West Virginia LLC (6-Step Guide) – How to Form an LLC in West Virginia

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If you are considering starting a new business or upgrading your existing business structure, then a West Virginia LLC may be a great call for you. West Virginia may not be the first state that comes to mind when it comes to forming a new business, but you may be surprised at what it has to offer.

A West Virginia LLC can offer you protection for all of your personal assets and potentially reduce your business’s tax burden. Plus, with an extremely low cost of living, your earnings can go a lot further. So, let’s take a closer look at what a West Virginia LLC can offer your business and how you can form your own West Virginia LLC in only six easy steps.

Why Would You Want a West Virginia LLC?

There are a number of reasons you may want a West Virginia LLC, from the protection it can offer you, the tax benefits, and the low costs of doing business it offers. Let’s take a closer look.

  • Protection For Personal Assets: A West Virginia LLC can offer your personal assets protection no matter what the future holds for your business. Even if your business becomes incapable of paying its debts down the line, you won’t have to worry about your personal assets being held accountable.
  • No Double Taxation: A West Virginia LLC is a pass-through entity which means that your earnings will not be taxed on the entity level only on your personal tax return. Thus, no double taxation, which other business structures such as C-type corporations may suffer from.
  • Easy Maintenance: With a West Virginia LLC, it is easy to keep your business on good terms with the state. Unlike a corporation, there are no required meetings or complex documentation and minutes to worry about. The most significant maintenance you have to worry about is filing an Annual Report with the state, and this is very easy.

Quick West Virginia LLCs Pros & Cons

Like most entrepreneurs, chances are you don’t have much time to spend, but this is a big decision. So, let’s quickly consider the most important pros and cons of forming a West Virginia LLC.

Pros

There are several advantages to this business structure, and here are a few of the biggest.

  • Freedom: With the West Virginia LLC Act, members of LLCs have a lot of freedom to create voting and nonvoting classes of membership. They can also customize how they wish to share profits and losses and arrange their capital contributions. Additionally, they can have classes of membership with and without voting rights. The act also allows LLCs to distribute profits and losses on a basis other than a member’s percentage of investment in the LLC. This act gives business owners a lot of freedom to customize their LLC.
  • Duration: The West Virginia LLC Act gives an LLC an unlimited life which means it can outlive its members
  • Business Partners: According to the West Virginia LLC Act, members can customize the responsibilities the members have to each other. However, both members and managers do have a limited fiduciary duty of care and loyalty. The duty of care means that the member or manager cannot behave in a reckless or grossly negligent manner, knowingly violate the law, or engage in intentional misconduct.  A duty of loyalty means members must act as a trustee for the property of the LLC, not compete with the LLC, not take any business opportunities away from the LLC, and not act in a manner that is adverse to the LLC or work on behalf of parties whose interest is adverse to the LLC.
  • The West Virginia LLC Act also allows members to alter the default rules. The members can specify categories of activities or kinds of activities that will not violate the duty of loyalty as long as these are not unreasonable. This act also contains a safe harbor provision that covers transactions between managers or one or more of the members and the LLC. It allows an LLC agreement to specify a percentage of the LLC’s members or disinterested managers to approve a transaction or act that would otherwise be a violation of the duty of loyalty after reviewing all the material facts concerning the transaction.
  • Unwanted Business Partners: The West Virginia LLC Act also helps members to protect their control of their LLC. It allows an LLC’s agreement to ban members from transferring their distribution of interests in the LLC. Even if the LLC agreement does not prohibit transferring distribution interests, the transfer does not give the transferee any right to participate in the management or the right to become a member. It will also not dissolve the LLC. The transferee will simply receive the distributions that the member would have received. The transferee cannot become a member unless all of the non-transferring members agree that the transferee can become a member.
  • Creditors Only Get Passive Rights: The LLC Act specifies that if a judgment creditor gets a charging order against a member, the creditor will only get the distributions that the member would have been entitled to. The creditor will not get management rights. A court could force the member to sell their interest, but the purchaser would only get the distributions the member would have received. They would not have the right to participate in the management of the LLC. Further protection comes from the fact that an individual will lose their rights as a member if they willingly make an assignment for creditors, fail to contest the appointment of a trustee, liquidator, or receiver over their property, or become a debtor in bankruptcy.

Cons

As with forming in any state, there are a few disadvantages to consider as well, and here are the biggest.

  • Poor Economy: West Virginia has a poor economy. It has lower job growth than most other states and a higher unemployment rate. This could lead to less qualified workers for some businesses.
  • Poverty Rate: West Virginia has one of the highest poverty rates in the country and one of the lowest average median incomes.
  • Privacy:  West Virginia requires the names of the members or managers of the LLC to be listed. This will reduce privacy.

How to Form Your West Virginia LLC in Six Easy Steps

Now that you have seen the reasons you might want a West Virginia LLC and all of the pros and cons, hopefully, you have decided a West Virginia LLC is right for you. If so, great! Now we can take a look at how you can form a West Virginia LLC in only six easy steps. Let’s get started!

Step 1: Pick a Name for Your LLC

Choose-your-LLC-Name-1

The first step in forming your West Virginia LLC is choosing a name for your business.  You want to choose a name that is catchy and also gives people an idea of what your business does. But your name also needs to comply with West Virginia’s guidelines for business names. So, we will list these guidelines below.

  • The name you choose must include the words “limited liability company,” L.L.C., LC, L.C., or LLC.  Also, the words “limited liability company” can be abbreviated as “Ltd.” and the word “company” can be abbreviated as “Co.”
  •  You cannot use words such as a bank, university, or attorney in your name unless you have the proper license and you fill out the appropriate paperwork.
  •  You cannot use words in your business’s name that could cause people to believe your business is a government agency.

You need to make sure your name is available in West Virginia by doing a Business Organization Search on the West Virginia Secretary of State website. If you’ve decided on a name but you’re not ready to form your LLC yet, you can reserve your name for up to 120 days by filling out Form NR-1. You will need to file this form by mail.

It would also be a good idea to see if the web domain for your business name is available since you will likely want to start a business website at some point. If the URL is available, it would be a good idea to purchase it.  If you cannot get a web domain using your business name, you may want to consider choosing a different business name.


Step 2: Choose Your Registered Agent in West Virginia

Appoint-Registered-Agent

West Virginia requires all LLCs to have a registered agent to accept service of process and other official documents from the state. You can choose a person or a West Virginia agent of process to be your registered agent. There are some requirements for the registered agent if you choose a person, such as:

  • The person must be 18 years of age or older.
  • The person must be a resident of West Virginia.
  • The person must have a physical address in West Virginia.
  • The person must be available during all normal business hours.

Hiring a Registered Agent Service

Most small businesses hire a registered agent service, and there are a number of good reasons for this.

  • LPrivacy: The biggest reason to hire a registered agent service is privacy. The address of the registered agent will become part of the public record which could lead to a lot of unwanted sales calls. But with a registered agent service, the address of the registered agent service will be listed.
  • Availability: A registered agent needs to be available during all regular business hours. This can be hard for businesses that operate outside of regular business hours. It can also be difficult for businesses that involve a lot of travel where the owners and employees are likely to be away from their office a lot. In both of these cases, it could be hard for a business owner or any of their employees to be available during regular business hours. However, with a registered agent service, someone will always be available doing regular business hours.
  • Business Reputation: Hiring a commercial registered agent service can also help preserve your good business reputation. If your business is sued and you receive service of process at your place of business, it would not only be embarrassing but could hurt your business’s reputation as well. However, with a registered agent service, your business would be served at the registered agent service’s address, thus avoiding this problem.

Step 3: File Your West Virginia’s LLC Articles of Organization

File-your-Atricles-of-Organization

Filing your Articles of Organization is what forms your West Virginia LLC. After the Articles of Organization are filed with the West Virginia Secretary of State, your LLC is officially formed. There are some things that you’ll need to include in your Articles of Organization, such as:

  • The name you’ve chosen for your LLC
  •  A description of your business
  •  The address of your principal office
  •  Your registered agent’s name and address
  •  The end date for your LLC, if there is one
  •  The information for your organizer
  •  Whether your LLC is member-managed or manager-managed
  •  The purpose of your business
  •  Whether your business is veteran-owned
  •  Whether or not any of your members intend to be liable for the business’s debts

Filing Your Articles of Organization

You have a number of options when filing your Articles of Organization. You can file online at the West Virginia One Stop Business Portal, by mail, by fax, by email, or in person. You can mail your Articles of Organization or deliver them in person to any of West Virginia’s three business centers. The addresses are:

One-Stop Business Center
1615 Washington St. E.
Charleston, WV 25311


North Central WV Business Center
200 W. Main St.
Clarksburg, WV 26301

Eastern Panhandle Business Center
229 E. Martin St.
Martinsburg, WV 25401

If you want to email your Articles of Organization, the email address is [email protected].

For those who want to fax their documents, the number is (304) 558-8381.


Step 4: Create an Operating Agreement

Operating-Agreement

You are not required to create an operating agreement for your West Virginia LLC.  However, doing so is a good idea as it can reduce arguments between members. The operating agreement is a legal document that details the structure of your LLC along with the responsibilities of its members. It also includes any rules or policies for your LLC that you wish to include. This agreement allows you to customize your LLC and can allow you to choose a lot of the rules for your LLC rather than being subject to the default laws of the state.

There are no specific rules as to what must be included in an operating agreement, but there are a number of things you should include in your operating agreement. We will list some of these below.

  • Name and Address: You will want to include the name of your business and the address of its principal office
  •  Percentage of Ownership:  You should list the percentage of ownership for each of the members of your LLC. This is usually based on the amount the member invested in the business. However, if the members choose, a person could get a larger percentage of ownership for other reasons, such as being the person that had the idea for the business or for any other reason the members agree on. Just make sure to include this in the operating agreement.
  •  Voting Rights: Voting rights are usually based on a member’s percentage of ownership. However, this doesn’t have to be the case if members wish to choose a different method. This method should be included in the operating agreement, though. You should also include what type of vote will be required for different decisions. You could choose a majority vote for more minor decisions and a supermajority or a unanimous vote for serious decisions. You just want to include your method in the operating agreement.
  • Profit and Loss Distribution: Profits and losses are generally distributed based on the percentage of ownership. However, like with many other rights, members can choose a different basis of distribution if they want. This should just be included in the operating agreement to avoid any arguments or in case of any legal actions.
  • Management: You can choose to have a member-managed or manager-managed LLC. Most businesses choose to have a member-managed LLC. In a member-managed LLC, all of the members run the day-to-day affairs of the business as well as make decisions for the business. This works well for small businesses in which the members have the time to spend running the business. You can also choose to have a manager-managed LLC. In a manager-managed LLC, the members choose a manager or managers to run the business on a daily basis as well as make decisions for the business. In this form of management, the members act as advisers to the managers. Although, the members can reserve some decisions for themselves by including this in the operating agreement.
  • Member Withdrawal: Eventually, one of the members of your LLC may choose to withdraw. It is best to be prepared for this by including in the operating agreement what will happen if a member chooses to withdraw. You should include whether the member will be required to offer to let members buy their shares before selling them to someone outside of the LLC. You should also include any requirements you want to have for anyone the shares will be offered for sale to.
  • Dissolution: You may eventually wish to end your LLC. So, to make the process smoother should you decide to end your LLC, you should include a couple of things about the process in your operating agreement. You should include how any assets that are left over after debts are paid will be distributed. You should also include whether any of the members will be allowed to carry on the business on their own after the LLC is dissolved.

Step 5: Get an Employer Identification Number (EIN)

Obtain-EIN

An Employer Identification Number, or as it’s also known, a Federal Tax Identification Number, is similar to a Social Security Number. It is a nine-digit number that the IRS uses to identify your business for tax purposes. You will be required to get one of these numbers if your LLC has two or more members or if you intend to hire employees.

Although even if you are not required to get an EIN, you may want to get one anyway because they can be useful for other purposes such as obtaining a business bank account. Most banks will require an EIN for opening a business bank account. An EIN is also required for multi-member LLCs when filing taxes. The number will be required on the K-1 that the LLC will need to give to each of the LLC’s members.

Applying for an EIN

It’s easy to apply for an EIN, and it’s also free. You can apply by mail, fax, online, or for international applicants by phone. Make sure you have a Taxpayer Identification Number available; a Social Security Number will work fine.

You can apply by mail by filling out Form SS-4 and sending it to:

Internal Revenue Service
Attn:  EIN Operation
Cincinnati, OH 45999

If you want to apply by fax, you will still need to fill out Form SS-4. Then, fax the completed form to (855) 641-6935. You should get a return fax in approximately four business days.

The fastest way to get your EIN is to apply online at the IRS website.  If you apply on the website, you will get your EIN as soon as you finish the application process. Make sure you finish the application in one session, as the application will not be saved if you leave before finishing the process.

If you are an international applicant, you can apply by phone. The hours are 6:00 AM to 11:00 PM Eastern Time. You will need to make sure that the person calling has the authority to answer any questions on Form SS-4 and accept your EIN after completing the application.


Step 6: Open a Business Bank Account

Open-a-Business-Bank-Account

Another important step you want to take for your LLC is opening a business bank account. This step isn’t required, but it’s still very important for several reasons, which we will discuss.

  • Keep Your Personal and Business Finances Separate: You need to keep your personal and business finances separate. It’s important that your LLC be seen as its own entity. If you combine your business and personal finances and your business gets sued, your LLC may not be seen as a separate entity, and the court could remove your LLC’s limited liability. This would put the personal assets of the members of your LLC at risk. One of the best ways to prevent this from happening is to have a business bank account that will keep your business finances separate from your personal ones.
  • Form a Relationship With a Bank: If you open up a business bank account, it will give you a chance to form a relationship with a bank. This could help you if you ever decide to apply for a loan or a line of credit.
  • Professional Appearance: Combining your personal and business finances not only risks your limited liability, but it looks unprofessional as well. If you have a business bank account, you can have your customers write out their checks to your business instead of to you, which will give your business a more professional appearance. This may also help your creditors and customers to have more trust in your business.
  • Credit Cards: Having a business bank account will also allow your business to accept credit cards. This is important for businesses these days as credit cards are very popular. If you cannot accept credit cards, it could limit the number of customers you have, thus lowering your income.

Steps for Growing and Maintaining Your West Virginia LLC

Now that you have finished forming your West Virginia LLC, you can take a well-earned rest and know that your business formation is done; the work of growing and maintaining your business can begin. Here are a few steps you can take to get your new business off on the right track.

1. Business Insurance

Get-Business-Insurance

Business insurance is a great way to protect your LLC. An LLC will generally protect your personal assets, but you should get general liability insurance to protect your business’s assets. If your business should be sued, your business assets could be used to satisfy any judgment against your business. However, by having business insurance, your business should be protected if you get sued. 

It is also a good idea to have liability insurance for all of your members since if any of your members are sued and negligence or wrongdoing is involved, their personal assets could be at risk. Also, if you provide a professional service, you will probably want professional liability insurance to protect your business and its members in case of any mistakes or wrongdoing.

Your business may also need Workers’ Compensation Insurance. West Virginia requires most businesses with employees to have this insurance. The insurance protects workers that are injured on the job.


2. Obtain the Necessary Licenses and Permits

Obtain-the-Necessary-Licenses-and-Permits

You will need to make sure your LLC has any licenses or permits it needs to operate in West Virginia as well as the local area your business is located in. West Virginia does require a state license for businesses that sell a physical product. This license is the Business Registration Permit, or as it is also called a seller’s permit. You can obtain this license online at the West Virginia One Stop Business Portal.

Depending on the industry your business is in, or where it is located, you may need other licenses or permits as well. You may need a professional license, building permit,  or possibly a health permit. You’ll want to check with your local area because it’s important to obtain all the necessary permits to avoid any fines or penalties.


3. Pay Your Taxes

Pay-your-Taxes

An LLC is a pass-through entity meaning that the business is not taxed as an entity.  Instead, any profits or losses are passed through the business to the members, where they are taxed on the members’ individual tax returns. This is in contrast to the way in which corporations are taxed where the entity is taxed, and then the shareholders are taxed as well on any dividends.

Both the federal government and the West Virginia State government tax LLCs the same as a partnership. West Virginia does have a state income tax of 3% to 6.5%. Some cities in West Virginia have an income tax as well. So it’s best to check with your local government to see what taxes you or your business might owe. You may want to consult with a tax professional to make sure you are paying your taxes correctly.


Get Professional Help Forming Your West Virginia LLC

Forming a West Virginia LLC is an extremely manageable process, but sometimes it can be hard to get it done with so many other things competing for an entrepreneur’s attention. Luckily you don’t need to go it alone. There are a number of services out there that can help you form your West Virginia LLC, and here are two of the best.

#1: Start Your West Virginia LLC With ZenBusiness

ZenBusiness is one of the newer LLC formation companies out there, but they provide excellent service and get great customer reviews. Their prices are reasonable, and they offer 25% off of registered agent service with all of their packages. They also provide a free operating agreement with any of their packages, which is a good deal since every LLC should have an operating agreement. In addition to this, they will file your annual report for you if you want them to.

$49

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Rating: 4.8/5
Review count: 4500+

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Form an LLC today with ZenBusiness for only $49. They Have 98% customer satisfaction rating and over 4500+ verified reviews.


#2: Start Your West Virginia LLC With Incfile

Incfile has had a lot of experience forming LLCs, and they do an excellent job. They also have very reasonable prices and even offer a free package. The only thing you have to pay for their free package is the state fee. Incfile even includes a year of free registered agent service with any of their packages. They also provide lifetime company alerts. With this service, Incfile will alert you to any upcoming filing deadlines so you can stay in compliance with the state.

$0+State Fees

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Rating: 4.8/5
Review count: 3900+

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Form an LLC today with IncFile starting from $0 + state fees. They Have 97% customer satisfaction rating and over 3900+ verified reviews.


Final Thoughts

A West Virginia LLC is a great way to give your business a meaningful boost while protecting your personal assets and potentially lowering your tax burden. Forming your own West Virginia LLC can be accomplished in only six easy steps, leaving you plenty of time to work on what is most important growing your business. So, don’t hesitate to get started on forming your West Virginia LLC today!


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About the Author
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Founder & author

Ian Broderick is an avid author and owner of LLCGuys.com. He's been involved with the LLC formation field for over 4 years. On top of that, he has worked in several well-known LLC formation service providers. Now he decided to share his knowledge and advice with everybody. Since there are a lot of questions and concerns surrounding this field - his aim is to make LLCGuys a top-notch information provider in regards to LLC creation, service reviews and etc..

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