By Jacob C. DeRue (February 28, 2025)

Introduction

When forming a Virginia Limited Liability Company, it is crucial to understand the scope and powers afforded to LLCs in Virginia. LLCs are controlled primarily by state law, so each state differs in how LLCs are treated depending on the state’s Limited Liability Company Act. You must examine the Virginia LLC Act and case law to understand the powers granted to you to run your LLC.

This article will provide a brief overview of what an LLC is, what the statutory purpose of a Virginia LLC is, and what powers are afforded to a Virginia LLC. Whether you are an experienced business owner or looking to establish your first LLC, this guide will provide a baseline understanding of the powers and purpose of a Virginia LLC.

What is a Limited Liability Company (LLC)?

An LLC is a business structure that is organized under state statutes. Therefore, each state may regulate LLCs in slightly different ways, so it is essential to always check with your state if you plan to start an LLC. LLCs have grown in popularity in recent years, with individuals creating LLCs for multiple purposes, from dog-walking businesses to noteworthy businesses such as Blockbuster L.L.C. and Google LLC.

As an LLC owner, you hold the title of a “member.” This title is not limited to individuals; it can also be held by corporations, other LLCs, or foreign entities. The beauty of an LLC is its flexibility; there’s no maximum limit on the number of members, and most states even allow “single member” LLCs (LLCs with one owner).

While many businesses can operate as LLCs, there are exceptions such as banks and insurance companies. Understanding your state’s requirements and federal tax regulations is crucial before creating an LLC. This knowledge will ensure you operate within the law and avoid potential issues. Additionally, there are special rules for foreign LLCs that you should be aware of which an attorney can help with.

Lastly, depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a: (1) corporation, (2) partnership, or (3) a disregarded entity (as part of the LLC’s owner’s tax return). A domestic LLC with two or more members is classified as a partnership for federal income tax purposes unless it files Form 8832 and elects to be treated as a corporation. An LLC with one member is treated as a disregarded entity for income tax purposes unless it files Form 8832 and elects to be treated as a corporation. Further, an LLC with one member will be considered a separate entity for employment tax and certain excise taxes.[1]

What is the Purpose of a Virginia LLC?

Business owners form LLCs in Virginia and nationwide for many reasons. People can form LLCs for such an expansive category of businesses because the Virginia LLC Act is very broad when defining the purpose of an LLC in Virginia. The Act states, “[e]very limited liability company formed under this chapter has the purpose of engaging in any lawful business, purpose, or activity, whether or not such business, purpose, or activity is carried on for profit, except as otherwise provided by the law of this Commonwealth, unless a more limited purpose is set forth in the articles of organization.”[2]

Breaking down the Act’s language, it becomes clear that a Virginia LLC can adapt to any business that intends to engage in lawful business, purpose, or activity. This adaptability means an LLC can be created for your neighbor’s dog-walking business, your cousin’s Etsy shop, or your friend’s multi-million-dollar beverage company. The versatility and adaptability of LLCs fit many people’s needs, making them a popular business structure.

What are the Powers of a Virginia LLC?

In addition to the purpose of LLCs in Virginia, the Act also lays out the powers LLCs hold in Virginia. First, LLCs generally have a “perpetual duration and succession in its name and has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs….” Therefore, LLCs can remain in business until the members decide they want to end the LLC or if they violate the law. Further, LLCs are treated as individual legal entities separate from their members and are afforded powers to run their businesses.

These powers include, but are not limited to, the power:

• To sue and be sued.
• To purchase, receive, lease or acquire, own, hold, improve, use, and deal with property.
• To sell, convey, mortgage, pledge, lease, exchange, and dispose of its property.
• To purchase, receive, subscribe for, or acquire, own, hold, vote, use, sell, mortgage, lend, pledge, or dispose of, and deal in and with shares or other interests in, or obligations of, any other person.
• To make contracts and guaranties, incur liabilities, borrow money, issue notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income.
• To lend money, invest and reinvest its funds, and receive and hold property as security for repayment.
• To conduct its business, locate offices, and exercise the powers the Act grants in or out of Virginia.
• To elect and appoint managers, employees, and agents of the LLC, define their duties, fix their compensation, and lend them money and credit.
• To pay pensions and establish pension plans, pension trusts, profit-sharing plans, and benefit and incentive plans for any current or former managers, members, employees, and agents of the LLC or its subsidiaries.
• To make donations to the public welfare or for religious, charitable, scientific, literary or educational purposes.
• To make payments or donations or do any other act allowed by this section and other laws that furthers the LLC’s business and affairs.
• To pay compensation or additional compensation to any managers, members, and employees on account of services previously rendered to the LLC, regardless of whether an agreement to pay such compensation was made before the individual did the services.
• To insure for its benefit the life of any of its managers, members, or employees, to insure the life of any member to acquire at his death the interest owned by the member, and to continue the insurance after the relationship terminates.
• To cease its activities, wind up its affairs, and cancel its existence.
• To enter into partnership agreements, joint ventures, or other associations with any party.
• Subject to any standards and restrictions outlined in its articles of organization or an operating agreement, to indemnify and hold harmless any member or manager or other person from and against any claims and demands, and to pay for or reimburse any member or manager or other person for reasonable expenses incurred by a person who is a party to a proceeding in advance of the final disposition of the proceeding.
• To transact any lawful business that a corporation, partnership, or other business entity may conduct under Virginia law subject, however, to any laws and restrictions that govern or limit the conduct of such activity by such corporation, partnership, or other business entity.
• To have and exercise all powers necessary or convenient to effect all purposes for which the LLC is organized.[3]

While this list covers all the powers granted to LLCs under the Act, the language of the Act in the blog post has been simplified for easier comprehension. Further, the list is extensive and includes a catchall provision at the end, allowing LLCs to exercise all powers necessary and convenient to effect all purposes for which the LLC is organized. This provision suggests that LLCs may have more powers than what is listed in the code section, and the code may not be fully exhaustive.

Despite the apparent simplicity of this list, case law and other code sections can modify the ability of LLCs to act. Therefore, it is important to consult a Virginia lawyer specializing in business law if you have any questions about the powers of your LLC.

Conclusion

In conclusion, using an LLC as your corporate form offers many benefits. By working with a skilled attorney, you can establish your own LLCs for your businesses and benefit from the vast powers given to LLCs in Virginia while protecting your personal assets.

This blog post is intended to overview the purpose and powers afforded to Virginia LLCs. Individuals who have questions about what type of business structure best fits their company, questions about business law, or seek experienced outside counsel for their business should contact Jacob DeRue at Briglia Hundley, P.C., through the Contact Page.

The information in this blog post may not reflect the current law in your jurisdiction. No information in this blog post should be interpreted as legal advice, and the blog post is not intended to substitute for legal counsel.

About The Author

Jacob DeRue is an associate attorney supporting BrigliaHundley, P.C.’s business litigation and corporate law practice groups. He joined the firm the summer after his first year of law school as a summer associate, then transitioned to a law clerk until passing the Virginia Bar after graduation and becoming an attorney. Mr. DeRue primarily practices in the firm’s corporate law practice group, commercial and business litigation practice group, and civil litigation practice group.

Briglia Hundley represent individuals and corporations throughout the Mid-Atlantic region, including Alexandria, Annandale, Arlington County, Ashburn, Burke, Centreville, Chantilly, Clifton, District of Columbia, Dulles, Fairfax County, Falls Church, Great Falls, Herndon, Leesburg, Loudoun County, Manassas, Manassas Park, McLean, Middleburg, Montgomery County, Oakton, Prince George’s County, Prince William County, Reston, South Riding, Springfield, Sterling, Tysons Corner, Vienna, Winchester and Woodbridge.

Contact the Author

Jacob C. DeRue

Briglia Hundley, P.C.

Tysons Corner Office

1921 Gallows Road, Suite 900

Tysons Corner, Virginia 22182

Telephone: 703.883.0880

Fax: 703.833.0899

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[1] Limited Liability Company (LLC), IRS (Jan. 25, 2023), https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc.

[2] Va. Code Ann. § 13.1-1008.

[3] See id.