How To Start a Business in West Virginia may not be on the short list of top business destinations, but Mountain State is home to a small but dedicated innovative technology and startup community focused on boosting the state’s reputation across the country. The state’s affordability, ranked eighth in the nation by US News & World Report, makes it easier for budding Start a Business in West Virginia to find a foothold in the state, allowing them to focus on important aspects of their business, rather than cash flow. West Virginia’s relaxed financial climate contributes to the state’s average above-average early-onset survival rate and the participation of new entrepreneurs in entrepreneurial opportunities.
Start a Business in West Virginia With the third lowest labor cost in the country is a great option for entrepreneurs. Start your business today with our simple step-by-step guide and take the fast track to financial and personal independence.
To Start a Business in West Virginia, Follow these Steps:
- Step: Choose a business idea
- Step: Write a business plan
- Step: Select a business entity
- Step: Register a business name
- Registration of a West Virginia Business Name for Sole Proprietorships and General Partnerships
- Registering a West Virginia Business Name for a Corporation or LLC
- Legally protect your business name
- Step: Get an EIN
- Step: Open a business bank account
- Step: Apply for Business Licenses and Permits
- Step: Seek Funding
- Step: Hire Employees
- Step: Get Business Insurance
- Step: Set up an accounting system
Steps to Start a Business in West Virginia
Step 1: Choose a Business Idea
The first step to start a business in West Virginia is to have a good business idea. Maybe you’ve already chosen an idea, or maybe you’re still settling on one.
Step 2: Write a Business Plan
Once a solid business idea has been established, it’s time to start working on the business plan.
Many people only consider writing a business plan because the bank requests it to get financing. While that’s a valid reason, more importantly, writing a business plan gets ideas out of the entrepreneur’s head and helps create a roadmap of where they want the business to be headed. Just as most builders would not build a house without plans, an entrepreneur should not build a business without a business plan.
The idea of writing a business plan is overwhelming, so here are some resources to help you get started.
Step 3: Select a Business Entity
The next step in starting a business in West Virginia is to select a legal business entity.
The business entity is sometimes called a business structure or legal entity, which refers to how a business is legally organized
A sole proprietor is an individual who decides to start a business in west Virginia. The ease of getting started is a great selling point; however, a major disadvantage of a sole proprietorship is that the owner is personally responsible for all debts and shares of the company. If the company is sued, the owner’s personal assets are potentially at risk. Another potential disadvantage is that the owner will pay taxes on self-employment on all business profits and can be more expensive than other entities.
General Partnerships consist of two or more people who conduct a business together. Like sole proprietorship, there is no formal presentation of the state. In addition, like a sole proprietorship, the partnership has unlimited liability. If the partnership were sued, the partner’s personal assets are at the same risk. Instead, profits and losses are transferred to the owner’s personal tax return.
While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the main advantage is that the corporation provides personal asset protection for the owners, should the corporation be sued. The downside is the compliance requirements and administrative burdens of having a board of directors, annual meetings for directors and shareholders, taking minutes from meetings, appointing a registered agent, and more.
There are several ways a corporation can choose to pay taxes, including corporation C and corporation S. Choosing how the entity should be taxed is complicated, so be sure to talk to your CPA, as there is the possibility of double taxation in which both profits and dividends are taxed. In addition, there is no tax on self-employment with a corporation, as the income for the owners will come from a salary or dividends, which can be beneficial.
To form a corporation, articles of incorporation must be filed with the West Virginia Secretary of State. The filing fee is $50.
The Limited Liability Company (LLC) is a popular business entity option because it provides the liability protection of a corporation with the ease of operation of the sole proprietor. The Limited Liability Company does not have many of the burdens that the corporation has and has the greatest tax flexibility of the four entities. Income can be taxed as a transferring entity, as the sole proprietorship or partnership, or as a corporation.
To form an LLC, articles of organization must be filed with the West Virginia Secretary of State. The filing fee is $100.
Step 4: Register a Business Name
Registration of a West Virginia Business Name for Sole Proprietorships and General Partnerships
If you are a sole proprietorship or general partnership in West Virginia and do business under your full first and last name, John Smith, for example, there is no registration, but if the company will operate under a fictitious trade name or DBA (Doing Business Like John Smith’s Handyman Service, Mr. Handyman, etc., you will need to file a Trade Name Registration Certification, sometimes called dBA (Doing Business As) at the County Clerk’s Office in the county where the company is located.
Corporations and LLCs must choose a name when filing the entity application, and each corporation/LLC must have a unique name.
Legally protect your Business Name
A trademark can legally prevent others from using names, slogans, or logos. The U.S. Patent and Trademark Office (USPTO) administers the registration of trademarks.
Before you decide on a name, you must first check and make sure that the name you want to use is not registered with another company.
Step 5: Get an EIN
This number identifies a company operating in the U.S. And it’s used to pay payroll taxes, file tax returns, and more. Like a social security number for a person, the EIN is similar to a company’s social security number. While most businesses will need to get an EIN, some won’t.
Sole proprietorships or a single-member LLC with no employees are NOT required to obtain an EIN.
The EIN filing can be done online through the IRS website, which only takes a few minutes, and the number is available immediately. Alternatively, you can register an EIN by mail or fax by sending IRS Form SS-4.
Step 6: Open a Business Bank Account
Keeping your business and personal finances in separate bank and credit card accounts makes it easy to track business income and expenses.
Sole Proprietorship and Partnership – Certificate of Business Name, EIN or SSN, and Driver’s License of the Owner(s)
Corporation – Articles of Incorporation, Bylaws, Certificate of Good Repute, EIN, and Driver’s License of the Owner
LLC – Articles of Organization, Operating Agreement, Certificate of Good Repute, EIN, and Driver’s License of the Owner
Step 7: Apply for Business licenses
There are several federal, state, and local rules and regulations that West Virginia businesses must register and comply with. Some common records include:
Business Licenses: The state of West Virginia does not have a general business license; however, many cities require a business license to operate.
Certificate of Business Registration: The West Virginia State Department of Taxation requires all businesses to register to obtain a Certificate of Business Registration. This registration allows a company to register for a sales tax permit.
Professional Licenses: Some occupations, such as accountants, cosmetologists, landscapers, and massage therapists, require a license in West Virginia. While this is not a license for the business, a license is required to operate.
Zoning: Before you start operating a business (even if it’s home-based), be sure to check local zoning regulations before you start operating outside of a location.
Step 8: Seek Financing
Getting the funds to start a small business is a challenging process for many.
Not only are there unknown terms such as collateral, equity, assets, liabilities, and others, but there are several sources of financing with different rules, processes, and costs.
From conventional bank loans, Small Business Administration (SBA) loan guarantees, investors, grants, and many others, it can be difficult to analyse what is available and best for your business.
Step 9: Hire Employees
Hiring employees is a complex and often overwhelming process for a new business owner, as there are several agencies to register and labor laws to understand.
Employers are responsible for reporting new hires, verifying that employees are eligible to work in the U.S., withholding income taxes, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.
Step 10: Get Business Insurance
Commercial insurance is never at the top of the list of things they want to do when they start their business; however, commercial insurance can be critical to protecting your business.
Most types of commercial insurance are optional, except for workers’ compensation insurance in most states. Some states will also require professional liability insurance for businesses that offer certain services and commercial auto insurance.
Even if insurance is not required and there is a lawsuit for fire, theft, or personal injury, the business owner may have to pay for out-of-pocket damages and legal fees. Home-based businesses and secondary businesses may also want to consider commercial insurance, as personal home and vehicle policies may not cover in the event of a business loss.
Step 11: Set Up an Accounting System
Just thinking about financial statements, debits and credits and accounting software hurt your head.
Staying on top of finances not only keeps the company out of trouble with the IRS but financial statements can be used to track and monitor trends in the company and maximize profits.
Fortunately, understanding numbers doesn’t mean getting a degree in finance. Tracking a company’s finances can be done with pen and paper (not highly recommended), spreadsheets, accounting software, or hiring an accountant.
To help you start a business in West Virginia, we have identified the best resources throughout the state of West Virginia that can help you in your entrepreneurial endeavors.