You might think that, being a U.S. territory, starting a business in the U.S. Virgin Islands is exactly like starting a business in any state. While most of the process is similar, there are differences that business owners need to be aware of.
First and foremost, do you really need a business license? Yes.
“Everyone in the Virgin Islands that does business in the Virgin Islands must have a business license,” said attorney Georgeann McNicholas from the Law Offices of Marjorie Rawls Roberts, PC. McNicholas has more than 30 years of local experience forming companies in the Virgin Islands.
The Lieutenant Governor’s Office Division of Corporations and Trademarks serves as the registry for all corporate filings in the V.I. The cost and level of complexity depends on what type of business you want to form and the nature of the business. There are numerous types of business entities to choose from, and an attorney can suggest the most appropriate option. Corporations and limited liability companies from outside the V.I. will also need to register to form a V.I. legal entity.
Registration must now be done online using the new Catalyst system at www.corporationsandtrademarks.vi.gov, available 24 hours, seven days a week. This application allows businesses to easily submit payment and corporate documents and maintain business activity and history in one location. However, exempt limited liability companies and trademarks must continue to submit paper filings to the division.
To complete the process, you may need:
• An executed and duly notarized resident agent form for those who do not have a local address
• Certified charter documents (articles, amendments and merger, if applicable) and a certificate of good standing for foreign business entities. Any business not from the V.I., including stateside companies, is considered foreign. Only V.I. businesses are considered domestic.
• Executed and duly notarized consent letter for use of a similar name (if desired name is too similar to an existing registrant)
• Names, physical, mailing, and email addresses of persons associated with entity
Licensing and Consumer Affairs is the next stop. According to Assistant Director Karleen Jeffers, “once you register online at www.dlca.vi.gov, your file will be input into the integrated system. Within 24 hours, it goes to Licensing officers and they, in turn, send a checklist to the applicant.”
Once all of the checklist items are provided, the license is approved and issued upon payment.
• Certificate of trade name/ partnership and corporation registration
• A tax clearance letter. If filing for a new business, there is no tax history, so no tax clearance letter is needed.
• Police records check
• Zoning approval
• Fire inspection
• Health inspection, if necessary, depending on the type of business
• Board certifications. The following professions must be certified by their respective board to practice in the Virgin Islands:
— Architects, engineers, and land surveyors
— Barbers, beauticians and manicurists
— Construction contractors
— Public accountancy
— Real estate appraisers
— Real estate commissioners
— Social workers
Once your dash board has been created, the application is available to all relevant agencies, who can automatically address it directly. At this time, fire safety is the only inspection that businesses must arrange themselves. Applicants can check their dashboard to see updates on what’s been done and what is still pending.
Licensing and Consumer Affairs Commissioner Richard Evangelista is actively coordinating with other agencies to continue streamlining the process.
“Licensing and Consumer Affairs is the gatekeeper for reinforcement and issuance, but getting a license is a collaborative effort with other departments,” he said. “My efforts are focused on getting actual issuance done much more expeditiously. All commissioners and directors affected are on board to get this done.”
The biggest pitfall, particularly for stateside companies, may not be getting the license, but sorting out the tax system when it comes time for renewal. Some companies automatically send their taxes to the U.S. Internal Revenue Service, however, all companies and all employees working in the V.I. must instead pay taxes to the local Bureau of Internal Revenue. Companies must pay gross receipts, excise tax and Customs taxes locally as well.
The issue of taxes can be a problem, with companies working in the V.I. without obtaining a business license or paying V.I. taxes, costing the local economy a substantial amount in revenue.
“A classic example is a stateside company with a contract to do work in the Virgin Islands sending workers down who come and leave, thinking they don’t need to change their protocol, but working here, they are considered a V.I. employee and taxes must be paid here,” said V.I. Bureau of Internal Revenue Director Joel Lee. “Tax information is automatically put up on the dashboard for us to take a look at and check to make sure they are in compliance. So make sure you file so you can do your part for the community. We all live here and share the same resources, and who else is going to help us but ourselves.”
A new Memorandum of Understanding (MOU) between Licensing and Consumer Affairs and the Bureau of Internal Revenue acts as a filter for some who may have some tax issues.
“Currently to renew, you have to get a tax clearance letter and you are stuck in a holding pattern,” said Evangelista. “With the MOU, we’re not going to give away the store, but if the only impediment to renewing a business license is tax clearance, and they have historically been in compliance for the past two years and are an outstanding citizen working to catch up, they will get the OK while we act on the issue.”
When in doubt, seek some help. “I highly recommend that you hire a local CPA and local legal counsel, for the first year at least, to help navigate through the process,” said McNicholas. “I also recommend hiring local employees. Their local knowledge of the way things work can be very beneficial.”