The Commonwealth of Virginia has a vibrant economy. The state has the 13th largest Gross Domestic Product GDP in the country at $476.4 billion. A large share of the revenue is sourced from farming activities, high-tech industries, and the military.
The Department of Defense plays a major role in the economy of Virginia. The Pentagon and a multitude of defense agencies are located in the state. Most of the funding that goes to these entities trickles down to the state economy.
Small businesses (SMBs) also have a major presence in the state, courtesy of a business-friendly environment and local government incentives that offer these small enterprises a better chance at competing with some of the Fortune 500 companies like Dollar Tree, General Dynamics and Amazon that are headquartered in the state.
The state does have some rather obscure taxation laws that may hinder the effort to help SMBs thrive.
Here are some fascinating statistics on small businesses in the Old Dominion:
- The average median income for self-employed Virginia residents who run incorporated businesses is $54,830. Those with unincorporated businesses have a median income of $24,748.
- There are 766,826 SMBs in Virginia – 99.5% of all businesses.
- SMBs pay the checks for approximately 1.6 million employees. That’s 47.1% of all employees in the state.
- There were 39,397 jobs created by small businesses in 2019. Businesses with less than 20 employees made the largest gains with 29,300 new jobs.
- 6,385 small firms closed shop in 2019. This resulted in 21,560 lost jobs.
- Virginia has very stringent tax laws. For instance, there is a 5% tax on restaurants and cafes, a 4% state tax and a 1% local tax. Food that is purchased for home consumption (or takeout) has a 2.5% tax rate, a 1.5% state tax and a 1% local tax.
- However, in the hospitality industry, the state imposes a fee on the rental or purchase of digital media in guest rooms during the period of occupancy not exceeding 90 days.
- For small-scale farmers wishing to hawk their produce, they may be pleased to learn that the state does not tax agricultural produce. However, such items need to be raised and sold at the local farmers market by the same individual and the yearly sales should not exceed $1000.
- Virginia state law requires that every new Virginia LLC designates a Virginia registered agent that will be available during regular business hours at a physical address within the state.
- At 2.9%, Virginia has one of the lowest unemployment rates in the country. This translates to a highly competitive labor market that can be quite daunting for SMBs. These firms often compete ferociously with other larger businesses to lure top talent by offering attractive compensation packages and incentives.
- To open a business in Virginia, you must first register with the Virginia Department of Taxation. If you are planning to employ a certain number of individuals, you must register your business with the Virginia Employment Commission.
- The average cost of obtaining a business license in Virginia is $100. However, this figure varies at the county level.
- Small businesses in the professional, scientific and technical services sectors account for 50% of the total private workforce with a total of 233,757 employees.
- There are only 299 small businesses operating in the utilities sector. 24 of these are businesses with fewer than 20 employees.
- Virginia has 6,143 small enterprises in the export business. They account for 29% of the state’s $17.3 billion of revenue from total exports.
- Sole proprietors are not required to maintain a business license.
- Opening an LLC requires you to file Articles of Organization with the Virginia State Corporation Commission. The filing fee is $100.