How to File Virginia Articles of Incorporation

Your Guide to Incorporating in Virginia

Virginia articles of incorporation are filed to create a corporation. This guide provides instructions and tips when preparing and filing this legal document.

Overview

Preparing and filing your articles of incorporation is the first step in starting your business or nonprofit corporation. Approval of this document secures your corporate name and creates the legal entity of the corporation. Only after this approval can the corporation apply for tax IDs, obtain business licenses, sign contracts, and otherwise conduct business.

Incorporating provides many important benefits:

• Limits the liability of directors, officers, and shareholders
• Fulfills statutory requirements to register your business’s or organization’s name
• Provides governance and adds credibility to the business or organization

Articles of incorporation are filed with the Commonwealth of Virginia State Corporation Commission (SCC). Preparing and filing articles of incorporation is the first step in starting your business or nonprofit corporation.

Virginia Stock vs. Nonstock Corporations

There are two types of corporations in Virginia each with their own articles of incorporation rules: stock and nonstock. Generally speaking, in Virginia business corporations form stock corporations and nonprofits form non-stock corporations.

Stock corporations are those that issue stock. The shareholders own stock in anticipation of dividends or selling their stock for a profit. Nonstock corporations may or may not contain members, which behave a lot like shareholders, except that they do not technically “own” any portion of the corporation but instead simply have a membership interest. The members may have a common bond of membership, such as a club, rescue squad, or religious organization.

In other states, sometimes business corporations form nonstock corporations; however, in Virginia “no dividend or income of a nonstock corporation may be distributed to its directors, officers or individual members, except as reasonable compensation for services rendered or upon the dissolution or liquidation of the corporation” (§13.1-814 of the Code of Virginia). As a result of this limitation, most businesses who intend to produce profits organize as stock corporations.

How to Incorporate

The Virginia State Corporation Commission (SCC) offers articles of incorporation templates and instructions. Be sure to locate the correct forms for your profit or nonprofit corporation.

Understand that the Virginia SCC will approve your articles of incorporation if they contain the minimum amount of information required by Virginia statute. Rejection will result in a delayed incorporation effective date, as Virginia does not process rejections with the original submission date. Acceptance does not guarantee that your corporate name does not conflict with other trade names (trademark infringement), that your articles of incorporation contain sufficient language to apply for 501(c)(3), or that your articles of incorporation do not contain other omissions or errors. You may not learn about errors in your articles of incorporation until the IRS, a licensing board, bank, or other agency refuses to accept them. Take the time to learn about filing articles of incorporation before filing them. It is a lot easier to incorporate correctly the first time than try to fix mistakes later on.

You do not need an attorney to file your articles of incorporation. You can file the articles of incorporation yourself or we can help.

Business Corporations

How to File Articles of Incorporation for a Virginia Business Corporation

Articles of incorporation for a stock corporation include the information listed below. Please note that certain information is noted as optional.

1

Name

Declare your corporate name or provide a valid name reservation number. Corporate names must be distinguishable from all other Virginia registered entities (including LLCs, LPs, and other corporations). Search that your desired corporate name is available prior to filing your articles of incorporation. Be sure to include a corporate designator as a suffix to your business name. Corporate designators include corporation, incorporated, limited, company, or a similar abbreviation. Certain words are restricted and may only be used if they accurately describe the nature of the business, such as bank, trust company, insurance company, and public service company.

2

Stock

Indicate the number of shares authorized to be issued. Stock is the means by which ownership of the corporation is divided and assigned.

• You do not have to issue all shares authorized, that way you have the flexibility to add more shareholders at a later date. In the example of a corporation with three owners, you may authorize 1,000 shares and issue 250 shares to each owner. This leaves 250 shares to issue to future investors or partners.
• The articles of incorporation can be amended to increase the maximum number of shares.
• The articles should state if more than one class or series of shares is to be authorized. State the number of authorized shares of each class or series and a distinguishing designation for each class or series (e.g., common, preferred, etc.) and set forth the preferences, rights and limitations of each class or series.

Note that the number of shares authorized will determine the fee for filing the articles of incorporation as well as the annual registration fee. The minimum fee applies when less than 25,000 shares are authorized.

3

Registered agent

You are required to choose and declare your registered agent on your articles of incorporation. A registered agent is the individual or company that will receive service of process (notice of a lawsuit) and other official legal or government documents for the business. There are three options:

• Name an individual who is a resident of Virginia and an initial director of the corporation.
• Name an individual who is a resident of Virginia and a member of the Virginia State Bar.
• Name a domestic or foreign stock or nonstock corporation, limited liability company or registered limited liability partnership authorized to transact business in Virginia. Many corporations use a professional corporate service company for this service. If you have a home office, are regularly out of the office, or wish to have added privacy of keeping your address off the public record, then using a registered agent service may be in your interest.
• The corporation may not serve as its own registered agent.

4

Registered office

State the street address of the registered agent. This registered office is the business office of the registered agent. A rural route, box number, or post office box are only acceptable in limited situations. Also provide the name of the county or independent city (in Virginia these are separate local jurisdictions) where the registered office is physically located.

5

Initial directors

If the registered agent is an initial director, then you must state the names and addresses of all initial directors. Listing the initial directors makes them effective immediately upon formation.

6

Incorporator(s)

The incorporator is the individual responsible for executing the articles of incorporation. In this capacity, the incorporator signs the articles of incorporation, delivers them to the Virginia SCC for filing, and then organizes the corporation. You may declare more than one incorporator. Each incorporator must sign and print their name. Date the execution of the articles of incorporation.

7

Other Provisions

You may choose to include statements that provide more information about your company. Be aware that any information you include will become part of public record.

• You may choose to include statements that provide more information about your company such as the corporate purpose(s).
• If you anticipate applying for a bank loan or have other complex banking needs, contact your bank to see if they require certain information on the articles of incorporation.
• You may optionally include a telephone number of an incorporator.

8

Special corporate structures

There are special types of corporations available. Review the Code of Virginia for the options available and to learn how to be compliant with declaring a subtype. Common examples:

• A professional corporation is formed to provide a specific professional service that requires a license, such as medicine or law. Leverage the articles of incorporation template specific to a Virginia professional stock corporation. The corporate name must contain the word corporation, incorporated, professional corporation, or any abbreviation of the same. Include a description of the professional services as the corporate purpose. Virginia law limits such services to the personal services rendered by: pharmacists, optometrists, practitioners of the healing arts, nurse practitioners, practitioners of the behavioral science professions, veterinarians, surgeons, dentists, architects, professional engineers, land surveyors, certified interior designers, certified landscape architects, public accountants, certified public accountants, attorneys-at-law, insurance consultants, audiologists or speech pathologists and clinical nurse specialists.
• A benefit corporation (B-Corporation) is a new type of corporation. B-corporations are certified to meet rigorous standards of social and environmental performance, accountability, and transparency. Virginia articles of incorporation must contain specific language for this recognition.
• A cooperative corporation is organized to conduct, on a cooperative plan for the mutual benefit of its members, any housing, agricultural, fishing, dairy, mercantile, merchandise, brokerage, water, sewer, manufacturing, service or mechanical business, or to represent or provide financing for cooperative associations, societies, companies or exchanges.

Supplementary Information Filed with the Articles of Incorporation

Expedited processing

If expedited processing is desired, this form must be submitted at the top of the articles of incorporation packet.

How to Elect S-Corporation Status

S-Corporation is a tax election made with the US Internal Revenue Service. By default, your corporation will receive tax treatment as a C-Corporation. Many small businesses elect S-Corporation tax treatment.

• Electing Subchapter S status helps shareholders avoid the double taxation that applies to traditional C-Corporations.
• S-Corps can also help the owners avoid paying the 15.3% Self-Employment Tax (Social Security and Medicare) on distributions.

Corporations must file form IRS-2553 within 75 calendar days of incorporation to be taxed as an S-Corp.

Nonprofit Corporations

How to File Articles of Incorporation for a Virginia Nonprofit Corporation

To incorporate, your Virginia nonprofit should file nonprofit articles of incorporation. Virginia nonprofit articles of incorporation include the information listed below. Please note that certain information is noted as optional.

1

Name

Declare your corporate name or provide a valid name reservation number. Corporate names must be distinguishable from all other Virginia registered entities (including LLCs, LPs, and other corporations). Search that your desired corporate name is available prior to filing your articles of incorporation. Be sure to include a corporate designator as a suffix to your business name. Corporate designators include corporation, incorporated, limited, company, or a similar abbreviation. Certain words are restricted and may only be used if they accurately describe the nature of the business, such as bank, trust company, insurance company, and public service company. Finally, “The name of the corporation may not contain any word or phrase that indicates or implies that it is organized for the purpose of conducting any business other than a business which it is authorized to conduct.”

2

Members or nonmembers

A nonprofit may choose whether or not to have members. Members of a nonstock corporation are like shareholders in a stock corporation. Members elect the board of directors and provide a layer of oversight that is important to many nonprofits, especially larger ones. Having members comes with added complexity in management, recordkeeping, and maintenance. You should indicate whether or not your nonprofit has members. Also provide information about the class or classes of members. For each class, either set forth the designation, qualifications, and rights (including voting rights) of the members of that class or state that such membership provisions will be set forth in the corporation’s by-laws.

3

Directors

Directors are the individuals elected by the members to oversee the management of the corporation. Nonprofits that do not have members typically have self-perpetuating boards, meaning the board of directors itself elects new directors to fill vacancies in the board. The board of directors elects corporate officers to run the day-to-day operations and make certain decisions for the corporation. The articles of incorporation must state the manner by which officers will be elected or appointed. For example, the directors might elect their successors, the directors might be elected by the members, or other procedures or rules may be defined. Also state any “ex officio” directors who hold office by virtue of another office that they hold or held.

4

Registered agent

You are required to choose and declare your registered agent on your articles of incorporation. A registered agent is the individual or company that will receive service of process (notice of a lawsuit) and other official legal or government documents for the business. There are three options:

• Name an individual who is a resident of Virginia and an initial director of the corporation.
• Name an individual who is a resident of Virginia and a member of the Virginia State Bar.
• Name a domestic or foreign stock or nonstock corporation, limited liability company or registered limited liability partnership authorized to transact business in Virginia. Many corporations use a professional corporate service company for this service. If you have a home office, are regularly out of the office, or wish to have added privacy of keeping your address off the public record, then using a registered agent service may be in your interest.
• The corporation may not serve as its own registered agent.

5

Registered office

State the street address of the registered agent. This registered office is the business office of the registered agent. A rural route, box number, or post office box are only acceptable in limited situations. Also provide the name of the county or independent city (in Virginia these are separate local jurisdictions) where the registered office is physically located.

6

Initial directors

If the registered agent is an initial director, then you must state the names and addresses of all initial directors. Listing the initial directors makes them effective immediately upon formation.

7

Incorporator(s)

The incorporator is the individual responsible for executing the articles of incorporation. In this capacity, the incorporator signs the articles of incorporation, delivers them to the Virginia SCC for filing, and then organizes the corporation. You may declare more than one incorporator. Each incorporator must sign and print their name. Date the execution of the articles of incorporation.

8

Provisions to Qualify for 501(c)(3)

Many nonprofits wish to apply for federal income tax exemption for the corporation under IRC §501(c)(3) or other subsection. The IRS requires specific language in the articles of incorporation for your tax-exempt application. These statements are to the effect of the following:

• The corporation is not for profit
• It will not engage in prohibited political or legislative activity listed in 501(c)(3)
• If dissolved, it will distribute its assets in compliance with 501(c)(3)

It is wisest to check with the IRS for the exact language required for your type of nonprofit and intended tax exemption.

9

Other Provisions

You may choose to include statements that provide more information about your company. Be aware that any information you include will become part of public record.

• You may choose to include statements that provide more information about your company such as the corporate purpose(s).
• You may choose to expound on the common bond of membership (if your nonprofit has members) and any restrictions to qualify for membership.
• Some people prefer to include more information about the initial directors and officers. Directors are the individuals elected by the shareholders to oversee the management of the corporation. The Board of Directors elects corporate officers to run the day-to-day operations and make certain decisions for the corporation.
• Certain banking purposes require certain information on the articles of incorporation. If you anticipate any significant banking activities such as obtaining a loan or other financing, check with your bank about their requirements. For example, listing the officers (president, vice president, secretary, and treasurer) may be required.
• Applying for certain business licenses, tax statuses, or other government classifications sometimes requires other provisions listed on your articles of incorporation. In particular, nonprofits can qualify in many states for exemption from sales tax and income tax and should provide any required language in the articles of incorporation. If your nonprofit will have a footprint in more than one state, check with each state’s department of revenue and/or division of charitable organizations.

10

Special corporate structures

There are special types of corporations available. Review the Code of Virginia for the options available and to learn how to be compliant with declaring a subtype. Common examples:

• A cooperative corporation is organized to conduct, on a cooperative plan for the mutual benefit of its members, any housing, agricultural, fishing, dairy, mercantile, merchandise, brokerage, water, sewer, manufacturing, service or mechanical business, or to represent or provide financing for cooperative associations, societies, companies or exchanges.

Supplementary Information Filed with the Articles of Incorporation

Expedited processing

If expedited processing is desired, this form must be submitted at the top of the articles of incorporation packet.

How to Register for 501(c)(3), Fundraising, and State Tax Exemption

501(c)(3) Federal income tax exemption

Nonprofits may choose to apply for federal income tax exemption. 501(c)(3) recognition also allows donors to make tax deductible contributions The IRS published rev-557, an informational resource on how to obtain tax exempt status for a nonprofit organization. 501(c)(3) is perhaps the most common and well-known tax exemption category for charitable organizations, however the internal revenue code has exemption categories for many other types of nonprofits organizations. Incorporating the nonprofit and obtaining a Federal Tax ID (EIN) are precursors to applying for 501(c)(3) recognition.

State tax exemptions

501(c)(3) recognition provides income tax exemption on federal taxes. Nonprofits can apply to become exempt from paying various state taxes in each state where they conduct activities, such as with the Virginia Department of Taxation.

State fundraising registration

Some aspects of fundraising are regulated by state government. Nonprofits that solicit funds may need to submit registrations with the Department of State or Revenue in each state where they solicit residents. Contact the Georgia Office of Secretary of State Charitable Organizations section before soliciting or accepting contributions (either monetary or in-kind donations). Be sure to check the procedures for obtaining the authority to solicit, employee solicitors, or otherwise engage in fundraising in each state where you raise funds.

Additional Requirements for All Corporations

Articles of Incorporation Filing Instructions

The State Corporation Commission provides the following specific instructions on how articles of incorporation should be submitted:

• Articles must be in the English language.
• Articles must be typewritten or printed in black on white opaque 8.5"x11" paper.
• Articles must be printed on side of the page only and without visible watermarks of background logos.
• Articles must be printed with a minimum 1" margin on the top, left, and bottom sides and a .5" margin on the right side.
• Articles must be legible and reproducible.
• Submit the original signed articles.
• Include check for the total charter, filing, and applicable expedite fees.
• Expedited service requests must contain Form SCC21.2 placed on top of each document submitted.

Understanding the Publishing Requirement for Articles of Incorporation

In some states, for-profit and nonprofit corporations are required to publish notice of their intent to incorporate or incorporation. In Virginia, this requirement does not exist.

Expedited Processing of Articles of Incorporation

Standard Virginia state processing time is real-time when you file a stock corporation online or approximately 3-5 business days for other corporations and filing methods. Expedited service requests should be included with the articles of incorporation package if desired. Options are $100 for next day service and $200 for same day service.

Register for Federal Taxes, State Taxes, & Licenses/Permits

After successfully filing your articles of incorporation, you will apply for a Federal Tax ID (EIN), a unique nine-digit number assigned by the IRS to identify your business. You should consult your tax professional to determine your state tax registration requirements. Many businesses register for sales tax or employer taxes. You may also need to get local licenses or permits.

Hold an Organization Meeting & Establish Records

Once the registration process is complete, you should hold an organizational meeting of the incorporators and take minutes of that meeting. At that time, you will ratify corporate bylaws, adopt a shareholders agreement, issue stock certificates and complete a stock ledger, elect directors and officers, and anything else you may want to include.

Virginia Annual Report

All Virginia corporations must file an annual report with the Virginia Secretary of State. Failure to file can result in automatic dissolution of the corporation. The annual report consists of an annual registration and filing fee. The filing window is based on your incorporation date. The window includes the month of incorporation and the two months prior. The fee is for nonstock corporations is $25 and for stock corporations is based on the authorized shares ($100 for less than 5,000 shares up to $1700 for over 270,000 shares).

Ongoing Compliance Requirements

Ongoing requirements include annual meetings with minutes, special meetings to make important business decisions, maintaining a registered office, amending your articles of incorporation as needed, and more. For more information on business compliance action items, please consult your Harbor Compliance representative.