How to set up an LLC for your rental property in Virginia

If you’re a landlord or real estate investor in Virginia, you’ve probably heard about the benefits of creating an LLC for your rental property. An LLC, or limited liability company, may help protect your personal assets, can potentially simplify management, and might offer tax advantages. But how do you set up an LLC for a rental property specifically in Virginia? What are the costs, timelines, and requirements? In this guide, we’ll walk you through everything you need to know about forming an LLC for your Virginia rental property — in a straightforward, conversational way.

Why Virginia landlords consider an LLC for rental properties

Virginia landlords often choose to create an LLC because it can provide a layer of protection between their personal finances and any liabilities related to their rental property. If a tenant sues or if there's damage to the property, having an LLC can provide a layer of protection for your personal assets like your home or savings, but it does not guarantee complete protection in all situations.

That said, an LLC isn’t a magic shield. Understanding exactly what an LLC protects you from, and where it falls short, is key before you dive into the setup process.

What an LLC is and what it can (and cannot) protect you from as a landlord

An LLC is a type of business entity that separates your personal assets from those of your business—in this case, your rental property. If your LLC faces lawsuits, debts, or other financial claims, your personal belongings are generally protected, but exceptions apply in cases such as fraud or personal guarantees.

However, this protection isn’t absolute. For example, if you personally guarantee a loan, commit fraud, or fail to keep your LLC’s finances separate from your personal accounts, your personal assets could still be at risk. Also, an LLC doesn’t protect you from tenant injuries related to property conditions if you’re negligent.

To cover gaps that an LLC might not fill, many landlords also consider landlord insurance in Virginia, which can cover property damage, liability claims, and loss of rental income.

Step-by-step: how to set up an LLC for a rental property in Virginia

Setting up an LLC in Virginia involves several steps, but you don’t need to be a legal expert to get it done. Here’s a simple walkthrough:

1. Pick a name for your LLC

Your LLC’s name must be unique in Virginia and include “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.” You can check name availability through the Virginia State Corporation Commission's Business Entity Search.

2. Designate a registered agent

Virginia requires your LLC to have a registered agent with a physical address in the state. This person or company receives official documents on behalf of your LLC.

3. File the articles of organization

The articles of organization is a key document that officially creates your LLC with the state. In Virginia, you file this with the Secretary of State. You can file online or by mail.

4. Create an operating agreement (optional but recommended)

While not required by Virginia law, an operating agreement outlines how your LLC will be managed and the rights and responsibilities of members. It’s especially useful if you have multiple members or want to clarify management decisions.

5. Get an EIN from the IRS

An EIN (Employer Identification Number) is like a Social Security number for your LLC. You’ll need it for tax purposes and to open a business bank account. You can apply for an EIN online for free through the IRS website.

6. File any necessary business licenses or permits

Depending on your rental property’s location and the type of rental, you might need additional local permits or licenses.

7. Open a separate bank account for your LLC

Consider keeping your personal and LLC finances separate to help maintain liability protection. Consult a qualified professional for guidance tailored to your situation.

How much does it cost to set up an LLC in Virginia?

One of the most common questions is: how much does it cost to set up an LLC? 

In Virginia, the LLC filing fee for the articles of organization is currently $100 if you file online or by mail. This is a one-time fee to officially create your LLC.

But that’s not the only cost to consider:

• Registered agent fees: If you hire a registered agent service, expect to pay around $100–$300 per year.
• Annual registration fee: Virginia requires LLCs to submit an annual report and pay a $50 registration fee every year.
• Optional costs: Operating agreement drafting (if you hire help), business licenses, and accountant or legal fees if you choose professional assistance.

How long does it take to set up an LLC in Virginia?

The timeline depends on how you file:

• Online filings: Typically processed within 1–3 business days.
• Mail filings: Usually take 7–10 business days.

If you need expedited service, Virginia offers a priority processing option for an extra fee.

Articles of organization: what are they and how to file them in Virginia

The articles of organization is a simple form that officially registers your LLC with Virginia’s Secretary of State. It includes:

• Your LLC’s name
• Registered agent’s name and address
• Principal office address
• Whether the LLC will be managed by members or managers
• Name and address of the organizer filing the form

You file the articles of organization online through the Virginia SCC online portal or by mailing a paper form to the SCC.

Once filed and approved, your LLC legally exists, though additional compliance steps may be necessary after formation.

Do I need a lawyer to start an LLC for a rental property in Virginia?

Many landlords wonder if they need a lawyer to set up an LLC. The good news: you don’t have to hire one just to form an LLC. The process is straightforward and can often be done online without legal expertise.

That said, consulting a lawyer or accountant can be helpful in complex situations or if you want:

• Customized operating agreements
• Advice on tax implications or ownership structure
• Help navigating more complex situations like multiple members or partnerships

Consider your own circumstances and seek professional advice if unsure.

How to get an EIN for an LLC that owns rental property

Once your LLC is formed, you’ll want to get an EIN from the IRS. This number lets you open bank accounts, file taxes, and hire employees if needed.

Getting an EIN is free and fast:

1. Visit the IRS EIN application page.
2. Fill out the online form as the LLC’s responsible party.
3. Receive your EIN immediately after submission.

Keep your EIN handy for tax filings and when setting up your LLC’s financial accounts.

Do LLCs need annual reports and other ongoing compliance in Virginia?

Yes, Virginia LLCs must file an annual report and pay a $50 registration fee each year. The annual report updates the state on your LLC’s contact info and registered agent.

The Virginia SCC sends reminders to your registered agent’s email address well before the deadline, which is the last day of the month your LLC was originally formed.

Missing the annual report or payment can result in penalties or administrative dissolution of your LLC.

In addition to the annual report, consider maintaining a registered agent in Virginia, keeping business records and finances separate from personal accounts, and renewing any local licenses or permits related to your rental property.

S corp vs LLC for landlords: what’s the difference?

Some landlords wonder about the difference between an LLC and an S corporation (S corp). Both can offer liability protection, but they differ in tax treatment and management.

• LLC: Flexible management structure, pass-through taxation by default (profits and losses flow to your personal tax return), fewer formalities.
• S corp: Also offers pass-through taxation but requires stricter management rules, payroll for owner-employees, and can help reduce self-employment taxes in some cases.

The choice depends on individual circumstances. For some Virginia landlords, an LLC may be simpler and more straightforward, but others may explore S corp election later for tax reasons. Always consult a tax professional before making this choice.

LLC vs umbrella insurance for rental property risk management

An LLC provides legal protection separating your personal assets from the property, but it doesn’t cover all risks. That’s where insurance comes in.

LLC vs umbrella insurance is a common question among landlords. While an LLC limits liability exposure, umbrella insurance can provide additional financial protection by extending coverage beyond your landlord insurance policy limits.

Together, an LLC and the right insurance policies may offer a stronger risk management strategy.

When does it make sense for landlords in Virginia to use an LLC?

Forming an LLC can be a useful step if:

• You want to protect your personal assets from lawsuits or debts related to your rental property.
• You own multiple rental properties and want to separate them into different LLCs.
• You want a formal business structure for tax planning and management.
• You plan to bring in partners or investors.

However, an LLC may not be necessary if:

• You own a single property and are comfortable with your current risk exposure.
• The cost and administrative work of an LLC outweigh the benefits.
• You’re not concerned about separating your rental income from personal finances.

Next steps: review your insurance and get started

If you decide to form an LLC for your Virginia rental property, take the time to set it up properly and maintain compliance. Also, review your insurance coverage to help ensure your property and finances are well protected.

For Virginia landlords, landlord insurance in Virginia is a key piece of the puzzle.

Remember, this article is meant to help you understand the basics of how to set up an LLC for a rental property in Virginia. For specific legal or tax advice tailored to your situation, always consult a qualified professional.