YOU NEED TO KNOW ABOUT STARTING A BUSINESS IN THE CITY OF
are certain procedures that need be followed when starting
a business. While there are many steps you need to follow
in starting a business, this brochure gives an easy-to-understand,
brief overview of starting a business in Petersburg. It
is NOT intended for use without involvement by or discussion
with your Certified Public Accountant and attorney and your
other important financial advisors. The forms and deadlines
discussed herein incur substantial penalties if not timely
filed. Always consult professional advisors before starting
any business venture. The use of this brochure without their
substantial input can be hazardous to your wealth.
THE BUSINESS ENTITY
one of the most important steps is choosing the type of
entity structure for your business, as it will determine
how you will keep your records and how you will be taxed.
Proprietorship A sole proprietorship is a type of
business entity which is unincorporated and consists of
one person, who pays tax on all income and is personally
liable for all losses and liabilities.
Partnership A partnership is an entity formed by two or more persons
contributing abilities, money, and other assets to the business.
In a general partnership, the partners are liable for all
debts. Each partner pays tax on his or her share of the
Corporation A corporation is a separate legal entity from its owners.
There are three main characteristics of a corporation: 1)
limited liability, owners can only lose their investment
in the corporation, 2) easy transfer of ownership through
the sale of stock and, 3) continuity of existence. A corporation
can be either an "S" corporation or a "C"
corporation. An S corporation has fewer than 35 stockholders
and income tax is paid once, at the individual level. If
a corporation is not an S corporation, it is a C corporation.
A C corporation, on the other hand, is taxed at the corporate
level and stockholders are also taxed on any dividends taken
Liability CompanyThe limited liability company
(LLC) income tax is paid by the "members," not
the company. With an LLC, the personal liability of its
owners is more limited and, unlike an S corporation, an
LLC can have more than 75 stockholders, which may be corporations
COMMON FEDERAL AND STATE FORMS
SS-4 is used to obtain a Federal Employer Identification
Number (EIN) and is filed with the Internal Revenue
of Assumed Name needs to be filed with the Clerk
of the Circuit Court in the city or county in which
your business is located if it will have a name other
than the legal business name.
of Incorporation and a charter fee need to be filed
with the State Corporation Commission.
of Organization and a filing fee need to be filed
with the State Corporation Commission.
VEC-FC-27 needs to be filed with the Virginia Employment
Commission if your business is subject to unemployment
R-1 needs to be filed with the Virginia Department
of Taxation if corporate income tax, sales tax, employer
withholding tax or any other state tax apply to the
operation of the business.
2553 needs to be filed with the IRS by the 75th
day of an S corporation’s existence.
WHAT FORMS DO YOU NEED?
SS-4, if you have at least one employee; sole proprietorships
are not required to file with the State Corporation Commission
or with the Clerk of the Circuit Court, unless you need
to file a Certificate of Assumed Name; Form VEC-FC-27 and
Form R-1, if applicable
SS-4; a partnership also must file Articles of Partnership
with the Clerk of the Circuit Court where the business will
be located; and, if applicable, Certificate of Assumed Name;
Form VEC-FC-27 and Form R-1
SS-4; Articles of Incorporation; Form R-1 and if applicable,
Certificate of Assumed Name, VEC-FC-27, and Form 2553 (If
"S" status elected)
SS-4; Articles of Organization; and if applicable, Certificate
of Assumed Name; Form
R-1 and Form VEC-FC-27
APPLICATION FOR A LOCAL BUSINESS LICENSE
business will operate in the City of Petersburg, you need
to complete an application for a Petersburg business license,
available from the Office of the Commissioner of Revenue.
Before applying for a business license, you must complete
a Business License Action Form, which requires that you
visit seven locations, the Zoning Department, Building Inspections,
Fire Department, Health Department, Clerk of Circuit Court,
Police Department, and the Office of the Commissioner of
Revenue, to obtain approval for your business. You also
must have filed a Certificate of Assumed Name, if necessary,
with the Clerk of the Circuit Court.
tax liability will be based on either a flat rate or an
amount per $100 plus a permit fee of $50, depending on the
type of business. Usually, the total tax owed is calculated
based on a business’ gross receipts or gross purchases (for
a wholesale merchant) from the previous year. Persons starting
new businesses, will need to estimate gross receipts or
purchases for the year. There are basic classifications
of business types, which determine the tax rate. It is acceptable
for a business to have more than one business license, for
each segment of the business, which would be subject to
various tax rates. Business licenses expire on December
31 and you must renew them each year by January 31.
PERSONAL PROPERTY TAX
31, you must file a City of Petersburg Return of Business
Tangible Personal Property. On the form you will list all
furniture, equipment, tools, office machines, signs, and
other property used in the operation of your business. The
tax is based on the purchase cost of the property and the
time you have owned it. You not only pay tax the year you
purchase property, but for each year it remains in use.
in Petersburg are exempt from business licenses, but must
still pay business personal property on all machinery and
you might also want to contact other state agencies, such
as the Alcoholic Beverage Control Board, Department of Health,
Department of Housing and Community Development, Virginia
Department of Occupational Regulation, Department of Labor
and Industry, and some other departments which may have
other requirements for your particular type of business.
WHAT IS THIS PLACE CALLED PETERSBURG?
area where Petersburg is located today, on the Appomatox
River, began with the founding of Fort Henry in 1645. In
1675, a trader named Peter Jones, settled in the area to
establish Peter Jones Trading Station. Later, it came to
be known as Peter’s Point until September 1732 when William
Byrd II suggested naming it Petersburg. It officially became
a city in 1850. Some of the bloodiest fighting of the War
Between the States occurred in or about Petersburg.
is part of a state program promoting investment in the city,
through tax incentives, by businesses located in a Enterprise
Zone. Among the requirements to receive state and local
tax benefits are that at least 40 percent of employees of
a new business must be in a low-income category and the
business must create new jobs. Businesses can receive general
and unemployment tax credits and refunds of state sales
tax it collects, depending on their specific situation.
A qualifying business can also receive local tax incentives
such as exemptions from the business license tax and zoning
and building permit fees. Petersburg also participates in
a Small Business Minority Business Loan program with local
banks. Contact the Petersburg Economic Development Office
at (804) 733-2352 for more information.
FEDERAL TAX FORMS
DEPARTMENT OF TAXATION
OF THE REVENUE
OF THE CIRCUIT COURT