Virginia LLC Taxes

Virginia’s thriving economy and abundance of natural beauty make it a popular spot for new businesses. Yet, as more business owners choose to start their ventures within the state, many may find it challenging to understand the business taxes involved.

Regardless of the size of your business, if you operate a limited liability company (LLC) in Virginia, you’ll need to stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you must pay for your Virginia LLC.

Recommended: Schedule a free consultation with an accountant to stay on top of your taxes. 

Virginia LLC Taxes Owed

LLCs benefit from pass-through taxation, which means the business’s profits pass through to its members’ individual tax returns. As a result, your LLC itself doesn’t pay taxes to the federal government or the state of Virginia. Instead, LLC owners must pay taxes on their portion of the income generated by the LLC. 

In Virginia, LLC owners can expect to pay the following taxes:

Federal Taxes

Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.

Federal Self-Employment Taxes

It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%. 

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.

Virginia State Taxes

Each state has its own laws that dictate how it taxes individuals and businesses. Below are some important state-level taxes likely to affect your Virginia LLC.

Virginia Income Taxes

Virginia’s state income tax rate is 5.75%. This puts it slightly below average when compared to income tax rates imposed by other US states.

Virginia Sales and Use Tax

In Virginia, the state sales and use tax is 5.3%. Some Virginia counties and cities also levy their own local sales taxes with an average rate of 0.45%. Check with your local municipality before your LLC starts operating to ensure you know the proper sales tax rate.

Register for a Sales Tax License in Virginia

If your business sells taxable goods or services, you must register for a sales tax license with the Virginia Department of Taxation.

Additional State Taxes

The Virginia Department of Taxation oversees the collection of various state-specific taxes businesses may have to pay, depending on their location, industry, and number of employees. A few examples of these additional taxes include:

  • Cattle Assessment Tax
  • Egg Excise Tax
  • Forest Products Tax
  • Rolling Stock Tax
  • Soybean Assessment Tax

For more information on business taxes that may affect your Virginia LLC, visit the Virginia Department of Taxation website.

Virginia Local Taxes

The local laws and ordinances in Roanoke may differ greatly from those in Richmond. Regardless of where you live in Virginia, we recommend you check with your local jurisdiction and ensure your business obtains the proper local permits and follows any local regulations that may impact its operations.

Virginia LLC Compliance

You must obey Virginia’s state and local laws in order to maintain your business in good standing. While LLCs technically don’t file taxes with the state, Virginia LLCs must still pay an annual fee each year.

Virginia LLC Annual Fee

Instead of filing a traditional annual report, all Virginia LLCs must pay an annual registration fee every year to the Virginia State Corporation Commission. You can do this online or by mail, and the cost is $50 regardless of your chosen method.

This annual fee is due on the last day of your LLC’s anniversary month — the month in which the state approved your LLC’s formation. If you miss this date, your LLC will have to pay a $25 penalty in addition to the filing fee. You have a three-month grace period in which to pay the filing fee and penalty to make sure your business remains in good standing. 

Failure to pay your annual fee and the penalty within the grace period will lead to the state of Virginia shutting down your LLC.

For more information, check out our Virginia LLC Annual Fee guide.

LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure that you handle your business taxes correctly.