Many modern businessmen favor a limited liability company as the structure for their future legal entity for the benefits it offers both to the company and to its owners. Besides, this type of business entity is one of the easiest to form. Though LLC law varies by state, the basic formation scheme for common LLCs remains the same. So, if you stand on the verge of the Washington LLC formation process and are inclined to pass it through on your own, below, you’ll find a step-by-step formation guide that will help you start an LLC in Washington in a maximum easy and smooth manner. And if you already have a professional license, check some peculiarities pertinent to the registration of the professional LLC in Washington.
With clear and comprehensive instructions at hand, the business formation process won’t look as intimidating and confusing as it might seem at a glance. Simply follow the plan, and you’ll make it through without a hassle.
Just like people have names, companies need to be named too. Yet, unlike persons, limited liability companies are not allowed to have similar names. A unique form and spelling is the key to an LLC business name. Yet, choosing a name for your future business entity, you are not solely bound by your imagination and should stick to some state regulations too. Thus, the Washington RCW §23.95.305 states the as follows:
Inventing a unique business name is not an easy task, So, it’s advisable to take some time thinking it over and have several versions at hand. To find out if your Washington LLC name is unique or not, check it through the business name database, which is a state service accessible for free.
Once you hit the spot with a company name that is both different from any existing ones and distinguishable, catchy, and easy-to-remember, don’t hesitate for too long and start the filing process immediately. Yet, if for some reason, you are not ready to keep up steam and need some more time to finalize the document preparation, you can put your business name on hold. Name reservation in Washington is available for as long as 180 days, which is half a year actually. To secure a business name for this period, you just need to pay a $30 flat rate and send the Name Reservation Form to the Secretary of State at the following address:
Secretary of State
801 Capitol Way S
P.O. Box 40234
Olympia WA 98504-0234
Note that online reservation is not available in this state and only paper form is required. You can mail the filled-in form to a P.O. box or bring it on your own if you reside in Olympia city. Besides, as you might guess, processing of application forms can extend to days. So, if you want to cut down the turnaround time and secure your LLC name as soon as possible, you can pay $50 for the expedited processing speed.
Considering the list of documents for the LLC formation, most likely than not, you’ve come across an Operating Agreement. First off, the document is not a must for opening an LLC in Washington. Similar to other states, it’s optional here. In fact, it’s a bylaw more related to the company operation and management than to any regulatory formalities. On the other hand, though, it doesn’t mean you don’t need one to run a business in Washington.
The main purpose of the Operating Agreement is to ensure a well-organized and solid operational and managerial structure for your company. As such, the document:
With that, an Operating Agreement facilitates day-to-day company management and control while making all processes clear and transparent that in its turn makes the company more attractive for investors, sponsors, and creditor institutions.
From the legal point of view, a Washington Operating Agreement can be drafted in a free form, with no regulatory templates required. So, you can write it down on your own, if you have some sort of experience with this type of document. If not, you can get an attorney to prepare it for you. Yet, while attorney’s help will run into bucks, online LLC formation services such as LegalZoom, for example, provide pretty much the same help at a fraction of the lawyer cost. They incorporate professionally drafted and customized Operating Agreement templates into their formation bundles, and some companies even allocate them for free at their websites.
Two key steps to complete before applying for registration with the Secretary of State are inventing a business name and appointing a registered agent. When the business name is selected and checked, you are one step away from filing your LLC. Anticipating your question, it should be mentioned that you do need a registered agent to operate an LLC in Washington. It’s a must-have “attribute” of any LLC in the US since it serves as an intermediary in communications between your business as a legal person and the state. A registered agent handles all the mail from administrative, regulatory, and government authorities meant for your company, be it notices, lawsuits, taxes, etc. And it’s the registered agent that should make sure you get those docs in time. In other words, a registered agent is an essential element for maintaining your company compliance with the state.
When it comes to the formal side, your Washington registered agent could be either a person or a company. If you choose an individual, it should be an adult over 18 years old and officially residing in Washington. Officially means not only registered in the state but also physically present at the registered address to personally receive any company communication during normal business hours. While you can designate your relative or friend as a registered agent, we recommend going with an attorney, tax expert, financial consultant, or accountant who has a registered office in the state.
If you decide to choose a company, the easiest option to go is a Professional Registered Agent service like say Northwest Registered Agent. Normally, this type of service is delivered by specialized online formation companies and some of them even offer it at no cost at all like IncFile does.
When the business name is chosen and a registered agent is appointed, you are finally ready to apply for LLC in Washington. To complete the registration, you need to submit the Articles of Organization or Washington Certificate of Formation to the Secretary of State.
To say a few words about the document itself, it’s pretty much a typical form. To fill it in, you’ll need to check the rules governing the LLCs in Washington (RCW §25.15 Limited Liability Companies) and have the following information:
Once the document is filled in and ready to be filed, you can submit it either online or send it in paper form. Notably, filing fees vary by state, thus directly impacting the final formation cost. Online filing is normally a quicker option and Washington DC is not an exception. Yet, here it comes at a higher price and will cost you $200. To mail the application, you need to send the printed version to:
Secretary of State
801 Capitol Way S
PO Box 40234
Olympia WA 98504-0234
Mailing option is charged at $180 and it will take up to two weeks to get your formation documents processed by the state. To cut down that time to two days, you can pay $50 in extra. And an online version is obviously more attractive in this concern.
Though not necessary for registering your LLC in Washington, an EIN or Employer Identification Number is needed to lawfully run your business afterward. It functions similar to an individual tax number making your company visible and traceable for state, tax, and authorities. If you are going to hire employees or open a business bank account, an EIN is a must.
This number is generated by the Internal Revenue Service (IRS) and the registration procedure is quite simple and straightforward. To apply for an EIN in Washington, all you need to do is file an application with the IRS that will impose no costs by the way. You can apply, choosing one of the following methods.
Filling a digital form between 7 am and 10 pm on weekdays, you can obtain your EIN immediately;
Download the Form SS-4 and fax it to the below number to get your EIN in four business days:
Mailing the printed application form will make you wait for quite a while since mailed hard copies are processed within four weeks.
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
While at this point your business is considered legally formed, formalities don’t stop here. There are a few more aspects you need to take into account to operate your company with a peace of mind.
While you certainly have a personal bank account, using it for business-related transactions is wrong. Don’t be lazy and don’t keep this task for later. By opening a business bank account right after formation is over, you’ll split your personal and business assets from the very start and make accounting and profit distribution much more convenient. To do that, you just need to contact your local bank department and bring a simple document bundle covering your formation docs, EIN, and Washington LLC bank resolution.
Paying business taxes is inevitable, no matter the state. The good thing is that running a Washington LLC, you’ll be exempt from paying federal and state income taxes. As a pass-through entity, LLC is free from those and that obligation passes on to the company owners who pay LLC income taxes on their personal tax returns pro-rata to their equity contributions. The taxes you’ll have to pay running a Washington LLC include:
To pay commercial and employee-related taxes, you need to register with the Employment Security Department and file an application for a business license. As for the latter, do it online or send a printed application form to
State of Washington
Business Licensing Service
PO Box 9034
Olympia, WA 98507-9034
Some types of business activities require a license or a special permit to commence business in Washington. You can check the state license list available on the local government website to find out whether you need licensing in Washington or not. The type of LLC business license you might need will depend on the type of your business activity and the industry your company operates in.
State reporting is an important part of any business and it’s essential to maintain your company’s good standing with the state. While most states require just annual reports, Washington regulations are more strict in this concern. Thus, within a 120-day period after formation, you’ll have to file an Initial Report that will cost you $10. Annual reports are due yearly at your LLC formation date and come at a filing cost of $60. Keep an eye on timely filing since any delay will incur a penalty of $25.
Annual Reports are to be sent to the Secretary of State and can be submitted online or delivered in paper to
Corporations and Charities Division
P.O. Box 40234
Olympia, WA 98504
Restireing for an LLC in Washington is a process you can certainly handle on your own if you have time and are eager to get into the nuts and bolts of LLC formation. However, if you are rather focused on your business development and seek to skip formalities, one of online LLC services is the best alternative to launch a Washington LLC in an effortless manner. Along with basic filing services, many of those companies come up with maintenance bundles including free registered agent service, EIN acquisition, a customized Operating Agreement, etc.