YOU NEED TO KNOW ABOUT STARTING A BUSINESS IN THE
CITY OF RICHMOND, VIRGINIA
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 you an easy-to-understand,
brief overview of starting a business in the City of Richmond.
It is NOT intended for use without the involvement of or
discussion with your Certified Public Accountant and attorney
and your other important financial advisors. The forms and
deadlines discussed here 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 could be hazardous to your
one of the most important steps is choosing the type of
entity structure for your business. This should be among
the first decisions, 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. In a general
partnership, the partners are liable for all debts. Each
partner pays tax on his or her share of the income.
Corporation: A corporation is a separate legal entity from its owners.
The three main characteristics of a corporation are 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 75 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 Company: The limited liability company
(LLC) income tax is paid by the partners, 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 and foreigners.
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 applies to the
operation of the business.
2553 needs to be filed with the IRS by the 75th
day of an S corporation’s existence.
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
FOR A LOCAL BUSINESS LICENSE
your business will operate in the City of Richmond, you
should start with the Tax Assessment Division. You must
first file a Certificate of Zoning Compliance. Costing $40,
this process takes between one and five days. Then, if your
business operates under a tradename, you must register the
name at the John Marshall Courts Building for a fee of $10.
Finally, you can file for a business license, for a fee
of $40. The Tax Assessment Division will mail you these
forms if you would like.
tax liability will be based on either a flat rate or an
amount per $100 plus a $30 fee, depending on the type of
business and a filing fee. 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 are not subject to a flat rate of
tax. Some of the most common classifications, in order of
tax rate, from highest to lowest are, professional service,
personal service, repair, restaurant, retail merchant,and
contractor. The flat rates also vary by business classification.
It is acceptable for a business to have more than one business
license, for segments of the business, which would be subject
to various tax rates. Business licenses expire on December
31 and you must renew them annually. For renewals only,
the first half of the tax is due March 1 and the second,
June 15. For all new business licenses and flat rates, the
tax must be paid in full within 30 days of beginning business.
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.
BUSINESS PERSONAL PROPERTY TAX
must also file, by May 1, a City of Richmond 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 due is based on the purchase cost of the property and
the time you have owned it. You not only pay tax In the
year you purchase property, but for each year it remains
in use. Manufacturers in Richmond are exempt from having
business licenses, but must still pay business personal
property tax on all machinery and tools.
OTHER LOCAL TAXES
business may also be subject to some other local taxes,
depending upon the nature of the business. Some other taxes
include a lodging tax, a meals tax, and an admissions tax.
WHAT IS THIS PLACE CALLED RICHMOND?
Richmond area was first explored by the Jamestown settlers
May 27, 1607 and by 1634 it had a population of 419. It
was named for its resemblance to Richmond, on the Thames
in England. It became a city in 1782, just three years after
being named the capital of Virginia.
City of Richmond actively promotes businesses to locate
in the city through its Office of Economic Development.
The office has information available about two programs:
1) Enterprise Zone, for tax benefits, and 2) Bank Participation
Loan Program, for help in financing small businesses. The
Enterprise Zone gives tax benefits to qualifying businesses
who hire a percentage of low-income employees and who operate
within a certain area. The loan program helps people, who
meet the qualifications, acquire a loan for their small
INTERNAL REVENUE SERVICE
FEDERAL TAX FORMS
VIRGINIA DEPARTMENT OF TAXATION (Richmond District Office)
STATE CORPORATION COMMISSION
VIRGINIA EMPLOYMENT COMMISSION
TAX ASSESSMENT DIVISION
CLERK OF THE CIRCUIT COURT
OFFICE OF ECONOMIC DEVELOPMENT