There many types of entities that can be used to own property and operate a business, including corporations, partnerships, limited partnerships, limited liability companies, trusts, along with other specialty entities. The most common entities used are corporations and limited liability companies, and these are discussed below.
1. Virginia Corporations
A corporation is an artificial person or legal entity managed by a board of directors, consisting of one or more individuals, who collectively elect officers to run the corporation’s day-to-day business activities.The corporate structure is more complex than other business structures. It requires complying with more Virginia statutory regulations and tax requirements. It may require more accounting and tax preparation services than the sole proprietorship or the partnership.
There are two types of corporations in Virginia: stock corporations, which are authorized to issue shares to persons who become shareholders, the owners of the corporation; and nonstock corporations, which may have members, but not owners.
Stock corporations are usually formed to generate a profit for the shareholders. Nonstock corporations are usually organized for not-for-profit purposes, such as a tax-exempt, charitable organization or a property owners’ association. Generally, officers, directors, shareholders and members are not liable for the obligations of the corporation.
A corporation is formed in Virginia by filing Articles of Incorporation with the Virginia State Corporation Commission. The Code of Virginia requires the Articles of Incorporation for a Virginia corporation to have certain information set forth in the Articles. Attention to detail here is important in order to avoid unnecessarily high filing fees AND recurring annual fees for stock corporations. If the Articles of Incorporation meet all necessary requirements, then a Certificate of Incorporation will be issued as of a specific date and that date is when the corporation becomes a legal entity.
The Virginia State Corporation Commission does allow for the formation of a Virginia corporation online.
There is a sample Virginia Articles of Incorporation form available on the Virginia State Corporation Commission website for stock corporations and nonstock corporations. But we caution that the forms may not be sufficient for your situation.
2. Virginia Limited Liability Company
A limited liability company is an unincorporated association of one or more members (the owners) who share in the profits and losses of the company’s business. It is managed in accordance with an operating agreement by one or more members (member-managed) or by one or more managers (manager-managed). A limited liability company is a separate legal entity and, generally, the members and managers are not liable for the obligations of the limited liability company.
The Virginia State Corporation Commission does allow for the formation of a Virginia limited liability company online.
There is a sample Virginia Articles of Organization form available on the Virginia State Corporation Commission website.