Hiring your first employee in Virginia

What do you have to register for before your first payroll?

Virginia has no single payroll account. One tax registration opens both your withholding and sales tax accounts, but each gets its own number, and unemployment insurance is a completely separate registration with the Employment Commission. The state's business portal can submit several registrations in one sitting, which makes it feel like one account, but you still end up with two agencies, two sets of returns and two sets of deadlines.

Does Virginia require income tax withholding?

Yes. You register with the Virginia Department of Taxation, before you pay a virginia employee's first wages.

Virginia ties withholding to the federal rule: if federal law requires you to withhold from a payment, Virginia requires it too, with no minimum headcount or dollar threshold to get you out of it. Your filing frequency is set by how much you withhold each month. The trap is that one Virginia employee, including a remote worker you never meet, creates an account you must keep filing on every period even when you had no payroll that period.

What unemployment insurance does Virginia charge a new employer?

A new Virginia employer pays 2.5% on the first $8,000 each employee earns, so roughly $200 per employee in the first year. A new employer is assigned the statutory base rate of 2.5% on the first $8,000 each employee earns, capping the base cost at about $200 per employee a year until you have enough history for a computed rate. Watch for add-ons: Virginia layers annual charges such as the pool cost charge and fund builder on top, so the figure on your rate notice is usually a little above 2.5% and it is reset every calendar year. You become liable once you pay $1,500 in wages in a quarter or have an employee in 20 weeks of a year.

Do you need workers compensation insurance in Virginia?

Yes, once you reach 3 employees. Below that Virginia does not require it, but read the counting rules before assuming you are under the line, because who counts is rarely obvious.

• any employer that regularly employs more than two employees, so coverage begins at the third
• contractors, counting the employees of any subcontractor hired to perform the contractor's own trade or to fulfil the contractor's contract
• employers whose count reaches three only by including corporate officers, LLC managers, working family members, minors, or temporary, seasonal and part-time staff

Virginia is not a first-employee state: coverage becomes mandatory once you regularly employ more than two people, so your third worker is the trigger. The count is much broader than a payroll list. Part-time, seasonal, temporary and minor workers count, so do working family members and corporate officers who draw no salary, and if you hire subcontractors to do your own trade then their employees are added to your total too. That last rule catches small contractors constantly, because two employees plus a two-person sub crew is four, and the penalty runs up to $250 per uninsured day capped at $50,000.

There is no waiver or exemption for an employer over the threshold, and employee waivers are not recognised. An individual executive officer or LLC manager may reject coverage for themselves by filing a rejection form, provided the business still carries a valid policy.

How quickly must you report a new hire in Virginia?

Within 20 days of the employee's date of hire, or within 20 days of the start of an independent contractor's contract. Reports go to the Virginia New Hire Reporting Center.

Virginia gives you 20 days from the date of hire, and the same 20 days from the start of the contract for a new independent contractor. Most states only require employee reporting, so the contractor half is easy to miss if you are running a 1099 workforce. Submitting a copy of the W-4 for an employee or a W-9 for a contractor satisfies the requirement.

Does Virginia have paid family leave or state disability insurance?

Nothing is withheld for this today, but it is coming and it is now law. Virginia enacted a paid family and medical leave insurance programme in 2026: the programme is established in January 2028, employer contributions begin that April, and benefit payments begin that December. It covers every private employer with no headcount exemption, but the split differs by size, with employers of 11 or more able to deduct half the contribution from wages and pay the rest, while employers of 10 or fewer deduct the same employee half and owe no employer share. The contribution rate is left to the Commissioner to fix actuarially and is republished each October, so no rate exists to quote yet.

Do you need a sales tax permit in Virginia?

The certificate of registration is free, and it is issued per place of business. Registering is not optional paperwork: doing business as a dealer without a certificate is a misdemeanour and each day counts as a separate offence. The deadline that catches out-of-state sellers is the 30 day clock, which starts when you cross the economic nexus line rather than at the following quarter or year.

Security deposits. Neither the statute nor the regulation conditions the certificate on a bond or deposit, so unlike California and Texas there is no open-ended deposit demand attached to registering.

Does a marketplace like Amazon or Etsy handle the tax for you?

The platform, not you, collects and remits Virginia sales tax on sales made through it. If every one of your Virginia sales runs through a platform you generally do not have to register at all. The trap is mixed channels: sales from your own website are yours to handle, and if those direct sales alone cross the threshold you must register and collect on them while the platform sales stay with the platform.

If your sales drop, when can you stop collecting?

Dropping below the threshold does not let you stop collecting mid-year. Virginia lets a registered remote seller cease collection on January 1 of the year following any year in which it failed the test, so you keep collecting through December 31 of the year you fell short. If you cross the line again afterwards, the 30 day registration clock restarts.

Does Virginia charge a tax on revenue rather than profit?

Virginia has no statewide gross receipts tax, but that answer alone will get an expanding business in trouble. Virginia localities are authorised to levy a Business, Professional and Occupational License tax computed on your gross receipts rather than your profit, and you owe it separately in each locality where you have a definite place of business. State law caps the rates by category and shields small businesses with a floor that varies by locality size, from $100,000 of gross receipts in the largest down to whatever the locality chooses in places under 25,000 people. Below the floor a locality can still charge a flat licence fee, so check the ordinance of the specific city or county you are moving into rather than the state.

Do you have to register your out-of-state company in Virginia?

A foreign LLC pays a flat $100. A foreign stock corporation has no single figure, because the entrance fee scales with authorized shares at $50 for each 25,000 shares or fraction, flattening to $2,500 above 1,000,000 shares, plus a $25 filing fee. That puts the real range at $75 to $2,525, which is why no corporation figure is published here. A foreign nonstock corporation is a flat $75.

Foreign qualification means registering an entity you already formed elsewhere so it can legally do business in Virginia, and it is a different filing from forming a Virginia entity. Hiring a Virginia employee or opening an office is the usual trigger, and doing business without qualifying blocks you from bringing suit in Virginia courts until you register. Budget for the annual registration fee that follows, which is separate from these one-time amounts.

Where these figures come from

Every number on this page was read on Virginia's own agency pages, its statute, or a current-year official form, and this record was last reviewed on 2026-09-08. Where a state's explainer page disagreed with its statute or its current form, we followed the statute or the form and said so in the relevant section, because a state's consumer-facing pages are often the last thing updated when a figure changes.

Anything we could not confirm on a primary source is left blank rather than estimated. A missing figure on this page means we could not verify it, not that it is zero.

This is general information, not legal or tax advice. Rules change and your circumstances matter. Confirm anything you are about to act on with the agency named beside it.