How to Start an Online Store in Virginia: Economic Nexus at $100,000 or 200 Sales and the Privacy Law Test
If you want to know how to start an ecommerce business in Virginia, the short answer is that the formation paperwork is manageable and the tax rules are where most online sellers get tripped up. Once you sell to Virginia customers, you need to know when you must collect sales tax, which products are taxable, whether Virginia’s privacy law reaches your store, and which local license applies. This guide covers those in order of importance, then walks through the formation steps that put your business on file.
Disclaimer: This article is informational content, not legal or tax advice. Your facts decide the answer, and rules change. For anything beyond a simple setup, talk with a Virginia attorney or a CPA before you rely on it.
What You Need Before You Start
- Your intended legal name and a list of the products you plan to sell
- A list of every sales channel: your own website, marketplaces such as eBay, and any wholesale buyers
- Filing money: $100 for LLC Articles of Organization, $10 for a name reservation if you want one, and $10 for an assumed name certificate if you sell under a trade name
- Access to the SCC Clerk’s Information System at cis.scc.virginia.gov
- A registered agent who meets Virginia’s requirements, if you form an LLC or corporation
- A sales record system that tracks sales by customer location and counts transactions separately
- A free federal EIN from the IRS at irs.gov
- Contact information for your city or county Commissioner of the Revenue, for local license questions
Step 1: Determine Whether You Have Sales Tax Nexus
Nexus is the connection that obligates you to register and collect. Virginia has three triggers that matter for online sellers.
Physical presence
A seller located in Virginia has nexus and must register and collect on taxable sales to Virginia customers. If your inventory, office, or home base is in Virginia, the question is settled, and you should register before your first taxable sale.
Economic nexus for remote sellers
A remote seller, one with no physical presence in Virginia, must register and collect once it has more than $100,000 in annual gross retail sales into Virginia or 200 or more separate retail transactions into Virginia. Either number triggers the obligation. Count transactions, not just dollars. A store selling $20 items can reach 200 transactions, or $4,000 in sales, long before it reaches $100,000, so the transaction count is the trigger to watch.
Marketplace facilitators
Marketplace facilitators, such as eBay, must collect for sales made on their platforms unless Virginia Tax waives that requirement. If you sell only through a marketplace, the platform generally handles collection on those sales, but you should still check whether your direct sales count toward your own thresholds. Selling on eBay does not give you a state business license. The local license question is covered in Step 4.
To register, go to Virginia Tax at tax.virginia.gov. There is no charge to register, and Virginia Tax assigns your filing frequency.
Know your rate
The combined rate depends on where your customer is located, not where you ship from. The base rate is 5.3% statewide plus local. Regional-tax localities pay 6%, eight localities pay 6.3%, and the Historic Triangle (James City County, Williamsburg and York County) pays 7%. The grocery rate is 1%. Use the rate lookup on the Virginia Tax sales and use tax page for each address, because rates are set by locality and can change. Sales to customers in other states follow those states’ rules, which this guide does not cover.
Step 2: Figure Out What Is Taxable
Physical goods are generally taxable retail sales when sold to Virginia customers. For everything else, the answer depends on the product and on how you bill for it. Treatment of the following items is product-specific, so check Virginia Tax guidance or ask Virginia Tax before you set up your cart:
- Digital products and downloads
- Software subscriptions and software-as-a-service
- Online courses and digital memberships
- Shipping and handling charges, whether separately stated or built into the price
- Drop-shipped goods, where a supplier ships directly to your customer
Do not assume a product is exempt because a competitor sells it without charging tax or because you read a claim on a forum. Treat each product category as a question to confirm, and record the answer you got and where you got it.
If you buy inventory to resell, your supplier needs a resale certificate so it does not charge you sales tax on items you intend to sell. Virginia’s resale certificate process is covered in a separate guide on this site.
Wholesale and reseller businesses face a different local tax measure. The local BPOL tax on wholesale is measured on purchases, not sales, at a maximum of 5 cents per $100 of purchases (Va. Code 58.1-3716). Retail is capped at 20 cents per $100 of gross receipts (Va. Code 58.1-3706). These are maximums. Your locality sets the actual rate and filing deadline.
Step 3: Test Your Store Against the Virginia Consumer Data Protection Act
The Virginia Consumer Data Protection Act (Va. Code 59.1-576) applies to persons who do business in Virginia or target Virginia residents and who, in a calendar year, either:
- control or process personal data of at least 100,000 consumers, or
- control or process personal data of at least 25,000 consumers and derive over 50 percent of gross revenue from the sale of personal data.
The law has no revenue threshold for small businesses, so the consumer counts decide it. Most small online stores fall below both numbers. If your store is growing quickly, or you sell customer data as a business line, count your consumers for the calendar year rather than guessing.
Some entities are exempt, including state agencies, financial institutions covered by the federal Gramm-Leach-Bliley Act, HIPAA covered entities and business associates, nonprofits, and higher education institutions.
An exemption from this law does not remove every privacy obligation. Card network rules for handling payment data still apply, and so does the privacy policy you publish to customers. This guide does not go into those rules, but do not treat a small store as exempt from them.
Step 4: Check the Local License and Your Home Base
Virginia has no general state business license. The State Corporation Commission forms your entity but issues no business license. The business license you may owe is a local tax: the Business, Professional and Occupational License (BPOL) tax under Va. Code 58.1-3700 et seq. Each city or county administers its own BPOL, usually through the Commissioner of the Revenue.
Not every locality levies a general license. Va. Code 58.1-3704 allows a locality to levy none. Several counties, including Stafford, Rockingham, Bedford County, Washington County, Montgomery County, Louisa and Fluvanna, have no general county license, and towns can displace the county tax. Confirm the current status with your locality. Do not assume your neighbor’s answer applies to you, and do not assume every locality requires a license.
State law sets a receipts floor that protects small sellers, though it depends on population:
- A locality over 50,000 people cannot require a license for gross receipts under $100,000.
- A locality with 25,000 to 50,000 people cannot require a license for gross receipts under $50,000.
- No statutory floor applies to a locality under 25,000 people.
Localities over 50,000 people may waive the license up to a higher amount. Confirm the waiver ceiling with your locality, because this guide does not state a settled figure for it. Localities set their own rates and filing deadlines, so no single rate applies across Virginia.
A home-based online business can raise a separate zoning question. Home occupation rules in your local ordinance may restrict customer visits, deliveries, and signs. Check the zoning ordinance before you assume a home base is allowed.
Products add their own rules:
- Food sellers should read the cottage food rules. Virginia has no statewide food-handler-card rule, but food establishments must have a Certified Food Protection Manager.
- Hemp and CBD sellers should check with the relevant state agency. For many agricultural and food products, that is VDACS.
- Alcohol sellers deal with ABC. Regulated professions are licensed by state boards such as DPOR and the Department of Health Professions.
- Cannabis retail sales are authorized from July 1, 2027 under budget language, but the regulations are not final. Verify the timeline with the agency before you plan a cannabis product.
Step 5: Form the Business and Get Your EIN
An LLC is the most common structure for online sellers. Articles of Organization (Form LLC1011) cost $100 and are filed through the SCC Clerk’s Information System at cis.scc.virginia.gov. Online filings can be expedited:
- Next day for $50 or $100, submitted by 2:00 PM Eastern, with a response by 4:00 PM the next business day.
- Same day for $200, submitted by 10:00 AM Eastern, with a response by 4:00 PM.
Expedited service is online only and nonrefundable. Your LLC name must contain “limited company,” “limited liability company,” “LC,” “L.C.,” “LLC,” or “L.L.C.,” and it must be distinguishable from names already on file. You can reserve a name for $10 for 120 days, and the reservation can be renewed in the 45 days before it expires. More information is at scc.virginia.gov/businesses.
Your LLC needs a registered agent. The agent must be a Virginia resident with a Virginia street registered office, available during business hours, and either a member of the Virginia State Bar or a member, manager, officer, trustee or general partner of the entity. The entity cannot be its own agent.
Virginia LLCs pay a $50 annual registration fee to the SCC and file no annual report. The fee is due the last day of the 12th month after the month the LLC was organized, and every year after that. The SCC assesses the fee about two months ahead. A late payment adds a $25 penalty, and the LLC is canceled at the end of the third month after the due date.
If you form a corporation instead, Articles of Incorporation (Form SCC619) cost $75. Corporations file an annual report and pay an annual registration fee of $100 for up to 5,000 authorized shares, plus $30 for each additional 5,000 shares. Check the SCC annual fee schedule for current figures. The annual registration fee is due the last day of the formation month. The annual report is due the last day of the 12th month after formation and may be filed no earlier than three months before that date. The state corporate income tax is a 6% flat rate.
If you sell under a name other than your legal name, file an Assumed Name Certificate with the SCC for $10. It is filed with the SCC, not the circuit court, and it requires no newspaper publication.
Get your EIN from the IRS at no cost through irs.gov. Most banks and payment processors will ask for it.
If you will have employees, workers’ compensation coverage is required at three or more employees (Va. Code 65.2-101). Virginia’s minimum wage is $12.77 in 2026, $13.75 in 2027, and $15.00 in 2028.
Insurance, platform fees, and shipping costs are real line items. Price them into your product before you launch. This guide does not give dollar ranges for them, because they vary by product, provider, and volume.
Common Mistakes to Avoid
- Counting only dollar sales and ignoring the 200-transaction trigger.
- Assuming a marketplace’s collection covers your own website sales.
- Charging the wrong rate by using your address instead of the customer’s.
- Assuming Virginia has one statewide business license, or that every locality requires one.
- Treating digital products, subscriptions, or shipping charges as exempt without checking Virginia Tax guidance.
- Skipping the resale certificate, so suppliers may charge you tax on inventory you meant to resell.
- Missing the $50 annual registration fee, which adds a $25 late penalty and can end in cancellation.
- Assuming the privacy law does not apply because you are small, without checking your consumer count.
Practical Tips
- Set up your sales records to track customer state, transaction count, and gross sales from day one. Reconstructing that data later is harder.
- Use expedited SCC service only if your launch date truly depends on it. It is nonrefundable.
- Reserve your name before you spend on branding, and remember that a reservation lasts 120 days.
- Calendar your LLC annual registration fee and your local BPOL deadline as soon as you are registered.
What to Expect
Following these steps in order may leave you with a registered sales tax account, a written count of your Virginia sales and transactions, a documented check of the privacy law, a local license answer from your Commissioner of the Revenue, and a filed entity with an EIN. Timing varies. Expedited SCC filings may speed up the state’s response, but locality replies, Virginia Tax processing, and your own record keeping set much of the pace. Outcomes for any one store depend on its products, customers, and locations, so treat these results as likely rather than guaranteed.
Because the sales tax, privacy, and local license questions turn on your specific facts, consider a qualified Virginia attorney for entity and privacy questions and a CPA for tax treatment before you launch. The Virginia Small Business Development Center network offers business advising and is a useful starting point for planning.