Step 2: Establish the Business Identity
Employer Identification Number (EIN)
Applying for an Employer Identification Number (EIN) is a free service offered by the Internal Revenue Service. Beware of websites on the Internet that charge for this free service. IRS.gov recommends completing the application online.
The Virginia Department of Small Business and Supplier Diversity recommends that sole proprietors also get an EIN from the IRS instead of using the owner's social security number for the business.
Select a Business Structure
It is recommended that you consult with an attorney or a tax professional in order to determine the entity type that is most appropriate for your anticipated business activities.
The SBA provides the following information about common business structures:
Business Structure | Ownership | Liability | Taxes |
---|---|---|---|
Sole Proprietorship | One person | Unlimited personal liability | Self-Employment tax Personal tax |
Partnerships | Two or more people | Unlimited personal liability unless structured as a limited partnership | Self-employment tax (except for limited partners) Personal tax |
Limited Liability Company (LLC) | One or more people | Owners are not personally liable | Self-employment tax Personal tax or Corporate tax |
Corporation-C Corp | One or more people | Owners are not personally liable | Corporate tax |
Corporation-S Corp | One or more people, but not more than 100, and all must be US Citizens | Owners are not personally liable | Personal tax |
Corporation-B Corp | One or more people | Owners are not personally liable | Corporate tax |
Corporation-Nonprofit | One or more people | Owners are not personally liable | Tax-exempt, but corporate profits cannot be distributed |
From <https://www.sba.gov/business-guide/launch-your-business/choose-business-structure>
Register with the State Corporation Commission (SCC)
If the business will be operated under a name other than that which will be listed on the business license application, the applicant must register his/her Trade or Fictitious Name with the SCC. You can check to see if your preferred business name is available online. Please be aware that using a fictitious name without first filing with the SCC is a misdemeanor, punishable by a fine or jail time. Registering with the SCC requires a small fee.
Additional Resources: The Campbell County Office of the Commissioner of the Revenue, located on the 1st Floor of the Citizen Services Building in Rustburg, is available to answer questions and provide information to help guide you through these processes. Please visit in person or call (434) 332-9518.