How to Form an S Corporation in Virginia

Introduction

An S corporation is a type of business structure designed for small businesses. The main benefit of an S corporation is that it offers limited liability protection to its owners, who are also known as shareholders. In this article, we’ll explain how to form an S corporation in Virginia and what you need to do in order to make your company official.

Choose a Company Name

Choosing the right name for your company is important because it will be part of the public record. You want to make sure that the name you choose is not already in use by another business, as this could cause confusion. You also don’t want to use a name that is too similar to an existing trademarked name or registered business name.

Next, check your state’s rules and regulations regarding what can and cannot be used as a company name. Make sure you’re using a word or words that are available and not taken by someone else.

Finally, research the Internet by searching Google with terms like “company names Virginia” (or whatever state you’re in). This will help ensure that there aren’t any other businesses using similar names within your state’s borders before filing incorporation paperwork.

File Articles of Incorporation

To form an S corporation in Virginia, you must file articles of incorporation, bylaws and a certificate of acceptance of appointment with the Virginia State Corporation Commission. You also need to file an annual report that is due on the anniversary date of your incorporation.

The fees involved with this process are as follows:

• Articles of Incorporation (Form 1): $150
• By-Laws (Form 2): $50
• Certificate of Acceptance for Appointment as Agent for Service (Form 3): $50
• Initial Report (Form 4): $200

Designate Directors

• Designate directors. In Virginia, a corporation must have at least one director. The number of directors will depend on your company’s needs and the amount of capital you want to raise from investors. Directors are responsible for general management, long-term planning and oversight.
• Choose a director or officers for your corporation who live in the state where you formed it (e.g., Virginia). They have to be U.S. citizens or permanent residents; they cannot be minors under 18 years old; they must not have committed certain crimes (felonies); they must not have been judged mentally incompetent by a court; and they cannot be members of other S corporations or partnerships.

Apply for an Employer Identification Number (EIN)

An employer identification number (EIN) is a nine-digit tax identifier assigned to businesses by the IRS. You’ll need it if you want to open a bank account or file a tax return as an LLC or corporation.

You’ll also need to submit proof of identity and residency at the office when applying for your EIN.

Create Bylaws

• Create bylaws.
• Adopt the bylaws at your first board meeting as directors of the S corporation. The bylaws should be adopted before you file your first annual franchise tax report, which is due on or before March 1st of each year.
• Bylaws should be as specific as possible and should describe how the corporation will operate in terms of finances, meetings, election procedures, and other rules that govern its operation.

Issue Stock Certificates

It is important to note that when you are forming your corporation, you should issue stock certificates for each shareholder. If you do not keep track of who owns what, it could lead to problems later on when trying to sell shares or transfer them between people.

Hold a Board of Directors Meeting

As the person who will serve as your corporation’s president, you must hold a board of directors meeting. This is where you and your fellow officers will discuss the following:

• The number of directors on the board.
• The names and addresses of all shareholders/owners, including yourself.
• The number of shares each shareholder owns in your business.
• The amount each shareholder paid for those shares (if applicable).

You’ll also need to make decisions about how much money should be paid out to shareholders as dividends (if any), who will be allowed to vote at such times when there are conflicting interests between shareholders and other issues that may arise. Finally, keep minutes from this meeting so everyone is aware of what happened in the meeting.

Elect Officer Positions

• A corporation has a board of directors, and it’s the board that elects officers. The most common officer positions are president, secretary, and treasurer. These are the people that make official decisions for the company.
• If you’re forming an S corporation in Virginia, there are a few requirements for who can serve as an officer:
• The board must have at least three members (these may be people or entities).
• The president must be one of those three members; this is required by federal law. It’s also recommended that you name a treasurer because keeping track of cash flow can help with tax planning and compliance.

Keep Corporate Records

• Minutes of board meetings
• Records of shareholder meetings
• A record of officer elections (if applicable)
• Financial records including balance sheets, income statements, tax returns, and tax payments, if applicable.

Conclusion

If you have any questions about forming an S corporation in Virginia, please contact us. We’re here to help!