Virginia Limited Liability Company Taxes

Virginia limited liability company taxes are a complex system of withholding and payments on a state and federal level. Here are the basics of LLC taxation.
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by | Last updated Sep 3, 2019 | Published on Sep 5, 2018 | Virginia Business Law

A Virginia limited liability company (LLC) is a single or multimember business entity that boasts the benefits of both a corporation and a sole proprietorship.

Some benefits include limited liability of business debts against personal assets, member-to-member liability, and various controlled management options. 

Additionally, filing Virginia limited liability company taxes makes it a desirable option for conducting business.

Virginia Limited Liability Company Taxes

As a combined entity resembling both a corporation and a sole proprietorship, a limited liability company (LLC) files its taxes differently than the entities that it resembles.

Pass-through Taxation

From a federal standpoint, an LLC is considered a “disregarded entity” which files “pass-through” taxes. Pass-through taxes means that the LLC doesn’t pay an income tax; however, the responsibility of paying income taxes on behalf of the LLC falls on the members.

Additionally, other ongoing business fees, such as registration fees, may be imposed on an annual basis. There is an additional registration fee for conducting business in Virginia.

Corporation Taxation

Alternatively, LLC members can opt to file taxes as if it were a corporation. Rather than following pass-through taxation, the members elect that a separate tax return is filed on behalf of the business entity.

The tax filing of an LLC consists of corporate income taxes, which amount to six percent of the net income filed each fiscal year. Filing as a corporation creates greater financial distance between members and the business.

Employment Taxation

You are subject to filing for state and IRS taxes as an employer. As an employer, you are responsible for withholding and paying employee income taxes to the Department of Taxation (DOT).

Employment taxes carry regular filing requirements. Additionally, you are required to fulfill annual tax withholding forms with the DOT.

You will also need to pay your state’s unemployment insurance taxes. This IRS tax collection funds state employment agencies and statewide job service programs.

Consulting with an attorney is beneficial when it comes to filing your business taxes.

Sales Taxation

Establishing a business that sells goods to customers requires the collection and payment of sales taxes. To do this, you must register with the DOT and make periodic sales tax payments throughout the fiscal year. You are required to submit periodic sales tax returns to the DOT as documentation of these sales tax collections.

Keep in mind that each state regulates the sales tax on goods.

This means that if you are a limited liability company selling goods in other states, your sales tax will change to reflect the sales taxes of each state.

Additionally, you are responsible for filing all proper sales taxes with each state in which you conduct business and sales.

Consult with a qualified attorney before conducting sales in other states.

If the state requires you to be registered in order to legally conduct sales, you should fulfill those requirements before your business commences.

Conclusion

Virginia limited liability company taxes are a complex system of withholding and payments on a state and federal level.

In order to maintain limited liability of the business, you must ensure that you are meeting all legal requirements.

Schedule a consultation with our business law attorney to discuss your business’ taxes, as well as what steps you need to take to file them.

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Jacob Tingen

Jacob graduated from the University of Richmond School of Law and was accepted to the Virginia Bar in 2012. Less than 30 days after being admitted to the bar, Jacob launched his own legal practice. Read More.

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