A sort of business structure known as a limited liability company (LLC) combines the adaptability of a partnership with the liability protection of a corporation. An LLC is created in Virginia by submitting Articles of Organization and the necessary fees to the State Corporation Commission (SCC). Although operating agreements are not required by Virginia law for LLCs, it is strongly advised that every LLC have one.
A legal document known as an operating agreement sets forth the guidelines for how an LLC shall be run. It outlines the management structure, the rights and obligations of each member, and the processes for making decisions and resolving conflicts. Although Virginia law provides default guidelines for LLCs without operating agreements, these guidelines might not always be appropriate for every type of company.
An operating agreement can assist LLCs in preventing future disagreements and legal problems. Without one, members could not have a clear understanding of their responsibilities, which could result in arguments about how decisions should be made and how much money should be made. Furthermore, if an LLC lacks an operating agreement, a court may impose default guidelines that do not correspond to the intentions of the members.
It is significant to note that other states require operating agreements for LLCs even though Virginia does not. An LLC may be subject to the operating agreement requirements of the various states in which it conducts business. In order to prevent any potential problems, it is always a good idea for an LLC to establish an operating agreement.
An additional sort of LLC known as a professional limited liability company (PLLC) exists in Virginia. For licensed professionals, such as lawyers, doctors, and accountants, a PLLC is a specific type of LLC. PLLCs are subject to extra rules and specifications, such as the need for all members to hold valid professional licenses in their specialties.
A company in Virginia is still required to seek a business license regardless of whether it is an LLC. In addition to any state-level licenses or permits, a municipal business license may also be necessary, depending on the type of business and its location.
Last but not least, LLCs in Virginia are taxed as pass-through entities, which means that the business’s gains and losses are transferred to the members’ individual tax returns. As a result, profits are no longer subject to both corporate and individual taxes, as is the case with conventional firms.
To sum up, even though Virginia does not mandate that LLCs have operating agreements, it is strongly advised that every LLC have one in order to prevent any legal challenges and disagreements. A business that is an LLC is still required to seek a business license, and PLLCs are subject to additional rules and procedures. Last but not least, LLCs are taxed as pass-through organizations in Virginia, which may be advantageous for small enterprises.