To set up a virtual assistant business in the United States, you can start as a sole proprietor with no formal registration at the federal level, then work through a short list: pick a structure, check local licenses, decide on an EIN and a business name, open a separate bank account, and plan for taxes. State and local requirements vary. You will owe income tax plus self-employment tax of 15.3 percent on net earnings, and you must file Schedule SE once those earnings reach $400. You will likely make quarterly estimated payments, and clients may send you Form 1099-NEC. This guide gives general information based on IRS and SBA pages, not tax or legal advice. Confirm details at irs.gov and sba.gov, and talk to a qualified tax professional.
The setup checklist at a glance
- Choose a structure: sole proprietorship or LLC.
- Check city, county and state license and zoning rules.
- Decide whether to get a free EIN.
- Pick a business name and register a DBA if your state requires one.
- Open a business bank account to keep client money separate from personal money.
- Learn self-employment tax and set up quarterly estimated payments.
- Keep records of income and expenses from the first payment.
The rest of the page explains each step. Once the basics are in place, the next jobs are choosing your services and niche, setting prices and finding your first clients.
Step 1: Choose a business structure (sole proprietor or virtual assistant LLC)
The SBA describes the main options. Two matter most for a solo VA.
| Factor | Sole proprietorship | LLC |
|---|---|---|
| Setup | No formal registration needed if you operate under your own name, though a DBA, licenses or permits may apply | Registered with your state, usually with a registered agent |
| Personal liability | No separation between you and the business | Generally separated, though protection has limits |
| Taxes | Self-employment tax plus income tax | Same by default, or taxed as a corporation if elected |
| Costs and paperwork | Minimal | State filing fees and, in some states, annual fees |
Many beginners start as sole proprietors and revisit the question as income grows. State LLC fees and rules differ significantly, so check your Secretary of State's website. The SBA's page on choosing a business structure explains the options.
What a virtual assistant LLC does and does not change
According to the SBA, you are automatically a sole proprietor if you do business without registering as another type of entity, and a sole proprietorship has no separate legal existence, so the owner can be personally liable for business debts. An LLC generally shields personal assets such as a home or savings, requires registration with the state (usually through the Secretary of State) and a registered agent, and the SBA recommends an operating agreement. An LLC owner who is a member is still treated as self-employed, so forming one does not by itself remove self-employment tax. Whether the extra cost is worth it depends on your state's fees, the size of your contracts and how much risk you carry; a lawyer or accountant can advise.
Step 2: Licenses, permits and zoning
The SBA notes that local licenses often come from your city or county, that states regulate more activities than the federal government, and that zoning ordinances can apply even to home-based businesses. Check your city or county website and your state's business portal. Some places require a general business license even for home offices. The SBA's licenses and permits page is a good starting point. Also review the licensing note in the niches guide.
Step 3: Do you need an EIN?
An Employer Identification Number is free from the IRS, and the agency warns against sites that charge for it. It is generally required if you hire employees or operate as a partnership or corporation. Many sole proprietors without employees can use their Social Security number instead, but some prefer an EIN to avoid giving their SSN to clients. Clients may also ask for one. Apply only through the official IRS EIN page.
Step 4: Business name, DBA and a business bank account
You can work under your own name. If you want a brand name, the SBA says a DBA (also called a trade name, fictitious name or assumed name) lets you operate under a name other than your legal one, and most states require registration when you use one; some counties and cities do too. It says a DBA gives no legal protection by itself. The SBA also lists entity-name registration, trademark and domain name as separate things you can protect, and suggests checking a name against the USPTO trademark database.
The SBA says that keeping business money in its own account offers limited personal liability protection and lets clients pay the business by card or check. To open an account you typically need your EIN (or your Social Security number if you are a sole proprietor), plus formation documents and a business license if they apply; banks may ask for more. A separate account also makes tax records and invoicing and getting paid simpler. Source: SBA pages on registering your business and opening a business bank account.
Step 5: Virtual assistant business taxes: self-employment tax
Self-employed people pay both the employee and employer portions of Social Security and Medicare. The rate is 15.3 percent, made up of 12.4 percent for Social Security and 2.9 percent for Medicare. The IRS says you must pay it and file Schedule SE if net earnings from self-employment are $400 or more. For 2026, the Social Security portion applies to the first $184,500 of combined wages and net earnings. You can deduct the employer-equivalent half of the tax when figuring adjusted gross income. Details are on the IRS self-employment tax page.
Step 6: Plan for quarterly estimated taxes
Nobody withholds tax from your client payments. The IRS says sole proprietors generally must make estimated payments if they expect to owe $1,000 or more when filing. You avoid the underpayment penalty if you owe less than $1,000 after withholding and credits, or if you pay at least 90 percent of this year's tax or 100 percent of last year's, whichever is smaller. Higher-income taxpayers have special rules. The year is split into four payment periods, each with its own due date. Payments can be made using Form 1040-ES, online, by phone or through the IRS app, and you can also pay more often than quarterly as long as enough is paid by the end of each period. Check Form 1040-ES or Publication 505 for the exact dates, because a due date that falls on a weekend or legal holiday moves to the next business day. A common habit is moving a set percentage of every payment into a separate savings account. Ask a tax professional what percentage fits your situation. Source: IRS estimated taxes page.
Step 7: Forms you will probably meet
- Schedule C: reports business income and expenses with your Form 1040.
- Schedule SE: calculates self-employment tax.
- Form 1040-ES: estimated tax payments.
- Form W-9: a client may ask you to complete it so they can report payments.
- Form 1099-NEC: for payments made in 2026, the IRS reporting threshold is $2,000, up from $600 for earlier years, and it is adjusted for inflation beginning in 2027. You owe tax on all income whether or not you receive a form.
1099 virtual assistant: what it means for your taxes
A virtual assistant who serves clients on a contract basis is normally an independent contractor, not an employee. The IRS says a worker who provides services to other businesses is generally considered self-employed, and payers generally do not withhold or pay employment taxes on those payments. That is why you handle your own self-employment tax and estimates. The IRS looks at the whole relationship, including behavioral control, financial control and the type of relationship, so a written agreement helps; see the contract and proposal guide. Source: IRS page on independent contractor, self-employed or employee.
Clients usually ask for a Form W-9 before the first payment. If they pay you $2,000 or more of nonemployee compensation in 2026, they generally report it on Form 1099-NEC, according to the IRS instructions for Forms 1099-MISC and 1099-NEC; below that threshold they generally do not have to file, but you still owe tax on all income. Be careful with any "employer" who asks you to pay fees or send money first; the job scams guide lists the warning signs. If you later hire help, the rules for contractors versus employees change your obligations.
Step 8: Track expenses and the home office
Keep records of software, equipment, internet and other business costs. The IRS says the law generally does not require any special kind of records, so use any system that clearly tracks income and expenses, such as a spreadsheet or bookkeeping app (see VA tools and software). A home office deduction exists, but the IRS requires that you regularly and exclusively use part of your home for business and that it be your principal place of business. There is a simplified method and a regular method based on actual expenses (self-employed filers use Form 8829 for the regular method); details depend on your situation. Read the IRS home office deduction guidance or ask a preparer. The invoicing guide covers record keeping habits.
Sales tax, state and local taxes
State income tax, local business taxes and whether services are subject to sales tax vary by state. Check your state revenue department.
Frequently Asked Questions
Do I need an LLC to be a virtual assistant?
No. Many VAs start as sole proprietors. An LLC can separate personal and business liability, but protection has limits and states charge fees. Consider advice from a professional.
Do I need an EIN?
Not always. It is generally needed if you hire employees or form certain entities. Some sole proprietors use an EIN anyway. It is free from the IRS.
Do I need a business license to work as a virtual assistant from home?
It depends on your city, county and state. The SBA says local licenses often come from your city or county and that zoning rules can apply to home-based businesses, so check your local government website before you take paying clients.
Do I need a business bank account?
It is strongly advisable. The SBA says separating business and personal money offers limited personal liability protection and makes payments from clients easier to receive. It also makes your records cleaner at tax time.
How much tax will I owe?
It depends on your net income, deductions and state. Self-employment tax is 15.3 percent of net earnings, in addition to income tax. A tax professional can estimate your situation.
When are quarterly estimated taxes due?
Four times a year. Check the current dates on Form 1040-ES or in IRS Publication 505, since they shift for weekends and holidays.
Will I get a 1099 from every client?
No. For 2026 payments clients generally must report only if they pay you $2,000 or more. You must still report all income.
Am I an employee or a contractor if I work as a 1099 virtual assistant?
If you provide services to a business as a contractor, the IRS generally considers you self-employed. The classification depends on the whole relationship, including how much control the client has over your work and how you are paid.