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.
Table of Content
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.
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:
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.
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.
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.
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 reaceive 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 Washington: 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:
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:
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.
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.
According to the Revised Code of Washington Section 25.15.071, the following information should be listed in the LLC Washington Certificate of Formation:
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.
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.
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.
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:
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.
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:
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.
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.
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:
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.
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:
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.
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.
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.
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.
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.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.