Need the LLC view instead? Review the Virginia LLC guide for pass-through structures and protected series strategy.
Statute map & entity types
| Entity | Statute citation | Purpose |
|---|---|---|
| Stock corporations | Title 13.1, Chapter 9 (§§ 13.1-601–805) | Profit corporations issuing shares; governs formation, governance, conversions, mergers, foreign qualification. |
| Nonstock corporations | Title 13.1, Chapter 10 | Membership or charitable corporations; separate annual fee, no share capital. |
| Professional corporations | Title 13.1, Chapters 7 & 7.1 | Licensed professionals (law, medicine, engineering, accounting, architecture) with ownership limited to licensees. |
| Benefit corporations | Article 22 of Chapter 9 (§§ 13.1-782–786) | Stock corporations electing general/specific public benefit and annual benefit reporting. |
| Business trusts | Title 13.1, Chapter 12.1 | Registered business trusts with series options, often used by funds; included here for entity choice cross-reference. |
These statutes collectively allow traditional corporations, professional entities, benefit models, and conversions in or out of Virginia. The SCC requires many transactions (merger, domestication, conversion) to be filed both centrally and in the affected counties.
Professional corporations
PCs serve lawyers, doctors, CPAs, architects, engineers, and similar licensees. Shareholders, directors, and officers generally must hold the underlying profession’s license, and malpractice exposure remains personal even though contractual debts stay with the corporation. Many professionals choose PLLCs instead—see the LLC guide for that comparison.
Corporation vs LLC vs Delaware
| Factor | VA corporation | VA LLC | Delaware corporation |
|---|---|---|---|
| Annual cost | $20 report + registration fee (based on shares) | $50 per LLC + $50 per series | DE franchise ($400+ for startups) + VA foreign registration fee |
| Governance | Predictable board/shareholder structure; investors prefer it | Flexible; can be member-, manager-, or director-managed | Best-in-class case law, but must still qualify in VA |
| Tax strategy | C-corps enable QSBS; S-corps eligible for PTE | Pass-through default; PTE election available | Same as VA corp once you foreign-qualify |
| Use cases | VC-backed startups, ESOPs, companies planning QSBS exits | Closely held services, real estate, director-managed ventures | National VC deals expecting Delaware law |
A founder may accept corporate double taxation to chase QSBS treatment and investor comfort. Others stay LLC until institutional money demands a conversion—plan conversion clauses in the operating agreement.
Pre-formation checklist
| Item | Counsel’s note |
|---|---|
| Entity choice | Stock corporation vs LLC vs business trust; consider QSBS, investor expectations, professional licensing, and whether a benefit corporation structure advances branding. |
| Name & reservation | Run SCC CIS search; include “Corp./Inc./Co./Ltd.”; reserve with SCC619.1 if signing leases prior to filing. |
| Registered agent | Virginia resident director/officer, VA attorney, or authorized entity at a Virginia street address. Confirm they can accept 9–5 service. |
| Share structure | Number of authorized shares, par value, preferred vs common vs option pool, and charter fee impact. Plan for near-term financing to avoid immediate amendments. |
| Tax & PTE posture | C-corp double tax vs S-corp election; S-corps eligible for VA PTE regime but still owe franchise/registration fees. Model QSBS potential for C-corps. |
| Local licensing | City/county BPOL, zoning, building occupancy, health permits, professional board registrations, and county-level business personal property returns. |
Charter drafting & filings
Articles drafting checklist
- Purpose clause: Broad “any lawful purpose” keeps flexibility; narrow purposes should cite statutes (e.g., bank, insurance) when regulators demand it.
- Share structure: Classes, par value, and share counts drive charter fees and investor rights. Avoid authorizing too few shares—you’ll amend before the first financing.
- Board size & staggering: Set initial director count and whether the board is classified; investors often require a fixed or maximum size clause.
- Director liability waiver: Use § 13.1-692.1 to limit monetary damages for breaches of duty except for bad faith, unlawful distributions, or conflicts not approved.
- Preemptive/anti-dilution language: Either grant specific preemptive rights or expressly disclaim them so default statutes don’t create surprises.
- Benefit corporation election: Include the general public benefit statement and optional specific benefits; reference Article 22 requirements.
- Transfer restrictions: Close corporations often lock share transfers to maintain Subchapter S eligibility or professional license compliance.
Charter fee planning
Virginia charges a $25 filing fee plus a charter fee based on authorized shares (capped at $2,500). Example: Founders authorize 10,000,000 no-par common shares and 2,000,000 blank-check preferred shares. Charter fee: first 1,000 shares $50 + remaining shares at $50 per 25,000 until the $2,500 cap. Most early-stage companies simply hit the cap to avoid recalculations. Don’t authorize only 1,000 shares intending to issue fractional interests—you’ll amend the charter immediately when investors demand option pools.
First 90 days timeline
Conversions, domestications & special entities
Conversions
Virginia allows LLC ↔ corporation conversions via Articles of Entity Conversion (LLC-1018.1 for outbound; SCC753/754 for inbound to corporations). Plan tax consequences before filing; conversions generally require SCC charter fees plus new entity filings.
Domestications
Corporations can domesticate into or out of Virginia using SCC819/819.1. Domestication changes jurisdiction of incorporation without dissolving, often used when moving to Delaware post-financing.
Mergers
Virginia supports long-form mergers, short-form parent-subsidiary mergers, and cross-entity mergers (LLC into corporation). File Articles of Merger with SCC ($25) and in each affected county. Parent owning ≥ 90% may complete a short-form merger without shareholder vote.
Professional & benefit corporations
Professional corporations: Shareholders, directors, and officers must generally be licensed. Malpractice liability is personal, but contractual debts remain with the corporation. PLLCs offer similar protection—compare with the LLC guide.
Benefit corporations: Include a general public benefit statement, optionally list specific benefits, and deliver an annual benefit report referencing a third-party standard. Directors must consider stakeholders beyond shareholders; investors often request clarity on enforcement standards.
Taxes, PTE & QSBS
C corporations: Pay Virginia Corporate Income Tax (CNIT) at 6% plus federal tax. No PTE election. The upside: potential federal QSBS exclusion if you meet Section 1202 requirements and hold qualified stock for five years.
S corporations: File IRS Form 2553; Virginia conforms. S-corps may elect Virginia’s PTE tax, shifting the deduction to the entity level. Watch for composite return requirements for nonresident shareholders and credit-for-tax-paid limits when owners live in other states.
LLCs taxed as partnerships: Covered in the LLC guide, but cross-reference if converting later—operating agreements must align with tax elections.
Annual reports, registration fees & reinstatement
Virginia corporations file a short annual report and pay an annual registration fee (based on authorized shares). The report itself is free but due by the end of the month in which the corporation was formed; the fee invoice arrives 2.5 months prior.
| Authorized shares | Annual registration fee |
|---|---|
| ≤ 5,000 | $100 |
| 5,001–10,000 | $130 |
| 10,001–15,000 | $160 |
| Each additional 5,000 or fraction | + $30 (cap $1,700) |
Missing the payment triggers a $25 late fee and, after 4 months, automatic termination. Reinstatement requires filing Form SCC750/751, paying past-due fees and penalties, and curing any missing reports before closing financings or filing with the SEC.
CTA, packages & pitfalls
Common pitfalls (law-office perspective)
Piercing the veil: Under-capitalization, undocumented insider lending, and ignoring corporate formalities give plaintiffs leverage. Hold meetings, document resolutions, and separate funds.
Charter inertia: Founders often authorize too few shares or omit director liability waivers, forcing expensive amendments right before a financing. Draft for the next round, not just day one.
Foreign qualification oversight: Doing business in other states without registering jeopardizes contracts and tax positions. Keep a matrix of states where employees, property, or recurring revenue exist.
Registered agent quality: Cheap agents frequently miss service-of-process deadlines. If you’re litigating or in regulated industries, pay for a responsive RA with electronic delivery.
My Virginia corporation packages
Charter Essentials · $525
- SCC charter drafting/filing (SCC619) with share modeling; state fees included up to $500.
- Initial bylaws template, organizational resolutions, EIN assistance.
- Compliance calendar and 30-minute onboarding call.
Growth Ready · $1,050
- Everything in Essentials plus custom bylaws and shareholder agreement drafted by me.
- Option plan skeleton, stock ledger/certificates, and first annual registration filing.
- One-year registered agent service and 45-minute QSBS/PTE consultation.
Benefit/Professional · $1,950
- Benefit corp or PC charter language, board committee charters, and stakeholder reporting templates.
- Regulatory coordination with licensing boards or benefit-report validators.
- Foreign qualification planning or domestication strategy session plus quarterly compliance check-ins.
Add-ons
| Registered agent renewal | $150/year |
| Annual registration filing service | $140 + SCC fee |
| Short-form merger/parent-subsidiary plan | $600 |
| Delaware domestication planning | $950 |