A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. Virginia, like every other state, has adopted a Limited Liability Company law. Thus, in addition to the traditional choices of Sole Proprietorship, Partnership or Corporation a business that is operated in the Commonwealth may also elect to operate in the form of an LLC.
Limited liability companies are popular because, similar to corporations, owners generally have limited personal liability for debts and actions of the company. Other features are more like a partnership, providing management flexibility along with the benefits of pass-through taxation. Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. Most states also permit “single member” LLCs, those having only one owner.
To form an LLC, a member must file Articles of Organization with the State Corporation Commission. Foreign LLCs, those formed under the laws of another state must obtain a certificate of authority in order to do business in the Commonwealth.
For additional information on the kinds of tax returns to file, how to handle employment taxes and other possible pitfalls, refer to IRS Publication 3042, Tax Issues for Limited Liability Companies.