Your West Virginia LLC
An LLC in West Virginia must pay taxes to the State and Federal Government, depending on the business of the LLC.
The way your LLC will be taxed depends upon the number of members in your LLC. There are four ways in which LLC will be taxed:
- Sole proprietorship: a business owned by a single person
- Partnership: a business owned by multiple people
- C – Corporation: income is split or segregated for taxation
- S – Corporation: tax liability is split between the business and its owners
Federal Tax Liability
All members, as well as managers of an LLC who take a share of the profits of the LLC, are liable to pay federal self-employment tax. In addition to the same, Federal Income Tax shall also apply. You may treat the LLC as a Sole Proprietorship, a Partnership, or a Corporation for Federal Taxes.
If you’re a single-member L.L.C., your default taxation type will be that of a sole proprietor or ‘disregarded entity.’ The L.L.C. has to report its activities under Schedule C, Schedule E and/or Schedule F of Form 1040.
A multi-member L.L.C. is treated as a partnership by default for tax purposes. In such a case, the partnership rules will apply for tax purposes, which means that partners will not be personally liable for taxes. In this case, apart from filing Form 1040, you’ll have to file your partnership return in Form 1065 and provide information in the K-1 of each partner.
Corporate tax rules apply if the company is a corporation, and the company must file Form 1120. Unlike a partnership, the income of an L.L.C. is taxed. If the company is an S-corporation, the L.L.C.’s income is not taxed, but individual members are taxed on their allocated share of income. For tax purposes, an S-corporation must file Form 1120-s.
All the forms will ask you to provide information regarding the assets, liabilities, total profits, and net revenue of the L.L.C. One must keep the financial records of the corporation handy.
If you want to change the manner in which your L.L.C. is taxed, you can do so by filing Form 8832.
State Tax Liability
State tax in West Virginia will depend on the business the LLC conducts. A “Sales and Use Tax” is levied on transactions through your LLC whereby taxable goods or services are exchanged. Therefore, you should register your company with the authorities to get a seller’s permit. Once obtained, your company can collect sales tax and remit the same to the authorities.
Additionally, in West Virginia, every LLC must pay a business registration when incorporated and before they start operating. The tax amount is $30. It must be remitted to the State Tax Department.
Also, if you have opted to treat your LLC as a corporation for tax purposes, you will have to pay corporate tax. Currently, in West Virginia, this tax is calculated at 6.5% of taxable income.
Permits and Licenses
To operate an LLC business in West Virginia, you must comply with State and Federal regulations. The kind of permits you may need depends on the area of your business.
Federal Licensing requirements will depend on the business activity carried on by your LLC. If your company is engaged in any area of business regulated by the Federal Government, you will be required to obtain relevant Federal Licenses and Permits.
Some business activities requiring Federal Licenses and Permits are:
- Alcoholic beverages
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
In West Virginia, your LLC must apply and get a business registration certificate. Additionally, if your LLC is engaged in a specific profession or industry, you should obtain additional permits from the concerned authorities.
Additionally, your LLC should get a seller’s permit if it sells specific physical products or services to which sales tax applies. You can apply for a seller’s permit online. You can get all the details relating to State license and permit requirements in West Virginia here.
Depending on where you operate your business, you may also be required to get the local government’s license and permit. All new companies must submit a business registration application in Charleston. Get in touch with your local West Virginia government to know more about local licensing requirements.
For Information regarding;
Business Bank Account and Phone Number
It is always prudent for you to open a separate Bank Account for your LLC and have an individual designated phone number. Having a different account helps you to avoid mix-ups and helps ensure that your personal assets are not affected in case of insolvency or lawsuits.
Privacy has become increasingly important in today’s world. As a result, it’s a good idea to have a separate phone number for your business. Furthermore, a business phone number may provide customer support, increasing customer satisfaction and benefitting your business.
West Virginia is an excellent choice for your LLC. The State has a pro-business climate, and some of the biggest companies in the world, including Clorox, Toyota, NGK Spark Plugs, Procter & Gamble, etc., have set up their facilities in West Virginia. The State eliminated Business Franchise Tax in 2015.
The State offers Sales & Use Tax Exemption for certain LLCs engaged in sales of radio or television broadcasting time, construction, repair, alteration, decoration, or improvement of real property, etc. You can read the West Virginia Sales and Use Tax Exemption guide for more information.
On completing the above steps, your LLC is legally incorporated and ready to do business.
However, once you form your LLC, you should hold your first meeting to decide matters like who shall manage the affairs of the LLC, authorizing the opening of a business bank account, applying for business credit, and obtaining requisite insurance for your business.
We wish you and your new business the very best!