The Virginia Motor Vehicle Dealer License is a legal authorization granted by the Virginia Department of Motor Vehicles (DMV) to individuals or entities engaged in buying, selling, or dealing motor vehicles in the state. If you sell more than 4 cars within a calendar year, then you will need to register as an auto dealer. An auto dealer license is required to operate a dealership and conduct vehicle transactions legally within Virginia and ensures compliance with state laws and regulations related to the automotive industry.
There are two types of dealers in the state of Virginia: franchise and independent dealers.
Franchise dealers are dealers that have the following characteristics:
Independent dealers are dealers that sell exclusively used motor vehicles.
The difference between independent dealers and franchise dealers when it comes to used vehicles is that independent dealers sell any brand of used vehicles, while franchise dealers will only sell used vehicles of the brand they have a franchise agreement with. For example, franchise dealers that have a franchise agreement with Toyota, they will only sell used vehicles that are also Toyotas.
The first step is to register your business. Obtaining a motor vehicle dealer license requires your dealership to be a legally recognized entity. In the state of Virginia, dealerships are typically four business types: sole proprietorship, partnership, limited liability company (LLC), and corporation. Below we will go into more detail about each business type.
A sole proprietorship is when you are the sole owner of your business. There is, therefore, no distinction between your personal assets and the business’s. In Virginia, you can establish a sole proprietorship without registering your business to any type of legal entity. However, there are a few circumstances where you must file legal documents with the Virginia state government.
The first scenario is if you need to file a fictitious name for your business. A fictitious name is a name that’s different from your business’s legal name. Typically, a sole proprietorship’s legal name would you the owner’s name. However, there may be times when a fictitious name may be helpful for your business’s brand. You can file your fictitious name online or by mail. To file online, make an account with the Virginia State Corporation Commission’s (SCC) Clerk’s Information System (CIS). After you make an account, you can begin the filing process. You can pay your filing fee of $10 via credit card or another electronic form of payment. To file by mail, download and complete the Certificate of Assumed or Fictitious Name - Individual. Mail the form to the following address:
State Corporation Commission
P.O. Box 1197
Richmond, VA 23218
You can also choose to deliver the form to the following address:
Courier Delivery Address
1300 E. Main St, 1st floor
Richmond, VA 23219
Mail or bring a $10 check payable to State Corporation Commission.
The second scenario for need to file documents is if you wish have employees. If you have employees other than yourself, you must obtain an EIN. EIN stands for Employee Identification Number and is a 9-digit number issued by the IRS to report employee wages. Apply for an EIN on the offical IRS webpage.
A partnership is a type of business structure in which two or more individuals or entities come together to form and operate a business. In a partnership, the partners share the responsibilities, profits, losses, and liabilities of the business. There are two types of partnerships: limited partnerships and general partnerships.
A limited partnership (LP) is a business structure that consists of two types of partners: general partners and limited partners. General partners manage the business and have unlimited personal liability for its debts. Limited partners are passive investors who contribute capital and have limited liability, only risking the amount they invest. Limited partnerships offer a flexible management structure and pass-through taxation, making them suitable for ventures where some partners want active involvement and others prefer a more hands-off, protected investment role. To become a LP, you must file the Certificate of Limited Partnership and pay $100. You can either file online or download and complete the physical form. You can mail the form to:
State Corporation Commission Clerk’s Office
P.O. Box 1197
Richmond, VA 23218
You can also choose to deliver the completed form to the following address:
Courier Delivery Address
1300 E. Main St, 1st floor
Richmond, VA 23219
A general partnership is a business structure where two or more individuals or entities join together to run a business. All partners share equal responsibility for managing the business, and they have unlimited personal liability for the company's debts and obligations. General partnerships often have pass-through taxation, where the profits and losses are passed through to the individual partners' personal tax returns. This type of partnership is suitable for small businesses or professional practices where the partners want to share responsibilities and have a direct say in the business's operations. To become a general partnership, the process is similar to that of a LP. You can either file online or mail the physical Statement of Partnership Authority same address above for limited partnerships.
For any method you choose, you must provide a payment of $25.
A Limited Liability Company (LLC) is a business structure that provides its owners, known as members, with limited liability protection. This means that the personal assets of the members are typically separate from the company's debts and obligations. LLCs offer the advantage of pass-through taxation, where profits and losses are reported on the individual members' tax returns, avoiding double taxation. The setup and maintenance of an LLC are relatively straightforward, and it offers flexibility in management, allowing members to manage the business themselves or appoint managers. Due to its liability protection and tax benefits, an LLC is a popular choice for entrepreneurs, small businesses, and startups seeking a simple yet advantageous business structure.
As an LLC, you are required to file the Articles of Organization. To do so online, follow the step-by-step instructions below:
To file a physical copy, download and complete the Articles of Organization form. You can either mail this form to the following address: P.O. Box 1197, Richmond, VA 23218-1197. Or deliver to 1300 East Main Street, Tyler Buildiing, 1st Floor, Richmond, VA 23219.
The filing fee for an LLC is $100.
A corporation is a legal entity separate from its owners, known as shareholders, created by filing articles of incorporation. It offers limited liability protection to shareholders, meaning their personal assets are typically shielded from the company's debts and liabilities. Corporations have a centralized management structure with a board of directors overseeing major decisions and officers handling day-to-day operations, making them an attractive choice for businesses seeking liability protection and scalability.
There are two types of corporations in Virginia: stock corporations and nonstock corporations. In Virginia, a stock corporation is a type of business entity where ownership is represented by shares of stock. Shareholders of a stock corporation have ownership rights and can buy or sell shares, and the corporation can raise capital by issuing additional shares to investors. In Virginia, a nonstock corporation is a type of nonprofit organization that does not have shareholders or issue stock. Nonstock corporations are typically formed for charitable, educational, religious, or social purposes and are governed by a board of directors or trustees.
You must file Articles of Incorporation for both types of corporations. You can file for these on the official CIS website. You can also download and submit physical copies of Articles of Incorporation of a Virginia Stock Corporation and Articles of Incorporation of a Virginia Nonstock Corporation. Mail these forms to P.O. Box 1197, Richmond, VA 23218-1197 or deliver them to 1300 East Main Street, 1st Floor, Richmond, VA 23219.
The next step is to establish a permanent location for your business that follows all zoning regulations of your local government. You must make sure your established place of business follows the below conditions:
The Virginia Motor Vehicle Dealer Board (MVDB) requires dealerships to have at least one qualified dealer-operator on the premises.
To become a franchise dealer-operator, you must:
To become an independent dealer-operator, you must:
After you pass, fill out the Salesperson License Application, and have it signed by the dealership representative and/or application for your dealership. Submit this application with the rest of your license materials.
As part of the licensing process, you must obtain a $50,000 auto dealer bond as well as liability insurance.
The Virginia Auto Dealer Bond is a requirement for motor vehicle dealers. It serves to ensure that auto dealers fulfill their legal obligations to the state and their professional duties to their clients. This surety bond provides financial protection for customers of the auto dealers. For instance, if a dealer sells a car without a valid title, the consumer can make a claim against the dealer's auto dealer bond.
If your dealership wishes to be a part of the Virginia Motor Vehicle Transaction Recovery Fund, you must submit a dealer bond of $100,000 instead. Joining the recovery fund is a helpful tool to build trust with potential customers.
The Virginia Motor Vehicle Transaction Recovery Fund exists to provide compensation to individuals who have experienced loss or damage while purchasing or leasing a motor vehicle. This reimbursement is available for those affected by unlawful actions committed by licensed or registered motor vehicle dealers or salespersons. The fund serves as a safety net for consumers, ensuring that they can seek recourse and financial restitution in cases of fraudulent or illegal behavior within the automotive industry in Virginia.
You must obtain your surety bond at a maximum of 30 days before you submit your license application. The bond also must be maintained for the first 3 years of your dealership.
Liability insurance for auto dealers is a type of insurance that provides coverage for the legal and financial liabilities faced by auto dealerships. It protects dealerships from claims and lawsuits arising from accidents, injuries, or property damage that may occur on their premises or as a result of their operations. This insurance also helps cover legal defense costs and settlements if the dealership is found liable for damages. Liability insurance is essential for auto dealers to safeguard their assets, reputation, and financial well-being in case of unforeseen events or accidents related to their business activities. Every dealer plate your business owns must be insured. There is no required minimum amount of insurance, so you must come up with a reasonable amount with your insurance company. We recommend using Next Insurance (not affiliated) for your general liability insurance needs.
The next step is to complete and consolidate all required licensing forms:
Bond application - No need to complete this application. If you get a bond from us, we’ll file this for you.
Dealer plate application - This application must be completed in order to obtain dealer license plates. You are allowed to have four plates per salesperson and are required to have at least two plates.
Dealer license application - The license application requires you to provide the following information:
Zoning compliance certification: To obtain your zoning compliance certification, you must apply for a zoning permit on the official website of your local government. For example, in the city of Richmond, you can apply for your certificate of zoning compliance on their Online Permit Portal. Obtain this certificate within 30 days of submitting your license application.
Salesperson license application/Request for criminal background check: The completion of this application licenses each salesperson in your business as well as consents a criminal history check for them. Fill one out for each salesperson in your dealership.
Copy of Buyer’s Order: A purchase order, also known as a buyer's order, is a formal document issued by a dealer to a lender. It contains essential information related to the transaction, including the Vehicle Identification Number (VIN), current mileage, sticker price, taxes, fees, and the total bottom line pricing. This document serves as an official record of the agreement between the dealer and the lender, ensuring transparency and clarity in the purchase or financing process.
The next step is to submit all your completed forms and applications. Along with these documents, you must mail checks to the Virginia Department of Motor Vehicles. The necessary fees include the following:
Make your checks payable to Virginia Motor Vehhicle Dealer Board and mail them along with your required licensing documents any DMV customer service center or to the main DMV office:
Virginia Department of Motor Vehicles
P.O. Box 27412
Richmond, VA 23269
After submitting your application, your license will be processed and mailed to your assigned Field Representative. Your Field Representative will then contact you to set up an appointment to visit your dealership. Below we’ve listed important requirements you should make sure your dealership follows before your representative arrives at your business.
Dealership employee requirements:
If you dealership passes the inspection, the Field Representative will deliver all license documents to the Motor Vehicle Dealer Board, and you will be open for business!
Your license expires after one year of its issuance. For example, if your license was issued on November 1, 2022, then your license expires on November 1, 2023. You must renew your license 30 days before the expiration date.
To do so, you will use the same license application you filled out to apply for the initial license. Instead, you will check the “RENEWAL APPLICATION.” This application as well as other necessary documents will be mailed to you in a consolidated renewal packet. If you have not received the packet within 30 days of your expiration date, you should contact the Virginia Motor Vehicle Dealer Board (MVDB). The MVDB’s email address is dboard@mvdb.Virginia.gov and their fax number is 804-367-1053. When contacting the MVDB via any method, provide the following information:
If you are late to renewing your license, there will be a late renewal fee of 50% of your dealer and salesperson license fees. Renewal applications received more than 30 days after your expiration date will be reviewed as initial applications. This means it will be like re-applying for your license. You will need to go through the exact same process a second time.