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A comprehensive guide to forming a Nonprofit and LLC, West Virginia

Forming a company can be an exhilarating journey filled with endless decision-making. Successfully forming a company in West Virginia involves essential steps and key considerations.

From selecting the appropriate business structure for the company to fulfilling the required legal formalities and assessing the valuable resources, business owners need to go through all of these stages to establish their company.

But the first and foremost step that forms the foundation of the company formation is deciding the appropriate company type for the business.

A Limited Liability Company or LLC in West Virginia is ideal for companies with multiple business founders. It offers a straightforward company structure with tax advantages to business owners.

In addition, LLC owners enjoy legal protection by keeping their personal assets separate from business debts.

Starting a Nonprofit Corporation is ideal for serving educational, scientific, religious, and charity purposes.

How to Start an LLC in West Virginia

Decide a West Virginia LLC name.

The first step to establishing an LLC in West Virginia is to decide on a name to register the LLC.

According to West Virginia, LLC names should not be identical to the state's existing business names.

LLC owners must include "Limited Liability Company," "L.L.C.," "LLC," "Limited Company," "L.C.," or "LC" in the names.

Furthermore, an LLC in West Virginia must not include the name of any government agency, for example, Treasury, CIA, etc. However, additional documentation may be required to add words like bank, attorney, etc.

Business owners can verify the availability of their desired name on the West Virginia Secretary of State website.

LLC name in West Virginia can be reserved for 120 days by filing an Application of Name Reservation with the West Virginia Secretary of State and paying a filing fee of $15.

Further information on naming rules can be checked on the West Virginia Business Name guidelines.

Appoint a West Virginia Registered Agent

Registered agent services involve receiving important legal documents, tax forms, notices for lawsuits, etc., on behalf of the company.

Appointing a registered agent is mandatory in forming an LLC in West Virginia.

A registered agent may be a founder of the company, an employee working for the company, or a business entity offering registered agent service.

A registered agent must be a minimum of 18 years with a physical address in West Virginia.

Furthermore, the registered agent must be available on-site and during regular business working hours.

Prepare West Virginia Articles of Organization

West Virginia articles of organization outline the key information about the LLC. Filing the articles of organization helps the LLC be recognized as a legal business entity.

It includes the following information:

  • Name of the LLC.
  • Address of the LLC, including website and email address.
  • Name and address of the West Virginia Registered Agent.
  • The purpose of starting the LLC.
  • The period of operating the LLC, if not perpetual.
  • Organizational structure.
  • Whether or not the LLC owners will be responsible for the LLC debts.
  • Signature of the person forming the LLC.

In addition, the LLC owner must mention if the LLC is veteran-owned and if the applicant owns or runs two or more businesses in the state.

The articles of organization filing fee in West Virginia is $100. Eligible veteran-owned businesses may file the articles of organization for free.

LLC owners can file articles of organization online with the West Virginia Secretary of State or by mail, email, fax, or in person.

Prepare an Operating Agreement

While West Virginia law does not require an operating agreement, having one can provide numerous advantages and is strongly recommended.

Operating agreements of an LLC specify the ownership and how an LLC will operate.

An operating agreement must include the following:

  • Name and address of West Virginia LLC.
  • Duration for which the LLC is intended to operate, if not perpetual.
  • Name and address of West Virginia registered agent.
  • Articles of the Organization details.
  • LLC Organizational Structure.
  • Names and contributions of the members of an LLC.
  • Responsibilities and liabilities of the LLC members.
  • LLC profit and loss division.
  • voting rights of the members.
  • Procedures for admitting and discharging members of the LLC.
  • Clauses for indemnification and liability.

It helps to reduce internal conflicts and ensures that business owners are on the same page. If an operating agreement is not in order, state law will govern, which may not always align with the LLC's and its members' best interests.

Obtain an Employer Identification Number (EIN)

The Internal Revenue Service provides an Employer Identification Number or EIN, a nine-digit number to identify an LLC for tax purposes.

An EIN is significant for hiring employees, opening a business bank account, and filing taxes at the federal and state levels.

An EIN or FEIN (Federal Employer Identification Number) can be obtained online or by mail.

File LLC Annual Report

West Virginia LLCs must file annual reports with the West Virginia Secretary of State. The filing fee is $25.

This must be done annually between January 1st to July 1st. In the case of missing the deadline, A fine of $50 may be charged.

Obtain business licenses and permits.

A West Virginia LLC must contact the state tax department to obtain the Business License or the Business Registration Certificate. An LLC business owner can register online or by mail for a registration fee of $30.

Depending on the nature of the LLC, other state and local business licenses and permits may be required to operate an LLC.

How to Start a West Virginia Nonprofit Corporation

Choose a West Virginia Nonprofit Name

The first and most important step when forming a nonprofit is choosing an appropriate name.

Ideally, a West Virginia nonprofit name must not state any purpose or intention other than the one mentioned in the Articles of Incorporation. Furthermore, it must include "Limited," "Corporation," "Incorporated," or "Company," or their abbreviations like "Ltd.," "Corp.," "Inc.," "Co."

Nonprofit founders must check the West Virginia Secretary of State to ensure a desired name is available.

Further information on West Virginia nonprofit names can be found on the West Virginia Legislature's naming guidelines.

Choose the Board of Directors

Decide on the board of directors for the nonprofit corporation in West Virginia. Ideally, a West Virginia Nonprofit must have a minimum of three directors, not necessarily residents of the state, and must be unrelated to each other.

The nonprofit must also have a minimum of one incorporator who will sign and file the Articles of Incorporation and officers for the president, secretary, and treasurer positions.

Appoint a West Virginia Registered Agent

West Virginia law mandates every nonprofit to have a registered agent having an address in West Virginia.

A registered agent accepts legal documents, official mail, and notices on behalf of the nonprofit.

The position of a registered agent may be fulfilled by a registered agent service, an individual working for the nonprofit, or the founder of the nonprofit.

Prepare Articles of Incorporation

Nonprofits must prepare and file the Articles of Incorporation for the nonprofit to be incorporated.

The articles of incorporation must have the following information:

  • The name, physical, email, and mailing addresses of the West Virginia Nonprofit.
  • Purpose of the non-profit.
  • The name and address of West Virginia Non-profit's registered agent.
  • The names and addresses of the nonprofit incorporators.
  • Assets to be used and actions will be taken in the event of dissolution.

The articles can be filed by mail or online for $25.

Prepare Bylaws for Nonprofit Corporations

Preparing bylaws is an essential part of forming a nonprofit. These are the governing rules of a nonprofit.

Bylaws of a nonprofit act as a guide to the members, defining how the nonprofit will run. They contain directions regarding electing officers and directors of the nonprofit, conducting meetings, and managing various necessary formalities.

Prepare Conflict of Interest Policy for the Nonprofit Corporation

The conflict of interest policy is another important document that outlines certain rules and procedures to avoid any action or decision made by the board members or officers that is not in the nonprofit's best interest.

Conflict of interest policy ensures that the decisions or actions are not encouraged by the personal interests of the officers or board members and provides guidelines on the procedures to follow when a clash of personal and organizational interests arises.

Hold a Board of Directors Meeting

The first board of directors meeting is also called the organizational meeting of the nonprofit.

The first board of directors meeting must address the following:

  • Attendance to show quorum.
  • Appointing officers, secretaries, etc.
  • Bylaws.
  • Conflict of interest policy.
  • Setting an accounting year.
  • Approving initial transactions.

After the meeting is concluded, the minutes of the meeting must be signed by the members and securely kept.

Obtain an Employer Identification Number (EIN)

Business entities in West Virginia must obtain an EIN regardless of employees. The IRS uses the EIN or Employer Identification Number to identify businesses for tax purposes.

An EIN is needed to open a business bank account for the nonprofit, file state and federal taxes, exemption applications, etc.

An EIN can be obtained by filing online or by mail.

Obtain Necessary licenses and permits.

West Virginia nonprofits may require certain business licenses and permits depending on the services provided and location. It will be helpful to contact the county or town's licensing division to learn more about licenses and permits required for the nonprofit.

Furthermore, nonprofits in West Virginia must register with the West Virginia Secretary of State for fundraising or asking for charitable donations.

Prepare Annual Report

Nonprofit organizations in West Virginia are required to file annual reports providing updated information about the nonprofit, including its address and the names and addresses of the board of directors.

The annual report must be filed online annually, by July 1st, with the West Virginia Secretary of State.

File for Tax Exemptions

Nonprofits in West Virginia may apply for tax exemptions upon meeting the following conditions:

  • Appoint a minimum of 3 unrelated directors.
  • Adopt bylaws.
  • Adopt a conflict of interest policy.
  • Submit the Articles of Incorporation and register with West Virginia as a nonprofit.
  • Receive EIN.

Furthermore, nonprofits applying for tax exemptions must serve the purpose of charity, education, religion, science, promoting sports, testing for public safety, or preventing cruelty against animals or children.

Federal Tax Exemption

Nonprofits in West Virginia can apply for federal tax exemption by filling up Form 1023 and Form 1023-EZ for small businesses.

When the application is accepted, the IRS will send a letter confirming that the organization is exempt from paying taxes. It states that the nonprofit doesn't have to pay certain taxes that regular businesses do, as it falls under a special category recognized by the IRS.

State Tax Exemption

Nonprofits in West Virginia are exempt from West Virginia income tax if they are exempted from federal income taxes.

Nonprofits, in addition, may also file for sales and use tax exemption with the West Virginia State Tax Department.

Closing Thoughts

Forming an LLC or nonprofit in West Virginia requires careful attention to prepare the necessary steps and requirements.

Whether starting an LLC or establishing a nonprofit corporation, following the proper procedures is crucial for legal compliance and success.

Consult with professionals and stay updated on the regulations to ensure a smooth formation process.

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