The Virginia Limited Liability Company Is Most Popular For Running A Small Business
Before 1991, Virginia did not offer business owners with the option of using a Virginia LLC for operating a business. Accordingly, most small business operated without the use of a legal entity and this created an unlimited personal liability situation for its owners. While there has always been the option of creating a corporation for business, the complication and compliance requirements of a corporation turned off many small business owners.
The LLC offers the same limited liability protection as a corporation but happens to be a much simpler entity to form and manage. An LLC does not require a board of directors and there was no mention in the Virginia LLC laws of required meetings or many other formalities.
While more business people commenced forming an LLC in Virginia for the protection, some still ignored this new option because they did not know exactly what this legal creature was and did not really understand its many benefits. At the time, there was also a lot of confusion about how a Virginia LLC would be taxed and this caused businesses not to pursue the limited liability company as an option.
The tax uncertainty was eliminated in 1997 when the IRS came out with simple rules which allowed an LLC to automatically be entitled to a single layer of taxation. This made the LLC a clear choice for most business owners over a corporation. For the single owner business, changing entity structure to an LLC did not affect anything from a tax perspective. With the country becoming so much more litigious, the LLC has become an essential requirement for small business in Virginia given its many benefits and with no real disadvantages.
So now, for a few hundred dollars, a Virginia business owner can get personal asset protection, a straightforward and easy to structure and have more tax benefits. Based on statistics of the past few years,, the Virginia limited liability company has greatly surpassed the Virginia corporation as the entity of choice for small businesses in the Commonwealth.