If you started a new business in Virginia and want to learn what is a business license and / or how to get a business license in VA, this guide can help you.
Types of business license VA
There are different types of small-business licenses, and the one that you will need depends on the type of your business and your location. This also means that you may need to get different business licenses for each of your state, your city, and your county at the same time.
Furthermore, boards, commissions, or associations regulate some industries. If your business falls into this kind of category, you may have to present a certification issued by the regulatory authority in order to receive state or county-level business licenses, so be sure to check to see if your local government has any licensure policies that regulate the business you are in.
Federal agencies also regulate some industries, and if your business falls into one of the following categories, you will require federal licensure in addition to your local licenses:
- Alcoholic beverages.
- Firearms, ammunition and explosives.
- Fish and wildlife.
- Commercial fisheries.
- Maritime transportation.
- Mining and drilling.
- Nuclear energy.
- Radio and television broadcasting.
- Transportation and logistics.
Do I really need a business license?
Although it is true that many self-employed people, in particular those who work from home, never get a state or local business license, there will be negative consequences if the state finds out that you have been working without a license in an industry that requires one. At minimum, you will be ordered to close your business, and you may also be ordered to pay a fine; failure to obtain a state license may even be considered a crime in some industries.
The same goes for local government: Failure to obtain a local business license may also to result in a fine if your local government learns about it, and you may also be prohibited from doing business until you get the appropriate license.
The difference between a professional license and the BPOL
Some kinds of businesses require professional licensure in order to obtain a BPOL license, including:
- Architects and Engineers
- Builders, Developers and Construction Contractors (including landscaping contractors and painters)
In Virginia, the Department of Professional and Occupational Regulation (DPOR) regulates professional licensing. This Department issues professional credentials, such as licenses, certificates, registrations etc., and also is responsible for enforcing professional conduct standards.
For more information about professional licensing in Virginia, see https://www.dpor.virginia.gov/.
Fairfax County Business Locations
Several independent business jurisdictions exist in Fairfax County:
- Fairfax City
- Falls Church
- Town of Clifton
- Town of Herndon
- Town of Vienna
If your business operates in one of these places, it will not be subject to the Fairfax County BPOL tax (except for construction contractors with contracts in Fairfax County). In this case, be sure to contact your jurisdiction for information about business licensing regulations and requirements, and always be sure you are applying to the right jurisdiction before you apply for a business license.
Apply for a Business License at the Right Time
Every business owner, including those who own businesses based at home, needs toregister their business with the Department of Tax Administration (DTA) and pay the BIPOL tax within 75 days from the beginning of their business operations in Fairfax County. A 10% late filing penalty applies after the 75 days are up.
The BIPOL license must also be renewed annually, with filing and payment due on March 1st of each year. When the filing due date of March 1stfalls on a weekend or county holiday, filing and payment are due on the next day of business. A 10% late filing penalty is applied to renewals submitted after March 1st.
How to Get a Business License
We’re glad to tell you that getting a business license is not all that difficult. Fairfax Country has a website that will give you the details on how to obtain a business license here.
People living in some places can apply online, and those who do not have that option may be able to download an application and email their application to the appropriate party, or simply mail it in.
In January of each year, the DTA mails a renewal application to businesses on its register. If this is your first time applying, you may download the BPOL Application form at https://www.fairfaxcounty.gov/taxes/sites/taxes/files/assets/documents/pdf/business/2022%20new%20bpol%20application%20fillable.pdf
Completing the BPOL Application Form
Before applying for the BPOL, make sure you have the following information about your business ready:
The Company’s and/or Owner’s Name: The name of your company. If you have established an LLC or Corporation, write its name in this box.
Most businesses are established as Corporations or LLCs. If you do business under your own name, your business is referred to as a Sole Proprietor company.
Trade Name: This box is for names that your company may have besides its legal name, sometimes known as Doing Business As (DBA) name or a Fictitious name. For details on registering a Fictitious name for your business in Virginia, see https://scc.virginia.gov/pages/Fictitious-Names
IRS Taxpayer ID Number (FEIN): Be sure to get an Employer Identification Number (EIN) for your business from the IRS.
NAICS Code: Find the code for your business’ industry category at https://www.naics.com/search/
Business Address: Enter the address of your business or store here, not your home address.
Description of Business: In a few words, describe your business.
Estimated First Year Gross Receipts/Purchases: The dollar amount of sales you expect to make in the first year of business operation.
Employee Information: Enter the number of people employed by your business here.
Business Sales Tax Number: This box is for any business sales tax number your business may have.
Begin Date: The date the business began operation, not the date that the business was registered.
Submitting the BPOL Application Form
After you have completed and signed the BPOL application form, you may submit it in a few different ways:
- In Person:
Department of Tax Administration
12000 Government Center Parkway, Suite 223
Fairfax, VA 22035
- Mail it to:
Department of Tax Administration
12000 Government Center Parkway, Suite 223
Fairfax, VA 22035
- Fax it to: 703-324-3500
- Email it to: firstname.lastname@example.org
The DTA will send a BPOL tax bill for forms that are faxed or emailed. Once full payment has been made, your business license will be issued to you.
How long does it take to get a business license?
Anywhere from a few days to a few weeks, depending on various factors, such as your state and the specific license you require.
If you’re applying for a local operating license for a retail business, for example, it will very likely take less time than if you are applying for a state or federal liquor license.
Although it is hard to estimate how long it will take you to get a business license, there are some ways to help speed up the process. For one thing, if your jurisdiction makes it possible to apply for your business license online, do it.This will expedite the process compared to mailing your application or filling it out at the departmental offices, partially because online applications are easier for staff to review.
More importantly, ensure that you have followed all directions fully and accurately, and don’t forget to include all required documents with your application. Any error or omission in your application has the potential to cause delays in processing, which may sometimes be quite lengthy.
The BPOL Fee: Tax Calculation
A license tax based on the gross receipts of the previous year is assessed on most businesses, professions, trades, and occupations. For wholesale merchants, this license tax is calculated on the basis of gross purchases as opposed to gross receipts.
The Fairfax County BPOL tax excludes some gross receipts, whether related to sales or revenue; details concerning these exclusions are given in Fairfax County Code § 4-7.2-1(b). Any requests for exclusion must be submitted with the BPOL Exclusion Worksheet, and must include the required documentation.
According to the County’s BPOL Ordinance, estimates for both the first partial year and the following full calendar year are required. This should not be taken to mean that the tax will be based on these estimates, although they are required; the tax is based on actual gross receipts, using adjustments made at the end of each of the tax years that fall within the estimation phase, as in the following examples:
First Partial Year of Operation: The initial gross receipt estimate of a given business was set at $160,000, but its actual gross receipts added up to only $135,000 at the end of the year. An adjustment of $25,000 is made, and the difference between the amount of tax already paid and the amount actually due is reimbursed. This reimbursement is made either by a refund, if the business has closed, or as a tax credit for the following year, if the business remains in operation. In the final account, tax will have been levied on the actual gross receipts of $135,000.
Second Year (First Full Calendar Year of Operation, 1st January-31st December): A new estimate of the gross receipts for the full year serves as the tax basis. The final tax bill is calculated by adjusting the gross receipt estimate according to the actual quantity of gross receipts for the year, higher or lower, following the same process as used for the first partial year of operation described above.
Third Year (Second Full Calendar Year of Operation: An estimate is not required to renew business licenses. The tax bill for the business is based on the amount of actual gross receipts for the previous year, and is then adjusted to make up the difference between the amount of actual gross receipts for the current year and that of the previous year. This is also the way that the tax basis for all subsequent years is calculated.
How much is a Business License?
Fairfax BPOL Flat Fees and Rates
If a business’s gross receipts or gross purchases are less than $100,000, its tax rate is a flat fee, calculated as follows:
Less than $10,000: No fee is levied.
$10,001- $50,000: $30.
$50,001- $100,000: $50.
For gross receipts or gross purchases that exceed $100,000, the BPOL tax rate is applied. These rates depend upon the nature of the business, as laid out in the BPOL Ordinance (Fairfax County Code, Section 4-7.2).
This tax serves as the business license application fee: Once the tax has been paid, your license will be issued.
- Gross receipts do not include those amounts not derived from the exercise of the licensed privilege to engage in a business or profession in the ordinary course of business.
- Gross receipts do not include revenues that are attributable to business activity with a taxable situs in another jurisdiction not within the Commonwealth of Virginia which shall include any amount attributable to business conducted in another state or foreign country in which the taxpayer is liable for an income or other tax based upon income.
- Gross receipts do not include those receipts which are subject to a license tax on the same business activity imposed by a town government
- Gross receipts do not include any amounts received and paid to the United States, the Commonwealth or any county, city or town for the Virginia retail sales or use tax, for any local sales tax or any local excise tax on cigarettes, for any federal or state excise taxes on motor fuels.
- Gross receipts do not include the value of any trade-in vehicle accepted in trade by a motor vehicle dealer who accepts a trade-in as part of a sale of a motor vehicle
- Gross receipts do not include membership dues collected by trade, business, professional, service or civic associations, or other similar nonprofit organizations.
- Gross receipts do not include the income of a charitable nonprofit organization except to the extent an organization has receipts from an unrelated trade or business the income of which is taxable under Internal Revenue Code § 511 et seq.
- Gross receipts do not include donations, gifts or contributions made without consideration to a nonprofit organization described in Internal Revenue Code § 501.
- Gross receipts do not include general and administrative intra-company receipts or intra-company reimbursements or transfer payments.
- Gross receipts do not include receipts on any venture capital fund or other investment fund, except commissions and fees of such funds. Gross receipts from the sale and rental of real estate and buildings remain taxable.