Create Your Business Entity

The following business types are available in Virginia:

Sole Proprietorship A business structure in which a single individual owns all assets and assumes full personal responsibility for the enterprise’s debts, liabilities, and obligations. This type of business is neither incorporated nor formally registered as a separate legal entity. While formal registration is not required, some sole proprietors may choose to operate under a registered trade name or “Doing Business As” (DBA) designation to enhance branding or market presence.

Some things to consider:

• Easy to form, minimal paperwork and compliance requirements.
• Simple tax reporting as income is reported on personal tax return.

Limited Liability Company (LLC) A flexible business structure that blends elements of partnerships and corporations, offering liability protection to its owners (called members) while allowing operational and tax flexibility.

Some things to consider:

• Fewer formalities than corporations
• No ownership restrictions (can be individuals, corporations, or other LLCs)
• Protection from personal liability and most instances your personal assets won’t be at risk in the event your business faces bankruptcy or lawsuits.
• Pass-through taxation (profits taxed on personal returns)

Corporation A legal entity separate from its owners (shareholders or members). It is managed by a board of directors and operated by officers. Stock corporations issue shares and are typically for-profit, while non-stock corporations are often nonprofits or associations.

Some things to consider:

• Strong liability protection for owners and directors but cost is higher than other structures.
• Require much more extensive record keeping, and reporting.
• Easier to raise capital through stock issuance
• Enhanced credibility with investors and clients
• Potential tax benefits (e.g., S-Corp election)

Limited Partnership A specialized LLC formed by two or more persons with at least one general partner and one limited partner. This is commonly licensed professionals (e.g., doctors, lawyers, architects, engineers, certified public accountants etc..) to provide services in their field while enjoying liability protection.

Some things to consider:

• Same benefits as an LLC, tailored for licensed professions
• Protects personal assets from business liabilities
• Allow professionals to operate under one legal entity

General Partnership An association of two or more individuals who co-own and operate a business for profit. All partners share equally in profits, losses, and management responsibilities. Each partner is personally liable for the debts and obligations of the business.

Some things to consider:

• Easy and inexpensive to form
• Shared decision-making and workload
• Pass-through taxation

Registered Limited Liability Partnership A general or limited partnership that registers for LLP status, providing liability protection to all partners for business debts and the actions of other partners. It is commonly used by professional firms.

Some things to consider:

• Liability protection for all partners
• Maintains partnership structure and flexibility
• Pass-through taxation

Business Trust An unincorporated legal entity where trustees manage property or business operations for the benefit of beneficiaries. It is governed by a declaration of trust and is often used for investment or estate planning purposes.

Some things to consider:

• Flexible structure for managing assets
• Separate legal entity
• Useful for estate planning and asset protection