Starting a New Virginia Business
You must complete several legal steps to start a new Virginia business. You must file with several types of bureaucracies at all levels of government. Additionally, it is best practice to get many of your agreements in writing and reviewed by an attorney to protect your person and your business.
1.) Reserve the Business Name
Choosing a name for your business to give it an identity is an important first step. You may reserve a name with the state and any individual using a name other than their own needs to obtain a fictitious name certificate locally where they have a place of business.
2.) Prepare and File Articles of Organization or Incorporation.
Corporations and LLCs must file articles of existence with the State Corporation Commission, where they identify the legal name of their business, type of entity, the address of the principal place of the business, & who the registered agent will be.
3.) File for an Employment Identification Number (EIN) with the IRS
This number is the identification number of your business for tax purposes and is often required by financial institutions.
4.) If there are multiple owners, have an Owner’s Agreement prepared by an attorney.
Owner’s Agreements (Partnership Agreements, Operating Agreements, Shareholder Agreements, Founders Agreements) are critical to businesses that are owned or managed by more than one person. They specify who owns what and who can make which decisions, what each person will contribute, why the company exists, how decisions and distributions are made, how debts are paid, how the company will be managed, what the rules and enforcement procedures are regarding disagreements, how an individual may transfer ownership or his share in the company, and how the company may be terminated or passed on to others, and any other wish of the owners.
5.) Have your Commercial Lease or Real Estate Purchase Agreement prepared and reviewed by an attorney.
It is so important for your new business to get the location right. Have an attorney draft and review your agreements to ensure the space has everything you need, that it is too your liking, and that you are protected should an accident occur.
6.) Once you are located, get a Business License with your locality and prepare for tax filings.
You will need to get a business license in the city or county where you are serving the public. Also, you will need to prepare to file your monthly and quarterly taxes.
7.) Consult with an attorney about negotiating your Purchase Orders, if you have inventory.
Contracts with suppliers, distributors, and other vendors are more negotiable than those at a retail store. That is why it is a good idea to have an experienced attorney assist in negotiating better terms for your purchase orders so your business can obtain a better deal. An experienced attorney is knowledgeable about various contract clauses that help a business secure more inventory, receive it at shorter intervals and lower quantities, and at lower prices. Additionally, clauses can be added that shift liability for accidents on to the other party.
8.) Have an attorney draft your Employment Agreements.
When done right, these agreements incentivize employees to do good work and also protect the parties from harmful behaviors. Employment and independent contractor agreements set the terms and rights of a healthy working arrangement, while non-compete and non-disclosure agreements provide competitive protection to the business.
9.) Have an attorney draft a Licensing Agreement, if you will be providing rights to a product, service, or idea.
Licensing agreements are used to set out the details of the rights and restrictions regarding a product or service. What is allowed and prohibited can often be confused and thus there is considerable value in putting the terms to writing should a disagreement occur.
10.) Have an attorney draft Indemnity Agreements to protect the business from liability, if you will be conducting a dangerous or risky activity.
Many services, products, & duties exist that create a liability to a business. Horseback riding, hazardous materials, and heavy lifting all create a potential liability. It is important that customers and employees know that they are responsible for engaging in risky behavior and that the business will not be responsible.
11.) Have an attorney review your Promotions, Offers, & Customer Agreements.
From time to time various businesses have offered a legally binding promotion or offer to customers that create an unintended effect that severely harms the business. Reviewing these offers ahead of time can save a lot of money down the road. New businesses should also examine contracts with customers, often a receipt, to properly list all terms and conditions.
BONUS: Insurance Policies
Insurance is one of the best ways to protect yourself from liability because they will reimburse your loss. You should have both personal and business umbrella liability policies. Life and disability policies to protect you and your family, the business and key employees. Also, an adequate business property policy is needed to protect the business in the event of an accident or loss.