Congratulations on your decision to form an LLC! Starting a new business or changing the structure of your existing business is always an exciting decision. If you've found your way here, you're either wondering about the process of creating an LLC in West Virginia or you've already chosen this structure for your company and need someone to assist you through the process.
I'll walk you through the process of creating an LLC in West Virginia, but first I'll explain what an LLC is and why many company owners pick an LLC as their preferred business formation. (Note that this is not legal advice. The information provided here is only educational in nature.)
(If you want to skip to the “How to Form an LLC” section, click here.)
What Is a West Virginia LLC?
A West Virginia LLC is a Limited Liability Company formed in the state of West Virginia that is governed by the laws, regulations, and statutes of the state of West Virginia.
Why Choose an LLC?
There are various benefits to choosing an LLC as your business structure over a sole proprietorship or corporation. These three key benefits, however, influence business owners' choices to form an LLC:
1. Limited Liability and Asset Protection
The first, and most important, benefit of creating an LLC is protection from personal liability. As the owner of a West Virginia LLC, you are not personally liable for your Limited Liability Company's financial or legal obligations because limited liability protection separates your personal assets from your business assets.
When an LLC is sued or files for bankruptcy, you, the owner, are protected from the creditors of the LLC taking your personal assets. This means they cannot use your home, automobile, or other personal assets in West Virginia as collateral to pay your business's financial obligations and debts. They can only list the funds or assets of your West Virginia LLC.
Due to the dynamic nature of the US economy, no business is ever completely secure. Additionally, it just takes one unanticipated event (such as a natural disaster) to financially devastate a business overnight. Thus, the security provided by forming an LLC in West Virginia is priceless for business owners who value the money, time and effort spent establishing their businesses.
2. Privacy
The second benefit of creating an LLC over another kind of business structure (such as a corporation) is the privacy and protection of your personal information that forming an LLC in West Virginia provides.
Over the last decade, hackers and internet criminals have risen in number and their knowledge has likewise risen exponentially. They can steal your identity and damage your credit by using harmless data (such as your name and address) and then amassing thousands of dollars in debt, credit card bills, and loans in your name. It may happen so quickly that you are oblivious to the identity theft until it is too late.
If you choose a sole proprietorship as your company structure, the West Virginia Secretary of State will add your information to the public record. Anyone, regardless of their motivation, can access anything publicly uploaded.
However, if you establish a Limited Liability Company in West Virginia, you can safeguard your privacy and identity throughout the LLC formation process.
To do this, you just need to choose an LLC formation service provider. Formation services will register your LLC with the West Virginia Secretary of State using their own information. This means that their information, rather than yours, will be put on the public record. It's a win-win situation for you as an LLC owner since your information remains private while they keep control of their Limited Liability Companies.
Northwest Registered Agent and ZenBusiness are the two services that I highly recommend for LLC formation.
3. Taxation
The third most favorable component of forming an LLC in West Virginia is the tax savings connected with doing so. When a Limited Liability Company is compared to a corporation, these tax benefits become most obvious.
If you choose to incorporate rather than create a West Virginia LLC, you will face what is referred to as “double taxation.”
Corporate income tax is originally levied on profits and personal income tax is subsequently levied on those profits after they have been distributed to shareholders as dividends. The phrase double taxation refers to the fact that company profits are taxed twice before they are distributed to shareholders.
However, forming an LLC in West Virginia allows you to avoid double taxation.
While profits made by the West Virginia LLC are taxed at the company rate, gains paid to LLC owners are classified as personal income and must be recorded on their individual tax returns. This means that if you own a West Virginia Limited Liability Company, you will not be required to pay taxes on the profits of your LLC more than once.
Apart from avoiding double taxation, LLCs provide plenty of other tax advantages.
The Qualified Business Income Deduction (QBID) was established in the 2017 Tax Cuts and Jobs Act, which notably benefits LLCs. QBID enables the majority of LLC owners to save up to 20% on taxes they would have paid had they chosen another company structure. This is a compelling argument to form a West Virginia LLC today.
How to Start an LLC in West Virginia
Now that you understand the fundamentals of an LLC and some of the benefits of creating one in West Virginia, you can make an educated choice about whether the LLC business structure is ideal for you and your business. If you're still interested in forming an LLC in West Virginia and are sure it’s the right business structure for you, the following are the five actions you'll need to complete.
*IMPORTANT* If you're new to LLC formation and want some help, I have some wonderful news. Professional services are available to assist you in forming your LLC. They're called LLC formation services and they simplify the process considerably.
LLC formation services will help you with every stage of the process, from document filing to post-formation administrative support. These services may cost as little as $0 and are an excellent way to ensure you maintain “good standing” status with the West Virginia Secretary of State.
Northwest Registered Agent, which costs $39*, is my top pick for an LLC formation service. They give superior service and always go above and above.
(*The cost is per state, per year and does not include state filing fees)
If you're interested in learning more about the benefits of an LLC formation service, check out my guide to the finest LLC service.
1. Obtain Articles of Organization Form
To begin the LLC formation process in West Virginia, you must first get a copy of the West Virginia Secretary of State's Articles of Organization form (form LLD-1).
This is the primary document you must file and the most important step in the process. You may file the Articles of Organization online or by mail, both of which require a $100 filing fee.
The steps below correspond to the sections of the West Virginia Articles of Organization.
2. Choose Your Business Name
Following the acquisition of the Articles of Organization, the next step is to register the LLC's business name.
Unfortunately, this step requires more effort than just registering the first LLC name that comes to you.
According to West Virginia law, your LLC must have a business name that is different from any existing company names registered with the Secretary of State, just as many websites require a unique username. Additionally, your LLC's name must include the phrase “Limited Liability Company” or the acronyms “L.L.C.” or “LLC.”
To expedite the process, you can submit an Application for Name Reservation (form NR-1) to the West Virginia Secretary of State to reserve a company name for 120 days. The filing fee is $15 and the form can be filed online or by mail.
3. Choose a West Virginia Registered Agent
Appointing a registered agent is the next step in forming an LLC in West Virginia.
West Virginia law requires all foreign and domestic Limited Liability Companies to designate a service of process agent, or registered agent.
A registered agent is an individual or business entity that serves as the point of contact and principal office for your LLC. It receives mail, official government correspondence and legal documents, accepts service of process during normal business hours, and safeguards your information by registering their name and address, instead of yours, with the West Virginia Secretary of State.
You have two options when it comes to picking an agent in West Virginia for your LLC. You may serve as an agent for your business directly or you may hire a registered agent service.
If you choose to act as the agent for your LLC, it is vital to understand that you will be legally required to receive your own mail, legal papers, and service of process on business days during regular business hours. This may complicate operations for your business since the majority of West Virginia LLCs function during regular business hours on business days, and overextending yourself as your LLC’s agent is not a wise decision.
If your West Virginia LLC fails to comply with a service of process, the court may rule a default judgment against you. Failure to timely reply to a service of process or correspondence from a government agency may result in your LLC losing its good standing status with the West Virginia Secretary of State, which could mean you’re no longer legally permitted to conduct business in the state.
By using a registered agent service in West Virginia rather than operating as your own agent, you may drastically reduce your workload and ensure the security of your information. Appointing an agent provider for your company ensures that you receive and are informed of all mail and Services of Process accepted on your behalf by the agent provider. The sole disadvantage of hiring a professional agent is that their business services cost between $99 and $299 each year.
Given the risks that come with operating as your own registered agent in West Virginia, the expense of hiring an agent service is warranted. I propose that newly formed LLCs hire a West Virginia agent rather than attempting to fulfill the registered agent responsibilities on their own.
If you're interested in knowing more about registered agent services, you can read my article on West Virginia's top registered agent.
4. Choose Your LLC Address
Your LLC name isn’t the only important piece of information required on the Articles of Organization form. According to West Virginia state law, every business entity in the state must list a principal business address on the public record.
If you’ve chosen not to use a registered agent, you can list the physical street address of your business. However, if your business doesn’t have a physical street address then you’re forced to list your home or office address on the form, which means it will be on public record. When choosing which address to list, it’s worth remembering that using a PO Box address as your business address isn’t permitted.
If you’ve hired a registered agent service, they will provide you with their address to use as your principal business address. This makes the decision effortless on your part and protects your identity.
5. Sign and File Your Articles of Organization
The last step is to sign and file your West Virginia LLC Articles of Organization. It’s critical to ensure that the information you provide on the form is accurate and that it’s 100% completed.
Here’s a list of the information required on the West Virginia Articles of Organization form:
- Your LLC name
- The classification of your LLC: professional LLC or regular
- Your principal business address
- Your registered agent’s name and address
- The business email for your LLC
- Your LLC’s website address
- Whether you own other businesses in the state
- Your LLC organizer’s information
- Whether you plan to have an LLC indefinitely or for a limited time
- The management structure of your LLC: member-managed or manager-managed
- Information for each LLC member or manager
- Whether your LLC members will be liable for LLC debts or business debts
- The purpose of your LLC
- Whether your LLC is a scrap metal dealer
- Your LLC’s effective date
- Whether your LLC is owned by a veteran
- Your LLC organizer’s signature
Once you’ve added all this information and checked it for accuracy, it’s time to sign and file West Virginia Articles of Organization for your LLC. If you sign the form yourself, your information is then listed on public record, but you can avoid this by using an LLC formation service.
You can file the Articles of Organization form for your LLC online or by mail, and the filing fee for either is $100.
If you’d like to file the Articles for your LLC online, you can do so here.
If you’d like to file by mail, send your form and a payment for the filing fee to the following address:
One-Stop Business Center
1615 Washington Street East
Charleston, WV 25311
Once you have submitted your form and payment for the filing fee, the West Virginia Secretary of State will contact you by mail or email after they’ve processed your documents and the fee. This can take as little as 24–48 hours if filed online and between 5–10 days if filed by mail. However, for additional fees the Secretary of State can process the forms faster. For an additional $25 you receive a 24-hour expedite, $250 for a two-hour expedite and $500 for a one-hour expedite.
Other LLC Activities
Filing your Articles of Organization is a monumental milestone for your company, but it’s far from the last action you’ll take as the owner of your LLC. Here are some of the activities you’ll be expected to take part in to keep your LLC in good standing with the Secretary of State:
Every LLC in West Virginia must file what is known as an annual report. An annual report is a way for the Secretary of State to keep updated information on file for your LLC, while also collecting a filing fee. You’re required to file and pay for your annual report between January 1 and July 1 every year after the year your LLC was formed. To help you remember to file your annual report, the Secretary of State will send you a reminder in the mail in January.
You can file your annual report online using the One Stop Business Portal, which you can find here.
Every business in the state must register with the West Virginia State Tax Department, obtain a Business Registration Certificate, and pay a $30 fee before conducting business in the state. Registering with the State Tax Department will determine whether you’re subject to West Virginia business taxes. To register with the State Tax Department and obtain a Business Registration Certificate, you can use the WV One Stop Business Portal.
Most businesses must obtain West Virginia business licenses based on the type of business they conduct in the state, whether they collect sales tax, or hire employees. It’s possible that you’ll be required to obtain local business licenses, as well. For local licensing, you can check with the city or county clerk in the area your LLC conducts business. For state licensing, go to the WV One Stop Business Portal.
Aside from these activities, you’ll be required to obtain a Certificate of Good Standing from the Secretary of State, pay taxes, and maintain your good legal standing with the Secretary of State through various compliance requirements.
If you’d like to delegate some of the workload, you could hire a West Virginia PEO service, or you could subscribe to online legal services.
West Virginia LLC Fee Summary
One of the most common queries regarding LLC formation is the cost of forming an LLC. Here’s a look of some of the costs you can expect to incur when forming an LLC in the state:
Articles of Organization: $100
Name Reservation: $15
Registered Agent Fee: $99–$299
Annual Report: $25
State Personal Income Tax: 3%–6.5%
State Corporate Income Tax: 6.5%
After Starting Your West Virginia LLC
Starting your LLC is a major accomplishment, and it’s one you should celebrate. So take time out to throw a celebratory party, have a nice dinner at a fancy restaurant, enjoy a night out with your significant other, or go on a shopping spree (because you earned it!).
But don’t stay in relaxation mode for long because there’s still work to be done. Here are the three steps necessary to ensure your LLC has proper business foundations.
Step 1. Create an Operating Agreement
The state of West Virginia doesn’t require West Virginia LLCs to create Operating Agreements, but I highly suggest that you do it anyway, and I’ll explain why.
Your LLC Operating Agreement provides a clear set of instructions that describes various managerial, structural, financial, and operational aspects of your business. The Operating Agreement names LLC members, describes their jobs, who they should work most closely with, their supervisors, and their share percentages and percentages of profits and losses.
Your Operating Agreement also designates which LLC members have the authority to make high-level decisions for the company. Before you draft your Operating Agreement, you should decide whether you’ll have a member-managed or manager-managed LLC and whether it will be a single-member LLC or a multimember LLC so that you can describe the management system of your LLC in the document.
Your Operating Agreement should also include a section that describes the succession order of LLC members. Many small business owners leave this part out, but it’s important to have these logical instructions in the event of a falling out between LLC members that results in members leaving or members joining.
It’s important that your Operating Agreement contains the proper language and that you’ve laid out clear operational instructions because your business is obligated to function according to the instructions you draft in your Operating Agreement. A faulty agreement may stifle your business and prevent future business growth and innovation. If you draft a well-planned agreement, you can watch as your business grows to new heights, unconstrained by faulty operational instructions.
Because it’s such an important formation document, I’ll provide you with a few options to ensure you get it right.
The first is a free Operating Agreement template from Northwest Registered Agent, which is easy-to-use and massively convenient for any new LLC owner. The next option is to subscribe to online legal services, which will help you with the legal wording of the document so that your agreement is legally sound. And the last option is using a business formation service, as they will typically draft an agreement on your behalf as part of their services.
Step 2. Apply For an Employer Identification Number
The next step is to apply for an Employer Identification Number, or EIN. You’ll be required to obtain an EIN if your business collects sales tax or hires employees.
Some of the perks of obtaining an EIN include:
- An EIN will qualify your LLC for business permits and licenses it wouldn’t otherwise qualify for.
- You can use your EIN in place of your Social Security Number on many forms, which protects your identity.
However, you aren’t required to collect taxes or hire employees to obtain an EIN. It’s merely a federal tax identification number for businesses.
It’s quite simple to apply for an EIN from the Internal Revenue Service (IRS). All you have to do is go to the IRS website, navigate over to the Online Application Portal between 7 a.m. and 10 p.m. Monday–Friday, fill out the application and submit it.
If you’re looking for a simpler option, most business formation services apply for an EIN on behalf of your business as part of their services.
Step 3. Open a Business Bank Account
The last step to ensuring your LLC has the proper business foundations is to open a dedicated business bank account for your new LLC.
Many business owners overlook this step, but it’s critical to the success of your LLC.
Oftentimes business owners use their personal bank account for both business and personal financial transactions, mistakenly believing that using one account for two purposes is somehow convenient or time saving. But there are two very good reasons I advise against this practice.
The first reason is that while you may assume that you’ll be able to determine the difference between personal and business transactions later on for tax purposes, you simply won’t. Sure, it’s easy to notice the difference between a couple of transactions within a few days after they were made, but it’s nearly impossible to determine whether a transaction was for personal or business reasons when you’re looking through a statement containing hundreds of transactions that were made as long as 11 or 12 months ago.
The second reason is if you use your personal account for business finances associated with your LLC, you negate the personal liability protection you receive when you start an LLC. Furthermore, your personal information, your identity and the funds in your personal bank account are all compromised.
In short, if you want to protect your personal finances as well as your identity and want to make tax season go more smoothly, simply open a business bank account for your LLC.
You need what is known as a “bank kit” to open a business bank account. This kit includes many formation documents, such as your EIN, Articles of Organization, initial resolution, and Operating Agreement.
Of course you can create the kit yourself. And as with every step of the formation process, a formation service will create it for you, which saves you time and effort.
West Virginia LLC FAQs
Can I form an LLC in West Virginia from out of state?
If your LLC is based outside of West Virginia and you want to expand into the state, or if you are a West Virginia nonresident, you must complete the foreign LLC registration procedure. This is analogous to the procedure for forming a domestic Limited Liability Company. The key distinction is that a foreign Limited Liability Company must file an Application for Certificate of Authority (form LLF-1). This must be accompanied by a valid Certificate of Good Standing from the state in which the LLC is registered. Additionally, you must choose a registered agent with a street address in West Virginia. The application may be submitted online or through the mail for a fee of $150.
Can I form a Professional LLC in West Virginia?
If your West Virginia LLC offers professional services, such as legal or accounting, you must adhere to the Professional Limited Liability Company (PLLC) formation guidelines. PLLCs are restricted to providing a single licensed professional service. All members must have the necessary business licenses and permits or be registered with the state in order to perform the licensed professional service for which the LLC was formed. As part of the LLC creation procedure, you may need to provide a copy of each LLC member's current business license or state registration.
In Summary
Starting an LLC is always a big business move that is worthy of celebration. Congratulations on possessing the fortitude to get through this process and take control of the future of your business.
If you’ve decided against the use of an LLC formation service (which can cost $0*), then there are five steps you need to take to form an LLC in West Virginia:
(*Does not include state filing fees)
- Obtain the Articles of Organization form
- Name your LLC
- Choose your Registered Agent
- Choose your LLC address
- Sign and file your Articles of Organization
Whether you’re starting a new business or restructuring an existing business, forming an LLC can be loads of work. It’s easy to become overwhelmed by the sea of red tape, mountains of paperwork to file, and legal jargon to learn in order to form your LLC. But if you get through it all on your own, there’s nothing that beats the sense of accomplishment you’ll feel.
Congratulations on your decision to form an LLC, and good luck on your business journey!
