West Virginia is the home to Harpers Ferry, Charleston, and Morgantown and seeing the Autumn leaves change is so beautiful. With almost 2 million people living in the state, there are a lot of reasons why people choose to form businesses in this beautiful state. It is a great place to live, work, and conduct business. As a business owner, you can choose to form an West Virginia LLC or to incorporate. There are benefits to forming your LLC in WV and the corporate entity has a couple of shared benefits so let's discuss a couple:
More LLCs are filed nationwide than corporations. C corporations are typically used by public companies as they can have unlimited shareholders, and a S corporation is limited to 100 shareholders.
The choice to form a West Virginia LLC is an important one, and you may want to consult with a CPA or attorney in your state before moving forward. There are others who know exactly what they want to file, and this page can help some of those people with the filing steps. As we mentioned above the limited liability company has a couple great benefits like limited liability protection and pass through taxation which makes it a popular filing choice for small and medium sized business owners. Here are some of the steps to file:
A C-corporation is typically filed by most public companies who call West Virginia home. The reason for this is primarily due to the fact that they will have more than 100 shareholders. The S corp will have fewer than 100 shareholders, and this type of registration will grant you pass through taxation, which may be attractive to some business owners. We always recommend to talk directly with a CPA if you are unsure.
As we mentioned above the C-corp is treated differently for tax purposes. The C-corp is setup with its' own tax-id number and it is essentially a taxable entity that is responsible for submitting and paying taxes. The S-corp is also setup with a tax id number, and it too must file a tax return, but the difference is that the income earned by the S-corp passes through the reporting entity and the shareholders must include that income onto their tax returns. The slight difference here can save shareholders from the dreaded event of Double Taxation. When you have double taxation, you will essentially be paying a tax twice for the same money earned. If you pay once at the C-Corp level when the income is earned, then you will pay again at the shareholder level when a distribution of capital is made. So, there are ways to avoid or mitigate paying this double tax, and a CPA can talk directly to you about this. But essentially you want to pay yourself out in a salary and not a dividend. The salary will decrease the retained earnings in the C-Corp and thus not really have much retained earnings that the shareholders need to withdrawal in the form of dividend or withdrawals of capital. This theory doesn't always work, and won't work in many business situations because most businesses need to retain capital in them to operate the business.
West Virginia Secretary of State Links: