If you are interested in opening a Washington LLC, you should be aware of the legislation in that state, calculate the cost of registration fees, clearly know what documents you need to prepare, and what is optional for operating there.
You can always turn to an intermediary agency, and such a decision is often the best one. But even in this case, it is useful to realize what services are essential for you, and what vendors try to impose on you.
In this article, we will cover everything about your business registration in the state of Washington, the time it takes, the fees you have to pay, and the services or additional steps you will need afterward.
- How to Form an LLC in Washington: Step by Step
- First Tasks After Setting Up an LLC in Washington State
- Keep Your Washington Company Compliant
- Washington Business Formation Quick Links
- FAQ About Washington LLC Registration
How to Form an LLC in Washington: Step by Step
Step 1: Name Your Washington LLC
The first thing you should consider when creating an LLC is coming up with a company name that you find original and appealing. What is critical to understand is that in Washington, like many other states, there are certain words that have to be included in the name of your venture, and others that, conversely, are not acceptable from the state’s point of view. Let’s discuss this issue in more detail.
Words You Have to Use
According to the Revised Code of Washington (see Section 23.95.305), any LLC name has to inform people about the type of ownership directly, and therefore, all companies of this category include one of the phrase alternatives:
- Limited Liability Company;
- Limited Liability Co.
Words You Can’t Use
There is also a list of words that cannot be incorporated into your chosen LLC name in Washington state. This is governed by Section 23.95.305. Thus, unlike many other states, you cannot add the abbreviation “Ltd.” to your name here.
In addition, your company name should not contain words such as “corporation,” “partnership,” or any other phrase that might give the mistaken impression that your business refers to another type of legal entity.
Another significant restriction is the prohibition of words, which can make people think that your organization is state-owned. Moreover, if you want to show in the name the type of business, it should comply with your real activity.
This is especially true when obtaining a license. There should not be any words in the name that might convey the impression that you render services without a license.
|One important rule about operating in Washington: if your firm needs a license, then you should double-check with the Secretary of State to see whether your chosen name complies with the field and the law.|
Besides, according to Section 23.95.300, your LLC name has to be different from the titles of other organizations. It helps customers not get confused between two different entities with similar names.
Research the Name You Want Starting an LLC in Washington State
Once you have chosen a name for your business, check with the Washington Secretary of State’s Corporation Search service to make sure that it is free. If you see that another organization has already registered it, you can only proceed with the filing of your name if the agency agrees in writing to change its LLC name.
|You don’t need to register to check the LLC name by searching the Secretary of State’s website. Just look at the bottom of the site, there is a “Corporation Search” function.|
After you’ve made sure that the name you want is available, according to Section 23.95.310 of the Revised Code of Washington, you can reserve it for up to 180 days. To do this, you will need to fill out a special form and pay a fee ($30) to the Washington Secretary of State. Sometimes, the registration needs to be expedited, and then, this fee will increase to $50.
The completed Washington LLC name registration form should be sent by mail. The application itself can be filled out on the website, but you still have to complete and send it via mail (see address below).
|Secretary of State Corporation Division801 Capitol Way S|
PO Box 40234
Olympia WA 98504-0234
In the envelope, you should also include a check or money order for the $30 paid to the Secretary of State. To greatly expedite the processing time, the check has to be for $80, and the word “Expedite” needs to be written on the outside of the envelope.
Washington DBA: Using a Trade Name
When you decide on an LLC name, bear in mind that you don’t have to use it as a brand name or for promotion. Ventures usually prefer to use a DBA, which is a special name used for business activities and stands for “doing business as”. You can also register it and then use it on your business cards, website, and for advertising.
Suppose you had registered the LLC name as follows: “Spokane Car Wash, LLC. For convenience, you can use “Spokane Car Wash” as your trademark.
But if you decide to focus primarily on pressure washing services, you can apply for another DBA, such as this one: “Spokane Home Washing”.
Using a DBA is a common solution for operating an LLC in different states in the US. You can put a bright, short name on a sign and in advertising that doesn’t have long phrases like “Limited Liability Company” and any strict limitations.
This name is called a trade name in Washington. It is mentioned in the Revised Code of Washington Section 19.80.010, which explains that if you want to use a DBA, you have to apply for a business license from the Washington Department of Revenue (DOR). The filing fee is $19.
|Business Licensing ServicePO Box 9034|
Olympia WA 98507-9034
The trade name application can be submitted online using Washington’s secure My DOR system. This option is the fastest and easiest. You may also mail this form (see address below). It takes 10 business days to process the document.
Step 2: Appoint a Registered Agent to Create an LLC in Washington
A registered agent means a person who may be an individual or a legal entity. One of their main functions is to receive correspondence and all types of documents for an LLC.
This activity is regulated by the Revised Code of Washington Section 23.95.415. It says that an agent is required to accept service of process for an entity.
|Accepting the service of process means obtaining legal documents if you face a lawsuit. Thus, when your company is sued in Washington state, a registered agent will receive these papers.|
The agent should have an office in the state and be available during working hours to receive the paperwork.
There are two types of registered agents in this state: commercial and non-commercial. If an individual or organization has an office in Washington state, they can act as a registered agent. The main difference between commercial and non-commercial agents lies in the fact that if it is a for-profit activity, the registered agent should file a statement with the Secretary of State on time indicating that it is a business.
Since anyone can be an agent in Washington state, LLC owners often come to the conclusion that they will perform such a role themselves. However, such a decision is actually not the best one.
Experienced entrepreneurs know that it is much more profitable and efficient to work with a registered agent, who provides services on a commercial basis. You will pay very little money, and a registered agent will receive legal documentation for your company in return.
Let’s discuss the pros of being your own registered agent to get an LLC in Washington:
- You don’t have to pay anyone for this service;
- Your address and other contact information, which should always be up to date, are your personal data;
- You receive all papers in person without delay.
On the other hand, we still do not recommend that you specify your company as a registered agent for your Washington LLC because it has some disadvantages:
- You will lose your privacy. Your address and name will be publicly available on the Secretary of State’s website. Anyone using the Internet can find your personal information;
- Receiving spam. You will get all your correspondence, including junk mail and all kinds of spam. Furthermore, you will have to handle these letters on your own;
- Working without breaks. You should be available throughout the working day to receive documents. As such, you may not have a free schedule, vacations, lunch breaks, or sick days;
- Unexpected business interruptions. You will have to take time away from your customers to meet with people serving processes, for example, claims against your firm. This is embarrassing and can negatively affect your image;
- You are responsible for mistakes in your address. If you change any contact information and forget to notify or make a mistake, you will be liable.
Hence, the decision to hire a registered agent makes sense. Moreover, the cost of services usually does not exceed $100 per year. Your agent will sort the mail and notify you about all the important details on time.
|When choosing a registered agent for Washington state LLC registration, we highly recommend that you study our rating of the best LLC services and take into consideration this information.|
If your company operates out of Washington state, we recommend that you select a national registered agent.
To do business in another state, you will need to file as a foreign LLC and maintain a registered agent there. Therefore, it will be much more advantageous to opt for a single service provider that has offices in different states. This will save you time and effort.
Step 3: File Your Washington LLC Certificate of Formation
The Certificate of Formation is a state document that contains all the basic information about your venture. In Washington, you are required to file this paper with the Secretary of State when forming an LLC.
|If you don’t want to handle all the nuances of LLC registration on your own, you can always take advantage of professional business creation services. Check out the best in our article.|
What to Include In My Washington Certificate of Formation?
According to the Revised Code of Washington Section 25.15.071, the following information should be listed in the LLC Certificate of Formation:
- LLC name;
- Name and contact information (address is required) of a registered agent;
- The name and address of each of the LLC members who file this document.
In some cases, LLCs are created for a fixed term. If you want to specify the end date of the organization right away, it will also be added to the Certificate. The law allows you to enter other information that you think is essential to be stated in the paper.
You can submit the Certificate on the Secretary of State website or send it by mail. You may find the option of applying online much more convenient as it reduces the processing time considerably.
Washington LLC Cost: Filing Fee
It will cost you $200 to file the Certificate of Formation in Washington state if you submit the application online, and $180 — if you send the documents by mail.
Washington LLC Processing Time
The standard turnaround time for the Certificate of Formation is 2 working days if you apply online.
If the documents are mailed, they will be processed in the order they are received, so the time frame for the Certificate of Formation depends on the mail and the office workload. An additional fee of $50 can expedite the procedure.
Step 4: Draft Your Washington LLC Operating Agreement
An Operating Agreement is one of the most crucial documents that regulates the activities of an LLC. It lists the rights and obligations of all company members and defines the management structure.
This paper is not required by law in Washington. Nevertheless, most businessmen create it since this agreement is very useful for the management of the firm.
Having such a document ensures that the participants have reached an agreement on the structure and management of the entity. It can help find a solution in the event of any disputes between members in the future.
For example, one of the company’s owners may decide to sell their share. There can be many reasons for that. Operating Agreements will already contain the sequence of actions to be followed when purchasing the share of one member. It also defines who will take over this person’s duties after they leave.
Operating Agreements are useful in many cases for the following reasons:
- The document clearly describes the rights and members of the LLC: who handles general management, who is responsible for financial issues, etc.;
- The paper outlines the possible activities of the LLC. All types of daily operations are also explained;
- Along with the leaving rules, the Operating Agreement specifies how new people can join the team;
- It describes how profits are distributed among LLC members. This includes defining different types of membership and payment schemes;
- This document defines the manager’s responsibilities. It shows what each team member is liable for, what specialists they can hire and fire;
- It describes the circumstances under which the business will cease to exist. This can be a date or terms. You should consider such things in advance;
- It specifies the methods for changing the rules, how, at what meeting, and with what number of votes, you can amend the Operating Agreement.
As you can see, Operating Agreements are more valuable to you as a business owner than to the state. The document helps establish the rules for the company’s existence and assists in resolving disputes and difficult situations. Be sure to keep a copy of the agreement in a safe place.
Step 5: Get an EIN (Employer Identification Number)
The Employer Identification Number (EIN) is a document similar to the Social Security Number, or SSN, but for legal entities. It is a nine-digit tax identification number. An EIN is used for tax returns and any other business relationships between LLCs and state organizations in the United States.
When you need an EIN number:
- Your LLC has more than one member;
- You hire employees;
- Your firm has a taxation structure like a C corporation or an S corporation.
If you recognize your business in any of these points, then you need an EIN number.
If you are a single member of a venture that is self-employed and files tax returns using your own SSN, you do not need an EIN. However, it can be valuable here as well. For example, an EIN will help prevent fraud against you, as well as separate your own financial savings from your business.
Thus, if you want to open a bank account for your entity, you will need to register an EIN. Most banks require it on a mandatory basis.
Getting an EIN is super easy. It takes a few minutes to apply for and receive a number on the IRS website. You can also send IRS form SS-4 by mail and get the identification number as well. All steps take less than 5 minutes, and therefore, entrepreneurs handle them on their own.
First Tasks After Setting Up an LLC in Washington State
Once you have established a Washington LLC, there are a few more steps you will need to take. They will help you operate in accordance with industry laws and standards.
Open a Business Bank Account
In Washington state, LLC owners are not required to open bank accounts for their businesses. But in fact, many entrepreneurs prefer to keep their personal finances and business funds separate. If you open a bank account for your LLC, keeping track of your business assets will be much easier. It also helps you protect your personal assets in the event there are any problems with your venture.
The main reasons to create a separate account for an LLC are:
- Convenience. The company’s accounting becomes much easier and more transparent;
- More business opportunities. An LLC can only accept credit card payments to a business account. You will be able to receive payments from people in as many ways as possible;
- Your personal assets are protected. If you don’t mix your own and business funds, you won’t be liable for LLC debts.
The last point in this list is especially critical. The issue is that having an LLC legally protects the business owner’s assets from the company’s debts. If your organization is sued, only assets that belong to the LLC will be allowed to be used for compensation. Even in the most complicated case, your personal funds will remain intact. You and your LLC are considered different legal entities, this is how the corporate veil is formed.
If you receive funds from clients into a personal bank account, the assets will blend together, and then, the corporate veil won’t work in court. Thus, it will be difficult for you to prove that particular savings are your personal and have nothing to do with the business, and you lose your defense abilities.
Get Business Insurance For Your Washington LLC
After setting up an LLC, it makes sense to think about insurance. You can lose business for a variety of reasons, so it’s worth obtaining insurance to cover the risks of operating in your chosen industry.
The main insurance options offered in Washington for LLCs are:
- General liability insurance. It can come in handy if someone is injured at work. Compensation for damages and the lawyer’s fees are covered in this case;
- Worker’s compensation insurance. The Revised Code of Washington Section 51.08.070. requires employers to provide workers’ compensation. Some employers prefer the state compensation system, while others choose self-insurance;
- Commercial automobile insurance. The insurance is completely similar to a personal car insurance policy but applies to the driver and the vehicle owned by the company;
- Commercial property insurance. This is protection for any damage. Keep in mind that flood protection in the U.S. most often is a separate policy;
- Professional liability insurance. It is often required by doctors, lawyers, and other professionals in the service industry. This policy provides legal protection and coverage in case of malpractice;
- Business income insurance. If you are forced to close your business for some time, the insurance will cover the losses. But you should study the policy carefully because different insurance firms list various conditions.
Keep Your Washington Company Compliant
In some cases, you will also have to follow additional rules when running a venture. Some LLCs require a business license, while others mandate that you file tax returns. Keep up-to-date with any changes in legislation and industry that may affect your organization.
Washington Business Permits and Licenses
When forming an LLC, you may face the need to secure a license or some type of permit from the state to conduct a local business. To expedite this procedure, use the Washington DOR’s Business Licensing Wizard tool, so you will know whether there are any additional requirements for you.
Washington Tax Requirements
In Washington state, individuals do not pay income tax. However, the situation is different for LLCs. Here you have to pay business and occupation (B&O) tax, which is 1.5% of gross receipts. You can use the My DOR system to pay taxes.
Federal LLC Tax Filing Requirements
From the IRS standpoint, all LLCs are “pass-through entities” for federal tax purposes. Like S corporations, you will have to report your LLC’s income and losses on Schedule C, along with information for your personal income tax.
You will pay Social Security and Medicare taxes even if your business has no employees. In addition, you have to withhold taxes from any employees’ wages.
Annual Report and Other Filing Requirements
In Washington state, it is mandatory to file an annual report for an LLC. It can be submitted online through the Secretary of State’s website or mailed in hard copy. Either way, the filing fee will cost you $60.
Washington Business Formation Quick Links
- Corporation Search/ online filing (SOS)
- My DOR
- Business Licensing Wizard (DOR)
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Name Reservation: Revised Code of Washington Section 23.95.310
- Trade Names: Revised Code of Washington Section 19.80.010
- Registered Agent: Revised Code of Washington Section 23.95.415Certificate of Formation: Revised Code of Washington Section 25.15.071
- Naming Requirements: Revised Code of Washington Section 23.95.305
- Additional Naming Requirements: Revised Code of Washington Section 23.95.300
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.
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