WHAT YOU NEED TO KNOW ABOUT STARTING A BUSINESS IN CHESTERFIELD COUNTY, VIRGINIA

There are certain procedures you need to follow when starting a business. This brochure gives an easy-to-understand, brief overview of starting a business in Chesterfield County. It is NOT intended for use without involvement by or discussion with your Certified Public Accountant, attorney and other important financial advisors. The forms and deadlines discussed here incur substantial penalties if not timely filed. Always consult professional advisors before starting any business venture. The use of this information without their substantial input can be hazardous to your wealth.

THE BUSINESS ENTITY

Perhaps one of the most important steps is choosing the type of entity structure for your business, as it will determine how you will keep your records and how you will be taxed.

Sole Proprietorship
A sole proprietorship is a type of business entity which is unincorporated and consists of one person, who pays tax on all income and is personally liable for all losses and liabilities.

Partnership
A partnership is an entity formed by two or more persons contributing abilities, money, and other assets. In a general partnership, the partners are liable for all debts. Each partner pays tax on his or her share of the income.

Corporation
A corporation is a separate legal entity from its owners. The three main characteristics of a corporation are 1) limited liability, owners can only lose their investment in the corporation, 2) easy transfer of ownership through the sale of stock and, 3) continuity of existence. A corporation can be either an "S" corporation or a "C" corporation. An S corporation has fewer than 75 stockholders and income tax is paid once, at the individual level. If a corporation is not an S corporation, it is a C corporation. A C corporation, on the other hand, is taxed at the corporate level and stockholders are also taxed on any dividends taken by shareholders.

Limited Liability Company
The limited liability company (LLC) income tax is paid by the "members," not the company. With an LLC, the personal liability of its owners is more limited and, unlike an S corporation, an LLC can have more than 75 stockholders, which may be corporations and foreigners.

SOME COMMON FEDERAL AND STATE FORMS

• Form SS-4 is used to obtain a Federal Employer Identification Number (EIN) and is filed with the Internal Revenue Service.

• Certificate of Assumed Name needs to be filed with the Clerk of the Circuit Court in the city or county in which your business is located if it will have a name other than the legal business name.

• Articles of Incorporation and a charter fee need to be filed with the State Corporation Commission.

• Articles of Organization and a filing fee need to be filed with the State Corporation Commission.

• Form VEC-FC-27 needs to be filed with the Virginia Employment Commission if your business is subject to unemployment tax.

• Form R-1 needs to be filed with the Virginia Department of Taxation if corporate income tax, sales tax, employer withholding tax or any other state tax applies to the operation of the business.

• Form 2553 needs to be filed with the IRS by the 75th day of an S corporation’s existence.

WHAT FORMS DO YOU NEED?

Form SS-4, if you have at least one employee; sole proprietorships are not required to file with the State Corporation Commission or with the Clerk of the Circuit Court, unless you need to file a Certificate of Assumed Name; Form VEC-FC-27 and Form R-1, if applicable

Partnership

Form SS-4; a partnership also must file Articles of Partnership with the Clerk of the Circuit Court where the business will be located; and, if applicable, Certificate of Assumed Name, Form VEC-FC-27 and Form R-1

Corporation

Form SS-4; Articles of Incorporation; Form R-1 and if applicable, Certificate of Assumed Name, VEC-FC-27, and Form 2553 (If "S" status elected)

Limited Liability Company

Form SS-4; Articles of Organization; and if applicable, Certificate of Assumed Name; Form R-1 and Form VEC-FC-27

APPLICATION FOR A LOCAL BUSINESS LICENSE

If your business will operate in Chesterfield County, you need to complete an application for a Chesterfield County business license, available from the Office of the Commissioner of Revenue. Before applying for a business license, you must have filed a Certificate of Assumed Name, if necessary, with the Clerk of the Circuit Court. You must send along with the business license, a Business Liscense Classification Questionnaire (BLCQ), which asks questions about the nature of your business and its location. Chesterfield rigorously enforces zoning laws, and this is a part of the BLCQ requirement. It is generally a good idea to appear in person at the business license depatment to ensure that the business is properly classified.

The tax liability will be based on either a flat rate or an amount per $100, depending on the type of business. Usually, the total tax owed is calculated based on a business’ gross receipts or gross purchases from the previous year. Persons starting new businesses, will need to estimate gross receipts or purchases for the year. There are six basic classifications of business types whech are not subject to flat rate of tax. These are, in order of tax rate, from highest to lowest: professional service, personal service and commission merchant, retail merchant, contractor and wholesale merchant. However, if your business falls under one of these categories and you do not expect the year’s gross receipts or purchases to exceed $10,000, you do not have to file a business license. The flat rates also vary by business classification. It is acceptable for a business to have more than one business license, for each segment of the business, which would be subject to various tax rates. Business licenses expire on December 31 and you must renew them each year on March 1.

Additionally, you might also want to contact other state agencies, such as the Alcoholic Beverage Control Board, Department of Health, Department of Housing and Community Development, Virginia Department of Occupational Regulation, Department of Labor and Industy, and some other departments which may have other requiremaents for your particular type of business.

BUSINESS PERSONAL PROPERTY TAX

You must also file, by March 1, a Chesterfield County Return of Business Tangible Personal Property. On the form you will list all furniture, equipment, tools, office machines, signs, and other property used in the operation of your business. The bill for the tax, due June 5, will be sent to you, based on the purchase cost of the property and the time you have owned it. You not only pay tax the year you purchase property, but for each year it remains in use.

Manufacturers in Chesterfield are exempt from business licenses, but must still pay business personal property tax on all machinery and tools.

WHAT IS THIS PLACE CALLED CHESTERFIELD COUNTY?

Chesterfield County was formed in 1748 and named for Philip Stanhope, the Fourth Earl of Chesterfield, was home to the first iron furnace in America in 1619 at Falling Creek.

It was the first county in the state to sell revenue bonds for a centralized water system. Today, Chesterfield County is a thriving area supported by manufacturing and distribution facilities, regional headquarters, as well as several large office parks and many retail locations. Chesterfield County is also home to many established and new residential areas.

The Chesterfield County Department of Economic Development is dedicated to providing businesses with assistance in locating. The office coordinates meetings with people, such as real estate agents, landowners, and government representatives, who can help you find an appropriate place for your kind of business.

IMPORTANT PHONE NUMBERS

INTERNAL REVENUE SERVICE

(800) 829-1040

FOR FEDERAL TAX FORMS

(800) 829-3676

VIRGINIA DEPARTMENT OF TAXATION (Richmond District Office)

(804) 367-0954

STATE CORPORATION COMMISSION

(804) 786-3733

VIRGINIA EMPLOYMENT COMMISSION

(804) 786-7159

COMMISSIONER OF THE REVENUE

(804) 748-1281

CLERK OF THE CIRCUIT COURT

(804) 748-1209

BUSINESS LISENSE SECTION

(804) 748-1754 or (804) 748-1282

BUSINESS PERSONAL PROPERTY

(804) 748-1366 or (804) 748-1755