Starting a Business in Virginia
Virginia has almost three quarters of a million businesses that call it home. It is currently in the top 5 best states to start a business as it has minimal regulatory burdens (except filings for business licenses). There are also many other advantages to starting a company in Virginia. The economy is very strong due to its diverse industries in the many areas within the state. Virginia has a top notch educational system that transfers into a highly educated and skilled labor force. Virginia businesses can benefit from many available programs and incentives. These include workforce development programs, tax credits, Sales and Use Tax exemptions, and companies who physically situate themselves inside a State designated Enterprise Zone.
STEPS TO STARTING A BUSINESS IN VIRGINIAWhen you go to setup a company in Virginia it is done with the Virginia Secretary of State. Their office assists with business administration procedures and other filings. After performing a Virginia corporation search, and once you have a formed company, you can register online for a Virginia Sales Tax Certificate. This permit will allow you to collect and remit sales tax, as well as file sales tax returns with the Virginia Department of Taxation which oversees tax regulations. Whether you are looking up a Virginia sales tax rate, trying to pay Virginia sales tax, or checking the status of Form R-1: Business Registration Form, using efficient systems is important. One system of particular significance is when you need to find the correct Business Licenses to work with. Once you are done with the administrative tasks for your business, you can see which incentive programs will work. Here are some of the benefits programs awarded:
- Virginia offers two different research and development tax credits to help businesses with expansion and growth:
- The first is a major research and development credit that a business can take against a portion of R & D expenses. This credit can be taken up to three quarters of the businesses total tax obligation.
- The second research credit is also an income tax credit that is given to businesses that are related to their qualified R & D expenditures. The maximum credit allotted is $60,000 if R & D is done with a private institution or college.
- Virginia has three major job training programs that can help a business strengthen its workforce while at the same time being compensated for doing so.
- The first program is known as the Jobs Retraining Program which allows business to expand the skill sets of current employees. Grant funding is available to offset training expenses. For companies with less than 250 workers an investment of $50,000 should be made with the hiring of five full time workers. For companies with more than 250 workers an investment of $500,000 should be made with the hiring of ten full time workers.
- The second program is an extension of the first for businesses that are able to create new jobs. If a business is able to hire at least 25 full time workers that are paid at least 125% of the current minimum wage, then they will qualify for cash grants.
- The third job program comes in the form of an income tax credit for companies that have retraining expenses. The credit is either $200 or $300 per eligible worker depending on if the training is in a specific specialty. Qualified educational facilities include private institutions as well as community colleges.
- The Virginia Enterprise Zone Program provides various benefits to incentivize businesses to relocate to economically distressed areas. The objective is to cultivate both monetary and human capital and bring them to these underdeveloped areas. The benefits under the program are the Real Property Investment Grant, the Job Creation Grant, and Technology Zone incentives.
- The Real Property Grant is cash based grant offered to a business that makes an eligible investment into a capital project. There is a minimum investment depending on if the project is a new structure or rehabilitation of an existing structure.
- The Job Creation Grant is an employment based incentive given to a company who opens operations or relocates into an enterprise zone. Grants are offered for up to 5 years at a maximum award of $800 per job annually.
- Businesses that open or relocate to a technology zone are awarded various benefits including tax incentives, ordinance and zoning exemptions, and waivers for certain locality costs.
- Virginia Sales Tax Exemptions are given to businesses within certain industries which include Research & Development, Film Production, Manufacturing and the energy used in the manufacturing process, and custom computer programming. Capital expenditures on equipment and machinery used in R & D as well as in the manufacturing process of tangible personal property that is for resale qualify for a Sales Tax Exemption. A Sales Tax Exemption is available for any film, audio, or video production. The cost of equipment and storage used in a data center also qualify for an exemption. Any customized computer programming is also exempt from sales tax.