Forming a Limited Liability Company can be a great way to avoid the hassles of incorporation and the complicated regulations that each corporation in the state must adhere to. But to many people, much of the LLC formation process is shrouded in mystery. Most business owners know that LLCs provide a lot of business and tax advantages, but they don’t know how to get one. And one of the most mysterious aspects of forming an LLC is formation time frames. How long does it take- from start to finish- to get an LLC? We’ll tell you all about formation times, as well as everything you need to know about doing business in West Virginia, and the requirements to form an LLC.
Discovering West Virginia
West Virginia is known as the Mountain State because it’s the only state in the country that sits entirely within the Appalachian Mountain region. The average elevation in the state is higher than that of any other state on the Eastern side of the Mississippi river.
It shares borders with Ohio, Kentucky, Virginia, Pennsylvania, Maryland and the Ohio River. Of course there are mountainous regions in the state, but there are also “water gaps”, which are canyons and ridges that were carved out by streams, caves, forests, hills, gorges, and rivers. It’s home to both the Appalachian and Blue Ridge Mountains, and the highest point in West Virginia, Spruce Knob.
Mountains aren’t the only thing West Virginia is known for. It’s the most forested state in the country, so it produces a lot of timber and has many areas of protected woodlands. Surprisingly, another one of its big natural resources is its salt deposits, where rock salt is mined and then used to make things like chlorine. Other natural resources in the state are natural gas, coal and oil.
Economic Overview of West Virginia
The GSP, or Gross Domestic Product, of West Virginia is $71.7b, and it’s growth rate from 2017-2022 is 0.1%.
The top performing industries in the state based on revenue are Hospitals, Coal Mining, Gas Stations with Convenience Stores, New Car Dealers, and Oil Drilling & Gas Extraction. The largest companies by employment are The West Virginia University Health System, Walmart Inc., Charleston Area Medical Center, West Virginia University, and The Kroger Co. And the sectors that contribute to the GDP the most are Mining, Healthcare & Social Assistance, Manufacturing, Real Estate & Rental & Leasing, and Retail Trade.
Business Environment in West Virginia
West Virginia’s business environment is #47 in the country, according to Usnews.com. It’s #48 for employment, and #42 for growth. The job growth in the state is only -0.1%, while it’s 0.2% nationally.
When it comes to the workforce, the state ranks #42 for higher education and #45 for Pre-K-12. The infrastructure ranks low, as well. It’s ranked #50 for internet access and #50 for transportation. 31.3% of the state’s roads are in poor condition, which is 19.0% nationally.
It ranks #5 for affordability, but #48 for economic opportunity. The cost of living index in West Virginia is 90.8 (100.0 nationally). The median household income is $51,248 in the mountain state, while it’s $69,717 nationally. And the poverty rate is 16.8%, while the national average is 12.8%.
State Specific Regulations and Incentives for Forming an LLC in West Virginia
Here’s a look at the programs and incentives that West Virginia offers businesses in the state.
- Economic Opportunity Tax Credit: Businesses that create a minimum of 20 new jobs and make an investment in a business facility can offset as much as 80% of the corporate income taxes on the investment. Businesses that create at least 20 new jobs that have an annual median wage over the statewide average can offset 100% of the corporate income taxes attributed to the investment. Businesses that create less than the 20 job requirement within the time limit can get a $3,000 credit per new job for 5 years. The jobs are required to pay at least $35, 700 per year, which is adjusted for cost of living, and provide health insurance benefits. The job minimum is lowered to 10 for eligible small businesses.
- High-Tech Manufacturing Credit: If a business creates a minimum of 20 new jobs and manufactures certain types of computers and peripheral equipment, semiconductors or electronic components, it could qualify for a tax credit to offset 100% of the B&O tax and the corporate net income tax for 20 consecutive years.
- Corporate Headquarters Relocation Credit: Companies that relocate their corporate headquarters to the state and also create a minimum of 15 new jobs can receive a tax credit for 10% of the investment. It can be used to offset up to 100% of the B&O tax as well as the corporate net income tax for as long as 13 years.
- Manufacturing Inventory Credit: This credit is designed to offset the corporate net income tax for raw materials and finished manufacturing inventory.
- Manufacturing Investment Credit: This tax credit is allowed to be used against 60% of corporate net income tax and is determined according to the investment in manufacturing property. This credit doesn’t require a job creation minimum.
- Sales & Use Tax Exemption: Some types of activities are exempt from the sales and use tax. Materials and equipment that are used in manufacturing, including building materials, process equipment and more that were purchased for the construction of the facility are exempt from 6% of the state and 1% of municipal sales taxes. Certain property items used for research and development, E-commerce businesses and warehouse and distribution centers are also exempt.
- Freeport Amendment: This legislation makes property tax exempt from West Virginia Ad Valorem in a couple of ways. First, products that were manufactured and stored in the state before moving to interstate commerce are exempt from property tax. Second, Goods that have been transported into West Virginia from another state and then housed in a warehouse for short periods to be shipped out of the state are exempt from property tax.
- High Technology Valuation Act (Data Centers): Tangible personal property that is used directly in an internet advertising or technology business is assessed at a reduction of 5% of its original cost for tax purposes. Sales tax is completely eliminated from purchases of computers, prewritten computer software, servers, computer hardware, building materials, and other tangible personal property for use in either internet advertising or technology businesses.
- Governor’s Guaranteed Work Force Program: This is a program that supplies individualized job training to businesses that have created a minimum of 10 new jobs during a 12-month period. The awards from this program can’t go over $2,000 per trainee.
- Direct Financial Assistance: There are a number of indirect as well as direct loan programs in West Virginia that can be used to acquire land, equipment or buildings. Customized financing provided through federal industrial revenue bonds is also offered.
Pros and Cons of Establishing an LLC in West Virginia
Before you start an LLC, you need to know about the benefits and drawbacks of this business entity type.
Pros
- The initial filing fees and formation cost for LLCs in West Virginia is affordable, which is beneficial for business owners.
- There’s no franchise tax for LLCs in West Virginia.
- Limited Liability Companies provide limited liability protection. This protects your personal assets and finances and keeps them separate from the assets and finances of the business.
Cons
- Your LLC is required to file an annual report every year, and pay a fee with each one.
- West Virginia has a small market and its people have low incomes, which can stunt the growth of your business and limit its opportunities.
Procedure of Establishing an LLC in West Virginia
This important section of our guide will provide a list of the steps to form a Limited Liability Company in West Virginia. We’ll start by looking at the documents you’ll need in order to file for an LLC.
Necessary Documentation for Filing an LLC in West Virginia
Having these documents on hand will make filing for an LLC simpler.
- Articles of Organization: The most critical formation document is the Articles of Organization because it’s basically your application to form an LLC. You can pick one up from the Secretary of State, and it will require information such as your business name, address, registered agent information and a list of LLC members and their contact information. It may also request your business purpose, duration, and whether your LLC is managed with managers or members.
- Employer Identification Number (EIN): Your business will need an Employer Identification Number or EIN to perform certain business activities, like opening a business bank account, filling out tax forms, and as the name suggests, hiring employees. You can obtain your EIN from the IRS website for free and receive one immediately on your own, so don’t fall for the gimmicks that some companies use to get business owners to pay exorbitant fees for an EIN.
- Operating Agreement: Preparing an operating agreement isn’t a legal obligation for your LLC, but it’s definitely something you don’t want to be without. It’s not just instructions for how your business will operate, it’s an agreement between your LLC members about how they’ll behave, what their jobs are, how they’ll be compensated and more. Some of the information includes the roles of each member, the contributions of LLC members, the ownership shares of each member, and details about the distribution of profits and losses. It also includes information for managers, like an explanation of voting rights for members and meeting schedules. And maybe most importantly, a section about how to remove or add members, which can come in handy if there’s a disagreement or if a member dies. You’ll be surprised how often you’ll refer back to this document.
- Name Reservation Application: The laws in West Virginia dictate that your business’s name has to be different from other businesses in the state. To find out if you can use your chosen business name, run a search on the business name database of the Secretary of State. Once you’re certain you can legally use the name, you’re required to file an Application of Name Reservation to reserve the name with the Secretary of State for 120 days.
- Initial Report: LLCs in West Virginia must file annual reports each year. The first one is called an initial report, which is submitted with your Articles of Organization.
- Tax Registrations: Every business in West Virginia is required to register with the State Tax Department, which can be done from the WV One Stop Business Portal.
- Business Licenses: In West Virginia, businesses are required to register with the West Virginia State Tax Department and receive a Business Registration Certificate, which is what West Virginia calls its state business license. You may also be required to obtain local business licenses.
Legal Requirements for Starting an LLC in West Virginia
With this step-by-step guide you’ll have your Articles of Organization submitted in no time.
- Obtain Articles of Organization Form: The first step is to obtain an Articles of Organization form from the Secretary of State. This is your application for LLC formation, which is why it’s so vital.
- Choose a Business Name: You need to make certain that you can legally use your chosen business name, which you can do by searching the Secretary of State’s business entity database. Then to lock it in, you have to file an Application for Name Reservation with the Secretary of State.
- Choose a Registered Agent: You must designate a registered agent to legally own and operate an LLC. A registered agent is a business or a person who will accept service of process on behalf of your business, as well as receive official government correspondence for you. All of this official mail is sent to their address. It’s an important position with your company. If your registered agent doesn’t adequately execute their duties, it could lead to serious repercussions for your company. This is why even though it’s legal to designate anyone of your choosing for this role as long as they meet the requirements, many businesses choose to hire professional registered agent services instead.
- Choose an Address: You don’t want to just quickly jot down your home address here. Your company’s address is listed on the public record, so listing your home address is essentially like doxing yourself. If your business doesn’t have a physical address in West Virginia, you can either use a virtual address or ask your registered agent about using their address.
- Sign and File Your Articles of Organization: The last step of your LLC formation journey is making sure your Articles of Organization are signed and filed with the Secretary of State. You can do this yourself, which will put your name on the public record, or you can hire an LLC formation service to keep your information private.
Time Frame for Establishing an LLC in West Virginia
Once you’ve submitted your documents, you must wait to hear from the Secretary of State about the approval of your LLC. Formation times are different in every state. Here’s what you need to know about West Virginia’s formation times.
How Long Does the Initial Paperwork Take in the State of West Virginia?
Approval times take 5-10 business days if you choose to file online, and 3-4 weeks if you choose to file by mail.
Processing Times in the State of West Virginia
Processing time takes 5-10 business days for both online and mail filings, with additional transit time for mail filings.
Common Delays in the LLC Formation Process in West Virginia
Some choices and unfortunate events that could slow your formation down.
- Filing Method: The filing method you choose makes a difference. Typically, online filing is faster than mail filing, and expedited processing is even faster than standard online filing.
- Weekends and Holidays: Generally speaking, government workers don’t work weekends or government holidays, so your filing won’t be processed on these days. To avoid delays due to your timing when filing, you should either file on a Monday, or on the next business day following a major holiday.
- Document Errors: The requirements for your formation documents are quite stringent. You can’t make typos, leave out information, or accidentally include incorrect information. You also must include the correct number of copies. You typically need to send in two copies of your Articles of Organization so that the Secretary of State can send one back to you with their seal once it’s approved.
- Timing: The highest volume of filings is always at the beginning and the end of the year. It’s not always possible to avoid filing during these times, so just be aware that delays could occur.
Expedited Processing for LLC Formation in West Virginia
Anyone looking for a fast formation option should look into expedited processing. We’ll tell you everything you need to know about expedited services in this section.
What are the Expedited Options Available?
There are 3 expedited options available in West Virginia:
- 24- hour
- 2- hour and
- 1- hour
Additional Costs for Expedited Services in West Virginia
Expedited processing costs an additional fee. Here are the fees for expedited processing:
- 24-hour: $25
- 2-hour: $250
- 1-hour: $500
Comparing LLC Formation Time Frame in West Virginia with Other States
You can find out a lot about the formation times in your state by looking at the formation times of other states. You’ll know whether it’s fast or slow, and you may decide that you want to start your LLC in another state by creating a foreign LLC.
Brief Comparison with Key States
In West Virginia, processing takes 5-10 days to file online or by mail, and there’s a 1-hour expedited processing option.
There aren’t any faster expedited processing options, although it would be impressive if there were. Online filings are processed immediately in Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming. And mail filings in Alabama, Massachusetts and South Dakota take 1-2 days, while they take only 1 day in Ohio and Kentucky.
Expedited Filing doesn’t always speed things up. It takes 5 days in Arizona and 7 days in Maryland. There are more than a few states that don’t even provide any expedited processing options at all. Processing online orders takes 13- 15 days in Texas, 14-16 days in Arizona, 12-14 days in Washington and 2 weeks in Maryland. Processing mail filings takes 4-6 weeks in Oregon, 4-8 weeks in Texas, 5-6 weeks in Washington, 5-8 weeks in Maryland and 8 whole months in New York.
In the scheme of things, 5-10 business days isn’t terrible, but the 1-hour expedited processing is lightning-quick compared to many other states.
Why is West Virginia a Favorable Place for Forming an LLC?
West Virginia can be a good place to start a business because it’s one of the most affordable states in the country when it comes to the cost of doing business. The cost of business in the state is approximately 12% lower than the nation’s average according to case-usa. In addition to low business costs, the state has made strides to build a pro-business climate. There haven’t been any new business taxes instituted for the past 20 years, it did away with the Business Franchise Tax in 2015, the Corporate Net Income Tax was reduced in 2014, and over the past 8 years around $800 million of tax burden has been removed. On top of all of that, the workforce if full of hardworking individuals. According to surveys, the turnover rates in the manufacturing industry in West Virginia are some of the lowest in the whole country. And with the Governor’s Guaranteed Workforce Development Program, the state places importance on training and educating the state’s workforce and providing this training both now and in the future. So as you can see, West Virginia can be a good place to form your LLC.
