Virginia LLC Taxes

An Virginia LLC is taxed at three levels: federal income tax on the profits, Virginia state rules, and payroll or sales taxes that depend on what the business does. Virginia taxes personal income, so LLC owners report their share of profit on a Virginia return in addition to the federal one. Virginia does not charge a separate franchise or privilege tax on LLCs.

Federal tax treatment

By default the IRS treats a single-member LLC as a disregarded entity, so profit is reported on Schedule C of the owner's personal return. A multi-member LLC is taxed as a partnership and files Form 1065, with each member receiving a Schedule K-1. Either can elect to be taxed as an S corporation (Form 2553) or a C corporation (Form 8832). See the IRS page on LLCs.

Self-employment tax

Members who work in the business generally pay self-employment tax of 15.3% on net earnings: 12.4% for Social Security up to the annual wage base set by the SSA, and 2.9% for Medicare with no cap, plus an additional 0.9% Medicare tax at higher incomes. An S corporation election can reduce this for profitable businesses, but it requires running payroll and paying yourself a reasonable salary. Our LLC vs S-Corp comparison walks through the trade-off.

Virginia state taxes

Sales tax, payroll tax, and local business taxes sit on top of these. If you sell taxable goods or services, register with the Virginia tax agency for a sales tax permit. If you hire, you will register for state unemployment insurance and withholding.

Estimated tax payments

LLC owners usually have no employer withholding, so they pay federal estimated tax each quarter, and Virginia estimated tax as well. Missing estimates can trigger underpayment penalties, so many owners set aside a percentage of every payment they receive.

Virginia specific notes

Virginia is filed with the State Corporation Commission (not the Secretary of the Commonwealth). Annual Registration Fee is $50 due in the anniversary month.

Virginia LLC at a glance

Tax rules and thresholds change, and this page is general information. Confirm details with the Virginia tax agency and a licensed CPA before you file.