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Virginia LLC |
Advantages of Limited Liability Company
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of Limited Liability Company
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Virginia and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Virginia LLC members, the name and address of your Virginia registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Virginia LLC formation documents assembled for application to the state of Virginia.
Virginia’s Tax Burden below National Average
Over the past 14 years, Virginia’s tax burden has consistently been among the lowest in the nation. Estimated now at 9.3% of income, Virginia’s state/local tax burden percentage ranks 37th in the nation, substantially below the national average of 10.0%.
Virginia’s Individual Income Tax System
Virginia’s personal income tax system consists of four separate brackets with a top rate of 5.75% kicking in at an income level of $17,000. That top rate ranks 13th lowest among states levying an individual income tax. Virginia’s 2002 individual income tax collections were $921 per person (ranked 7th highest nationally).
Virginia’s Corporate Income Tax System:
Virginia’s corporate tax structure consists of a flat rate of 6.0% on all corporate income. Among states levying corporate income taxes, Virginia’s rate ranks 9th lowest nationally. In 2001, corporate tax collections reached $51 per capita, ranking it 41st nationally.
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