West Virginia LLC Registration
A limited liability company (LLC) is a type of business entity that limits the legal liability for you as its owner. This means that if the company is sued and loses, your personal finances won’t be affected. An LLC also provides other benefits such as allowing flexibility in the operation and management of the company. Thus, you receive income with no tax at the entity level.
Now that you are interested in forming a West Virginia LLC, you may have a lot of questions. Before explaining how to set up an llc in West Virginia, let’s go over some of the basic features of the LLC. For example, as the owner, you have limited liability for the company’s debts and obligations. This is similar to the status of a corporation shareholder. This means that you must form and maintain your LLC West Virginia correctly to enjoy this benefit.
Another basic benefit for a West Virginia limited liability company is its losses and income are passed to you as if it were a partnership and not a sole proprietorship. However, unlike a typical partnership which is developed under Common Law, an LLC is created by filing a document. This makes the LLC more like a corporation than a general partnership.
Types of LLCs in West Virginia
Before beginning the legal process of registering your LLC, it’s important to determine the type LLC you need. You have three options for an LLC depending on the type of business and partners you have:
- Single-Member LLC: This type of LLC is formed by one person. You have no other members.
- Multi-Member LLC: You form a multi-member LLC when you have more than one member in the company. These multiple members want to appoint one or more managers to run the daily tasks of the company.
- Multi-Member LLC: A multi-member has more than one member in the LLC. However, it is different from the multi-member LLC because they want to run the company together.
Starting a West Virginia LLC
Starting an LLC requires completing five steps. These steps are:
1 Choose a Name of your LLC
2 Pick your registered agent
3 File your Articles of Organization
4 Create your operating agreement
5 Obtain an EIN for your LLC
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Choose a Name for Your LLC
Choosing a company name is the first step to forming an LLC West Virginia. It’s actually the most important step too. You want to choose a name that complies with West Virginia LLC naming requirements. These guidelines are:
1. Your company name must include the phrase LLC, L.L.C. or “limited liability company”
2. You are limited to the type of words you can use. For example, you can’t use Attorney, Bank or University in your LLC without additional licenses and paperwork.
3. Your LLC name can’t include words that will confuse your company with a government agency such as the State Department, FBI or Treasury.
Once you’ve picked your name, make sure it’s available to use via the West Virginia LLC search. You cannot use a name that already exists. West Virginia has an online database with all the current and past business names. When you input your potential company name in the search box and yield no results, then you can use the name for your LLC. If the search does yield results, then you must determine if it is active or not being used.
It’s also recommended that you determine if your business name is available online. You may not plan to use a website. However, it is important to buy the URL to prevent someone else from buying it.
For now, it’s important to complete the West Virginia LLC registration. After registering your company name, set up a professional email account with your company name. It’s not mandatory to do so in the first step, but it can help get this step off your list.
Pick Your LLC’s Registered Agent
A registered agent, or Agent for Service of Process, is a third party given the task of receiving service of process notices and correspondence. The notices and correspondences include tax forms, lawsuit notices and information from the Secretary of State. This person or entity must be located in the state. You may choose a registered agent that may or may not have a role in your company.
You can be your LLC’s registered agent, but it’s not recommended. It’s important to have a third-party designated to perform this vital role. It gives you peace of mind knowing that you won’t miss an important document when you go on vacation or leave the office. Visit the LLC Formations home page for more info.
If you don’t nominate a registered agent, the Secretary of State will act as your registered agent.This means that the Secretary receives all files and notices from your company. Thus, it’s best to pick a company, who can act on your behalf, to receive your LLC’s vital documents. A professional Registered Agent service is one affordable way to manage all your government filings for your business. For many LLCs, a professional registered agent service is typically more affordable than the annual costs of other alternatives.
File your Articles of Organization
The Articles of Organization basically outline the details about your LLC. The document acts as a birth certificate for the company. It means your LLC has been officially formed. The common type of information needed includes:
- The company’s name
- The description of your company’s business
- The mailing address that is your primary place of business. This is the company’s address. It can be a physical address or a post office box.
- Information about the LLC owners, officers and managers
- The name and address of the nominated registered agent. The agent must have a street address and sign a form accepting and acknowledging that they are the LLC’s registered agent.
You may have to file additional paperwork depending on if you already have an existing LLC in another state. West Virginia requires all existing LLCs formed outside the state to register as a foreign LLC. This requires completing an additional paperwork.
West Virginia LLC registration requires you to file your Articles of Organization with the state. You can register it by mail or online. When filing your Articles, you must also inform West Virginia whether your LLC is a member-managed or manager-managed company. In a member-managed LLC, members are working in the day-to-day operations of the business. Decisions are made by the members voting on them. A member-managed LLC is for a business that is small. Also, it is ideal for an LLC where members are willing and able to be involved in the daily operations of the company.
In a manager-managed LLC, members allocate the administrative duties to one or more managers. This is often the best way to operate the day-to-day operations of the business. A manager-managed LLCs don’t require members to vote on decisions. Members grant the managers in charge the authority to make those major business decisions.
A manager-managed LLC is ideal for a large company. Also, you want to pick a manager-managed LLC if you and/or other members don’t want to make decisions about the day-to-day operations of the company.
The process time for the state to register your LLC depends on how you send your Articles of Organization. If you send online, then the registration is immediately after receiving payment. If you mail your Articles of Organization, then you’ll wait approximately two weeks your LLC’s registration.
It is not automatic that the Secretary of state will register your Articles of Organization. The office can reject the Articles. Typically, Articles of Organization are rejected because there’s an issue with the LLC’s name.
Create Your LLC Operating Agreement
An LLC operating agreement is a document that outlines specific terms such as the financial and functional decision-making structure. In other words, it customizes the terms of the business according to your specific needs. For example, it outlines the path your business will follow and clearly defines the management and operations side of the LLC. Let’s say you want all profits distributed to each LLC member, regardless of their contribution. You’d write that into the agreement. It’s usually 10- to- 20 pages long and contains information such as:
1. The members’ percentage of ownership
2. The members’ voting rights and responsibilities
3. The duties and powers of each member
4. How losses and profits are allocated among each member
5. Any issues related to the LLC’s management
6. The rules regarding taking votes and holding meetings
7. All buy-sell and buyout provisions. This means the agreement outlines what happens when a member wants to sell their share of the LLC or leave the company. It should include what will happen to the member’s shares if they die.
8. The rules regarding new members
9. The purpose of the LLC’s business
10. How the LLC is taxed
11. How long the LLC intends to operate
12. Where the LLC is located in West Virginia
Do you know what the term “boilerplate” means? It is a term used to describe a fill-in-the blank form such as an LLC operating agreement form. You can get a boilerplate LLC operating agreement form and fill in the necessary sections.
However, this isn’t a good idea. A boilerplate LLC operating agreement form has the standard language needed to have an agreement. Unfortunately, it is a one size fits all type of document. It’s best to work with a company to write an LLC operating agreement instead of using a boilerplate form. You can avoid major mistakes and outline all the terms of your LLC.
An operating agreement isn’t required by state law. That doesn’t mean you should not have one. In fact, the state’s Corporations Code Chapter 31B Section 1-103 recommends that ever LLC have an operating agreement. You need to have this legal document to outline operating procedures and ownership of your company. Without one, you increase the risk of future conflicts within your LLC.
If you’re a single-member LLC, you really need an operating agreement. It will help keep your limited liability status in court. In addition, it’ll add more credibility to your company.
Obtain an EIN for Your LLC
An Employment Identification Number (EIN) is also called a Federal Tax Identification Number. This number is similar to your Social Security Number (SSN). However, it is for your business. An EIN allows the Internal Revenue Service (IRS) to track your company’s tax reporting. You obtain an EIN from the federal government. West Virginia doesn’t provide EINs.
It’s important to form your LLC prior to getting an EIN. The reason for this is because you are expected to provide the federal government with the date your LLC was formed. Also, you want to ensure your company’s name isn’t taken. If your business is a sole proprietorship with no employees and no obligation to file pension plan tax returns, you’re not required to obtain an EIN.
A single-member LLC may not need an EIN. Your LLC may fit into this category if you don’t have any tax liability or employees. That doesn’t mean you shouldn’t obtain one. You may decide to hire employees later. Another reason to get an EIN is to maintain the LLC’s corporate veil.
LLCs are tricky because the government requires you to keep your personal finances separate from the LLC’s finances. If you use LLC money or simply place it into your account, you commingle finances. This pierces the corporate veil and eliminates your limited liability status. If you obtain an EIN, you can open a business checking and/or savings account for your business. Doing this will maintain your corporate veil.
If your LLC is a multi-member LLC, you will need to file for an EIN. Your company is required to get an EIN because you’re required to file a partnership return. You’re also required to provide the K-1s to all LLC members. Each LLC member will use this form to pay taxes to the IRS on their tax returns.
Why is an EIN is Needed for an LLC?
It doesn’t matter the industry or type of business you operate, you should obtain an EIN. Some advantages of getting an EIN include, but are not limited to:
Preventing identity theft: Using an EIN is more private than using a SSN. Also, it’s peace of mind knowing that if someone hacks your accounts, your personal information and finances are separate and safe.
Opening a bank account: Majority of banks require you to have an EIN to open a business account. Once you open a bank account, you can also build business credit and qualify for business loans.
Hiring employees: You will need an EIN to hire an employee. Having an EIN will help you set up payroll and allow the IRS to track your payroll taxes. You’ll need an EIN to register for your West Virginia employer taxes.
Getting a Free EIN for Your LLC
The simplest way to obtain an EIN for your LLC is to go to the IRS website and apply. Although the internet is open 24 hours a day, the IRS website maintains online hours of operation. You can only apply if you meet certain eligibility requirements. For example, you have a business in the United States or any of the U.S. Territories.
The IRS requires you to have a valid Taxpayer Identification Number. This includes an SSN, EIN or ITIN. Once you complete the online form, you’ll immediately receive an EIN. However, you can only apply for an EIN once per day. If it takes longer than 15 minutes for you to complete the online form, your session will expire. The session can’t be saved. Thus, you’ll need to start the application again.
You can request an EIN during the day from 7 a.m. to 10 p.m. You can also request an EIN via mail. Print, complete and fax or mail an SS-4 form to the IRS. The questions on the form are the same as the online version. You must answer questions about the type of business you have and how many owners does your LLC have.
Other Steps to Forming an LLC in West Virginia
Once you’ve registered your LLC in the state, you have some important things to do. These things will ensure your LLC runs smoothly. For example, you want to open your business bank account. Another thing you may want to do is to get a business credit card. A business credit card will assist in separating your business and personal expenses. You’ll build your LLC’s credit history. This will help you raise capital for your business.
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Get the Required Insurance for Your LLC
Business insurance assists in growing your LLC. For example, general liability insurance is a type of insurance policy that protects your LLC from business lawsuit. This type of insurance is for most small businesses.
Professional liability insurance is more specific insurance for professionals such as accountants and consultants. It covers your LLC against malpractice claims and other types of business errors. Workers’ Compensation Insurance is another type of business insurance your LLC may need.
Workers’ Compensation Insurance provides coverage for any job-related injuries, deaths or illness. West Virginia requires any company with more than one employee to obtain workers’ compensation insurance. An “employee” is considered LLC members and corporate officers.
Obtain West Virginia Business Licenses and Permits
Obtaining business permits and licenses will depend on your type of business. To operate an LLC, in the state, you must comply with local, state and federal regulations. For instance, if your LLC operates a restaurant, you’ll most likely need building permits, health permits and signage permits. The fees for permits and business licenses vary according to the type of permit or license needed.
Complete West Virginia Tax Requirements for Your LLC
Your LLC in West Virginia may require registering for one or more state tax forms. For example, if you are selling a physical product in the state, you’ll need a sellers permit. Obtain a sellers permit via the state’s tax department. The permit allows you to collect sales tax on products. This sales tax is levied by counties, states and municipalities on the exchange of taxable goods.
You may be required to register for Unemployment Insurance Tax via the states department of commerce. Whether you do have to register depends on if you have employees or not. Sign up for Employee Withholding Tax via the state’s tax department.
Creating Your LLC West Virginia
Congratulations on embarking on your new business journey. Creating an LLC is the first step in building your business and growing into a profitable company. One thing to remember is that the process of setting up an LLC is a time consuming and stressful one. Any misstep can cause West Virginia to dissolve your LLC. For example, the Secretary of State can reject your LLC based on using a name that’s already registered. That’s why it’s important to perform a West Virginia LLC search.
In addition, there are a lot of things you may not know you need to do like obtain a Certificate of Good Standing. This certificate is also called Certificate of Existence in West Virginia. The certificate verifies that your LLC formed legally and has been maintained properly. You may need this certificate if you want funding from a lender or bank or your obtaining a specific permit or license.
It’s important to note that you are not alone in setting up an LLC. You have the option of using a professional service to set up your LLC for you. A professional LLC services take a lot of the stress and frustration out of the process of starting and registering an LLC located in West Virginia. The service will create your LLC so that you can focus on starting your business and making it a success. Our Wisconsin LLC guide is another great resource to check out.