Start a business in Virginia

Virginia's state-level demands on a small business are modest. Formation is $100 through the SCC's Clerk's Information System and usually processes the same day. The annual registration fee is $50, due the last day of your anniversary month. Five years of state fees comes to $300 — one of the lower figures in the region, and the LLC hub has the mechanics. There is no state business licence at all.

The money goes to the locality instead, through two charges assessed by the same person: the BPOL licence on your gross receipts and a tangible personal property tax on your computers, furniture and equipment. Both are administered by your city, county or town commissioner of the revenue — an elected local officer, not a state agency — which is why there is no single website and why the rules you find online for one Virginia locality may not describe yours.

BPOL is owed in every city, county or town where the business has a definite place of business. That phrase matters: it is about having an established location there, which is a narrower test than South Carolina's "operating within", where simply doing the work in a town brings you into its licence tax. A Virginia consultant who visits clients in six counties generally licenses in one.

Below the locality's gross receipts threshold, state law limits what the locality may charge to a flat fee. Above it, the licence becomes a rate on gross receipts. The threshold itself is set by the size of the locality, and there is a category with no threshold at all.

So the same business is treated very differently in Fairfax and in a small town. In a large locality, a firm billing $90,000 pays a flat fee of no more than $50; the following year at $110,000 it is over the line and paying a percentage of the whole $110,000, not of the excess. That is a cliff rather than a slope, and it is worth knowing which side of it your forecast puts you on before you plan the year. Running it through a runway view makes the step visible.

Once you are over the threshold, the rate is capped by state law according to what kind of business you are. These are ceilings — a locality may charge less, and many do — but they are what the bill is measured against.

A consultancy billing $400,000 in a locality charging the professional cap owes $2,320 a year for the privilege of holding a licence. A contractor billing the same $400,000 owes $640. Neither figure has anything to do with profit — a break-even year produces the same bill as a good one.

Which category you land in is therefore worth getting right rather than accepting. The line between "professional services" at 58 cents and "business services" at 36 cents is not always obvious for a modern services firm, and it is a conversation to have with the commissioner of the revenue at the point of application, when it is a classification question, rather than three years later when it is an amendment.

Virginia localities also levy a tangible personal property tax on business equipment — computers, furniture, machinery, tools — assessed by the same commissioner of the revenue who handles your BPOL licence. It is annual, it is based on the depreciated value of what you own, and the rate is local.

For a laptop-and-desk consultancy the amount is small. For a business that has bought equipment it is not, and it is the reason two firms with identical revenue in the same locality can get very different local tax bills. Budget it as a real line rather than a rounding error, and keep an asset list, because the assessment is built from one whether you supply it or the commissioner estimates it.

Together, BPOL plus equipment tax is Virginia's local charge on doing business — and it is the whole of it. No Virginia city, county or town levies an income tax. That is worth saying plainly because both of Virginia's nearest neighbours do: across the Potomac, Maryland counties add 2.25% to 3.30% on the same pass-through profit, and Kentucky localities tax payroll and net profits separately.

Virginia does not set sales tax county by county. It sets it by region, which makes the map simpler than most of the South once you know which region you are in.

Services are generally outside the tax entirely. A Virginia consultant, designer or agency collects nothing on their invoices — which is a real difference from North Carolina, where repair, maintenance and installation labour is taxable, and from Maryland, where data and IT services have carried a 3% rate since July 2025. Registration with Virginia Tax is free if you do sell goods.

Virginia requires workers' compensation once a business has more than two part-time or full-time employees, and temporary and seasonal workers count toward the total. Three is the number.

The trap is subcontractors, and it is specific to this state among its neighbours. If you engage subcontractors in the same trade as your own, or to fulfil a contract you have taken on, their employees count toward your total — even when the subcontractor carries its own policy. A two-person firm that brings in a three-person sub to finish a job is over the line at five, without having hired anybody.

This is why Virginia builders and agencies who subcontract regularly should treat the question as continuous rather than as something to check when they next make a hire. The headcount moves with the work.

The Virginia Employment Commission counts differently again, and the difference is worth holding on to. Unemployment insurance liability turns on wages paid rather than on headcount — $1,500 in a calendar quarter, or one employee in 20 different weeks — and a subcontractor's people do not enter into it at all. So you can be liable for one of these and not the other in either direction. The VEC publishes the 2026 wage base and new-employer rate, which were not confirmed in this pass.