Limited Liability Companies (LLCs) have become the entity of choice for many entrepreneurs in Virginia, offering liability protection without the complexity of a corporation. However, understanding your tax and accounting obligations is essential to maintaining good standing with the Virginia State Corporation Commission (SCC) and the Department of Taxation. This guide covers the key requirements for Virginia LLCs in 2026, from annual fees to tax filings and local licenses. Virginia LLC Formation and Initial Costs Forming an LLC in Virginia requires filing Articles of Organization with the Virginia SCC. The filing fee is $100 . The process is straightforward and can be completed online through the SCC’s Clerk’s Information System . If you are forming a Professional LLC for services such as legal, accounting, or medical practice, use Form LLC-1103 . Before filing, you must confirm your business name is unique through the SCC’s name availability check . The name must include “limited liability company,” “limited company,” or an appropriate abbreviation . You will also need a registered agent with a physical address in Virginia . Virginia LLCs benefit from no state franchise tax—Virginia does not charge an annual tax based on revenue or net worth just for existing, unlike many other states . The state also maintains a low corporate income tax rate of 6.0% for LLCs that elect to be taxed as corporations . Annual Registration Fee: A Key Ongoing Obligation Unlike corporations, which must file annual reports, Virginia LLCs do not file annual reports but must pay an annual registration fee of $50 . This fee is due on the last day of the month in which you created your LLC each year . For example, if your LLC was formed in March, the fee is due by March 31 each year . The SCC typically generates the fee assessment about two months before the due date; you cannot pay before the assessment is issued . You can pay this fee online through the SCC’s Clerk’s Information System . Failure to pay by the deadline results in a $25 late fee, and if left unpaid for several months, the SCC will automatically terminate your LLC’s existence . Virginia LLC Tax Obligations Pass-Through Taxation (Default) By default, Virginia LLCs are pass-through entities for tax purposes. The LLC itself does not pay state or federal income tax . Instead, profits and losses flow through to members, who report them on their personal Virginia income tax returns . For Virginia tax purposes, single-member LLCs file a Schedule C with their personal return; multi-member LLCs file Form 1065 and issue each member a Schedule K-1 . Virginia taxes individual income on a graduated scale with a top rate of 5.75% for income over $17,000 . Self-Employment Tax Members who work in the business must pay 15.3% in federal self-employment taxes on top of income tax . This is a significant ongoing cost that should be factored into financial planning. Electing Corporate Taxation LLCs may elect to be taxed as a corporation. If you make this election, the LLC must register with the Virginia Department of Taxation, file corporate income tax returns, and pay estimated income taxes . Virginia’s corporate income tax rate is 6.0% . Virginia Pass-Through Entity Tax Virginia allows pass-through entities to elect to pay tax at the entity level at a rate of 5.75% . This elective tax can be beneficial in some situations, particularly when owners can benefit from corresponding credit rules. The decision should be made carefully with your tax advisor. Required Virginia Tax Registrations If your LLC has employees or sells taxable goods, you must register for a Virginia employer withholding account or sales tax account through the Virginia Department of Taxation . Virginia State and Local Tax Obligations Virginia Individual Income Tax For pass-through entities, income flows to members’ personal returns. Virginia individual income tax is graduated: the tax rate increases with income, with a top rate of 5.75% for income over $17,000 . Pass-through entities doing business in Virginia or receiving income from Virginia sources generally must file an annual return . The standard filing deadline is April 15 for calendar-year filers, with a 6-month extension available . Virginia Business, Professional and Occupational License (BPOL) Tax Virginia’s BPOL tax is one of the most misunderstood obligations for new business owners. Unlike income tax, BPOL is based on gross receipts (gross revenue before expenses) . In Virginia localities, the structure generally works as follows: Gross receipts under $5,000: No tax due $5,000 to $500,000: $30 flat annual license fee Over $500,000: Tax per $100 of gross receipts at rates depending on business classification (up to $0.58 per $100) Over $1,000,000: Rate drops to $0.20 per $100 ($0.15 for contractors) The BPOL filing deadline is typically March 1 annually, and you must register within 75 days of starting business operations . The BPOL requirements illustrate why working with a local firm that understands these obligations is essential. Sales and Use Tax Virginia’s general sales tax rate is 5.3% (4.3% state + 1% local) . If your LLC sells taxable goods, you must register for a sales tax account and file returns—typically monthly or quarterly, depending on tax liability, due by the 20th of the month following the reporting period . Businesses with no taxable sales in a period may still need to file a zero return . Virginia also requires economic nexus registration for online sellers once annual sales in the state exceed $100,000 or you have 200 transactions . Business Personal Property Tax Virginia localities impose a Business Personal Property Tax (BPPT) on tangible assets owned by businesses—computers, furniture, equipment, vehicles, and machinery . You must file an annual return listing your depreciable assets, and the locality applies its tax rate to the assessed value. Maintaining a fixed asset register tracking purchase dates, costs, and depreciation schedules is essential . Local Business Licenses Many Virginia localities require a business license separate from state registration. For example, Richmond requires business owners to obtain an annual business license . Check with your locality before assuming state registration covers everything. Payroll Tax Obligations If your LLC has employees, you must register for Virginia withholding tax and file returns . The term “employer” includes LLCs with employees, and you
On August 19, 2026, the Internal Revenue Service announced the establishment of an Office of Conservation Easements . This new office recognizes the important role conservation and historic preservation easements can play, as well as the specialized tax, valuation, contractual, and procedural issues they present . What Is a Conservation Easement? A conservation easement is a voluntary legal agreement between a landowner and a qualified organization that permanently limits uses of the land to protect its conservation values. Landowners who donate a conservation easement to a qualified organization may be eligible for a federal income tax deduction. The IRS has long scrutinized conservation easement transactions due to concerns about overvaluation and tax avoidance. The establishment of the Office of Conservation Easements represents a significant shift in how the agency will administer and enforce conservation easement tax rules. Why the IRS Created This Office The IRS’s experience administering conservation easement initiatives, together with engagement with taxpayers, has shown that standardized, unsolicited settlement letters on a rolling basis, each with a fixed response period, are not well suited to the full range of conservation easement cases . Partnership agreements, insurance arrangements, procedural posture, and other circumstances may differ materially and affect when and how taxpayers evaluate settlement . The Office will centralize technical expertise and coordinate policy, enforcement, and case-resolution strategy across the IRS and with the Office of Chief Counsel . It will support engagement with taxpayers, practitioners, conservation and historic preservation organizations, and other stakeholders . The Office will also work with Treasury to evaluate administrative and legislative options that advance Congress’s conservation and historic preservation objectives, promote consistent tax administration, and strengthen valuation integrity . Changes to the Settlement Process As part of this transition, the IRS will conclude the current uniform settlement initiative effective August 19, 2026, and will not issue any additional uniform settlement letters under the prior program . Any deadlines for accepting previously issued offers are withdrawn, though prior elections to participate in the settlement framework will remain in effect and will be processed in accordance with their terms . Taxpayers with pending cases may continue to request settlement under the prior framework through their assigned IRS examination or Chief Counsel representative. If the case remains eligible, the IRS will issue a new offer on the same standardized terms . Individual cases may continue to be resolved on different terms where warranted by the hazards of litigation . The IRS emphasized that this transition does not signal a new or more favorable standardized offer, but rather ends issuance of uniform offers and deadlines . Impact on Virginia Landowners and Nonprofits Virginia has a long history of land conservation, with numerous land trusts, conservancies, and nonprofit organizations working to protect the Commonwealth’s natural and historic resources. The establishment of a dedicated IRS office focused on conservation easements has significant implications for: Landowners: Those considering donating a conservation easement should be aware that the IRS is centralizing its expertise and may increase scrutiny of conservation easement transactions. Working with qualified appraisers and legal counsel is essential. Nonprofit Land Trusts: Organizations that hold conservation easements should ensure their documentation, monitoring, and enforcement practices meet IRS expectations. The Office’s coordination with Treasury may lead to new administrative or legislative proposals affecting the conservation easement deduction. Tax Professionals: CPAs and tax advisors who work with conservation easement transactions should stay current on the Office’s guidance and policies. The shift from a uniform settlement initiative to case-by-case resolution may affect how disputes are resolved. Virginia-Specific Considerations Virginia has one of the most active conservation easement programs in the country. The Virginia Department of Conservation and Recreation administers the Virginia Land Preservation Tax Credit program, which provides state tax credits for conservation easement donations. Landowners considering a conservation easement should consider both federal and Virginia tax implications. Under Virginia law, the real and personal property of organizations classified for religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purposes is exempt from taxation . Conservation easements held by qualifying organizations may qualify for property tax benefits at the local level. What to Do Next If you are considering a conservation easement or have a pending case, the IRS advises that taxpayers should continue working directly with their assigned representatives on case-specific matters and settlement requests . Once operational, the Office of Conservation Easements will provide central coordination and a channel for general inquiries, with additional contact information to be announced separately . At Nova Tax & Accounting Services , our expert tax solutions team can help Virginia landowners and nonprofits navigate conservation easement tax issues. We also provide accounting and bookkeeping services to help organizations manage their financial records and maintain compliance with IRS requirements. Schedule your free consultation today to discuss your conservation easement needs.
The U.S. Department of the Treasury announced on April 23, 2026, that the Internal Revenue Service plans to revise Form 990 for the first time in nearly two decades . This marks the most significant change to the annual information return filed by tax-exempt organizations since the last major redesign in 2008 . For Virginia nonprofits, understanding these proposed changes is essential for maintaining compliance and protecting their tax-exempt status. Why Form 990 Is Being Revised The Treasury Department’s announcement cited several objectives for the revision, including improved transparency, strengthened tax administration, and clearer reporting on certain activities . Treasury Secretary Scott Bessent emphasized that the purpose of these proposed changes is to prevent “fraud, abuse, and extremist activity,” stating that “[p]ublic money and tax-exempt status demand public accountability” . Treasury Assistant Secretary and Acting IRS Chief Counsel Ken Kies similarly noted that “[i]f an organization receives public funds or tax-deductible donations, it should be prepared to show who controls the money and where it goes” . The proposed changes reflect the current atmosphere of increased scrutiny of tax-exempt organizations, particularly relating to fraud and potential links to “terrorism activities” as defined by the current administration and under federal law . Three Key Areas of Change 1. Government Grants and Contracts Currently, government grants are reported separately from other types of contributions on Form 990, but there is no requirement to show how specific governmental funds are spent . The proposed changes would require organizations to report not only the receipt of government grants and contracts, but also how those funds are specifically used . This would add a new layer of accountability and public transparency around governmental funding . Organizations that receive substantial funding from federal, state, or local government sources may need to provide clearer, more detailed reporting on the sources and uses of government funding. 2. Fiscal Sponsorship Arrangements Fiscal sponsorship arrangements are another area of concern identified by the Treasury Department . Tax-exempt organizations are often approached by individuals or groups who want to conduct a charitable activity but don’t have the means or long-term goals that warrant creating a new tax-exempt organization . Existing organizations may choose to sponsor these activities. Currently, there is no required reporting for fiscal sponsorship arrangements on Form 990 . Proposed reporting changes would require disclosure of who is operating the project, who controls the funds, and how the funds are used . Treasury raised concerns that some organizations may use fiscal sponsorship arrangements to obscure the source of funds and how funds are being used . 3. Increased Scrutiny of 501(c)(3) Organizations The proposed changes specifically target 501(c)(3) organizations, particularly those that receive government grants, have government contracts, or participate in fiscal sponsorship arrangements . The IRS expects that these changes will impact all tax-exempt organizations required to file Form 990 . Timeline for Implementation It is difficult to predict how long the revision process may take . Any major changes would need to go through the formal notice-and-comment rule-making procedures under the Administrative Procedures Act . Treasury has stated that it expects to publish proposed regulations and provide an opportunity for public comment before any revisions are finalized . The last major redesign of Form 990 took place in 2008 . At that time, an initial draft of the proposed regulations was released for public comment on June 14, 2007, with a 90-day comment period, and the final revisions were not released until the summer of 2008, with a 3-year phase-in period . If the changes do go through a notice-and-comment period, we expect it will be several years before the changes to Form 990 are finalized and implemented. How Virginia Nonprofits Can Prepare In light of this increased scrutiny, organizations, particularly 501(c)(3) organizations with government grants and contracts, should take proactive steps : 1. Review Public Disclosures: Examine publicly available information regarding your organization, including what is reported on your Form 990, regarding funding, spending, programs, and activities to ensure that what is documented is consistent with the organization’s stated purpose . 2. Ensure Consistency: Confirm that the exempt purposes stated on your annual return are consistent with your organization’s actual activities . 3. Document Fiscal Sponsorships: If your organization serves as a fiscal sponsor, ensure that all reporting regarding sponsorships and sponsored entities is consistent and accurate . 4. Track Government Funds: Review how government grants and contracts are tracked, so your organization can clearly demonstrate the source, purpose, and use of public funds . 5. Enhance Internal Reporting: Enhance internal reporting processes to support potential new disclosures on how specific government funds are spent and allocated across programs and activities . 6. Strengthen Oversight: Strengthen board oversight, internal controls, and fund stewardship procedures to address heightened scrutiny around transparency, accountability, and misuse of charitable assets . 7. Assess Systems: Assess whether current accounting and compliance systems can support more detailed reporting requirements . At Nova Tax & Accounting Services , our Form 990 preparation service and assurance and compliance services can help Virginia nonprofits prepare for these upcoming changes. Schedule your free consultation today to discuss your organization’s compliance needs.