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Buying or Selling a Business in Virginia

| John M. McCormick | ,

Quick Answer

Buying or selling a business in Virginia follows the same basic path as anywhere else: letter of intent, due diligence, purchase agreement, financing, and closing. Virginia adds its own steps. Entity status and UCC liens are checked with the State Corporation Commission, buyers must protect themselves from the seller's unpaid sales taxes under Va. Code § 58.1-629, local business licenses are handled by each locality, and Virginia courts will not rewrite an overbroad non-compete.

This article is part of our Legal Guide to Buying or Selling a Business.

Our firm is based in Norfolk, and a large share of our transactions involve Virginia businesses, from Hampton Roads to Richmond and Northern Virginia. This guide covers the Virginia-specific issues we see most often. For the general process, start with our asset purchase vs. stock purchase and due diligence guides.

Where Do You Check a Virginia Company's Status?

The State Corporation Commission (SCC) Clerk's Office maintains Virginia corporation and LLC records, including formation documents, annual reports or registrations, registered agent information, and certificates of good standing. The SCC also maintains Virginia's central UCC filings, which show whether a lender holds a security interest in the business's equipment, inventory, or receivables. Judgments, land records, and fixture filings are kept by the circuit court clerk in each city or county, so searches should cover every locality where the business operates or owns property.

Who Has to Approve the Sale?

For a Virginia corporation, a sale of assets outside the usual and regular course of business requires board approval and shareholder approval if it would leave the corporation without a significant continuing business activity. Unless the articles say otherwise, shareholders must approve by more than two-thirds of all votes entitled to be cast, not just two-thirds of those voting (Va. Code § 13.1-724). The statute includes a safe harbor: a corporation that keeps a business accounting for at least 20% of its total assets and at least 20% of either its pretax income or its revenues from continuing operations is treated as retaining a significant continuing business. Appraisal rights generally do not apply to a Virginia asset sale unless it is an interested transaction or the governing documents or board provide them. For an LLC, the operating agreement controls; if it is silent, members generally act by a majority of voting power, which is allocated by contributions rather than one vote per member (Va. Code § 13.1-1022). A stock or membership interest sale may also be limited by transfer restrictions or rights of first refusal in a shareholder or operating agreement. These documents should be reviewed before the letter of intent is signed.

How Do Virginia Sales Taxes Affect a Business Purchase?

Virginia imposes successor liability for unpaid sales and use taxes. When a dealer sells its business or stock of goods, it must file a final return and pay within fifteen days, and the buyer must withhold enough of the purchase money to cover any unpaid tax, penalties, and interest until the seller produces a receipt or certificate from the Tax Commissioner. A buyer who does not withhold can become personally liable (Va. Code § 58.1-629). Virginia Tax has applied this rule to ordinary asset purchases, and a seller's promise in the contract does not change the buyer's statutory exposure. Buyers should build the clearance or a holdback into the purchase agreement.

What Licenses and Local Requirements Apply?

  • Business licenses: each Virginia county, city, and town decides whether to impose a business license and BPOL tax (Va. Code § 58.1-3703), so check the ordinance for every location, including any incorporated town. Where a license is required, an asset buyer should apply in its own name before operating; in a stock sale the licensed entity stays the same, but the locality may require updated records. Confirm the seller's BPOL account status at closing
  • Professional and trade licenses: contractor and many occupational licenses are issued through the Department of Professional and Occupational Regulation and are tied to the licensed entity and its qualified individuals
  • Alcohol licenses: Virginia ABC retail licenses cannot be transferred to another person or location (Va. Code § 4.1-203(B)), so an asset buyer operating through a new entity needs its own license and cannot sell alcohol under the seller's. In a stock sale the license stays with the same entity, but a sale of a majority of a retail licensee's corporate stock requires written notice to the ABC Board, which may then require the new-application notice procedures. Virginia's temporary retail license is narrow and is not a general bridge for a buyer awaiting approval, so the licensing timeline should be planned before closing
  • Food and other health permits: Virginia food establishment permits are issued in the owner's name and cannot be transferred to another person or location, so a buyer that replaces the permit holder must apply to the local health department for a new permit (12 Va. Admin. Code § 5-421-3660). Hotel and campground permits follow similar rules. In a stock sale, the permitted entity stays the same, and these rules do not by their terms treat a change in owners as a transfer, though the local health department should be consulted
  • Real estate: deeds are subject to Virginia recordation and grantor taxes, which the purchase agreement should allocate

Are Non-Competes Enforceable in Virginia?

Virginia enforces non-competes only if they are narrowly drawn to protect a legitimate business interest, are not unduly burdensome, and do not violate public policy. Virginia courts do not rewrite overbroad covenants. Virginia also prohibits non-competes with "low-wage employees," a definition that since July 1, 2025 includes all employees who are non-exempt under the Fair Labor Standards Act (Va. Code § 40.1-28.7:8). For a genuine sale, the Supreme Court of Virginia has said that a greater scope of restraint is permissible between a buyer and seller than between an employer and employee (Richardson v. Paxton Co., 1962). Virginia's appellate courts have not settled exactly how that changes the analysis, however, and courts still examine the restricted activity, territory, and duration against the goodwill the buyer purchased. Placing a covenant in a shareholder agreement or tying it to a share transfer does not by itself guarantee the more lenient treatment. And because the low-wage statute has no general exception for sellers, a seller who stays on after closing as a non-exempt employee creates real risk, even if the non-compete appears in the purchase documents. Our article on non-competes in a business sale covers this in more detail.

Financing a Virginia Acquisition

SBA and conventional lenders active in Virginia will require proof of good standing, lien searches, and often landlord consent and a minimum lease term. See our guide to buying a business with an SBA loan.

Attorney Insight

I have seen the Virginia sales tax withholding rule surprise buyers frequently. It applies to ordinary small business asset purchases, and a seller's promise in the contract does not change the buyer's exposure under the statute. I recommend making the clearance part of the closing checklist on Virginia deals.

Frequently Asked Questions

Do I need a Virginia attorney to buy a Virginia business?

It is strongly recommended. Virginia has state-specific tax, licensing, and non-compete rules, and the purchase agreement should be governed by and drafted for Virginia law where appropriate.

Who pays the seller's unpaid Virginia sales tax after a sale?

The seller remains responsible, but a buyer who does not withhold purchase money or obtain clearance can become personally liable under Va. Code § 58.1-629.

How long does a Virginia business sale take?

It depends on financing, landlord and third-party consents, and how prepared the seller is. State filings themselves are usually not the source of delay.

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Buying or Selling a Business in Virginia?

McCormick Law & Consulting represents buyers and sellers in business acquisitions, primarily in Virginia and North Carolina and in transactions that cross state lines. The transactions in which we have represented a party total hundreds of millions of dollars in combined deal value, a measure of the size of those deals, not of amounts recovered or earned for clients. We have formed roughly a thousand new business entities and currently represent hundreds of businesses, so we approach every deal from the operating side as well as the legal side. Every transaction is different, and the size or outcome of past deals does not predict the result in yours.

With offices in Norfolk, Virginia and Raleigh, North Carolina, we handle most of our transactions in those two states and also assist clients with multistate transactions. If you are buying or selling a business, a short call early in the process can save time, money, and leverage later. Learn more about our mergers and acquisitions practice.

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This article provides general information only. It is not legal, tax, or financial advice and does not create an attorney-client relationship. Laws differ by state and change over time. Our attorneys are licensed in Virginia and North Carolina. We assist clients with business transactions involving multiple states. For matters involving the law of a state where we are not licensed, we associate with appropriately licensed counsel or otherwise proceed only as permitted by applicable law.