How much does it cost to form a Washington LLC or Corporation?
Washington is considered one of the top states for setting up a new business. The economy is stable and has grown by 3.7% in the last few years. It is home to several high-growth industries like Aerospace, Agriculture, Clean Technology, Food Manufacturing, Forest Products, Life Sciences, and IT among others. If you want to start a business in this state and want to know about the costs of forming an LLC in Washington; then this guide will be helpful. This guide has been created to provide you with an insight into many facets of the incorporation of an LLC formation in the state.
Washington LLC or Corporation
There are a variety of types of business structures available to choose from depending on your needs and objectives. A limited liability company and a business corporation are two of the most popular entity structures. Whether you choose to incorporate in Washington or form an LLC; each has its advantages and state-specific maintenance requirements. There are several other items to consider including the cost of forming a corporation in Washington and state business taxes.
Which business entity should I choose for my Washington business?
Washington is considered a global leader in several essential industries including aircraft and unmanned aerial systems (UAS). The state is also home to several unicorn startups with Seattle ranked #9 in the list of top startup ecosystems. The business climate along with a steady infrastructure, availability of a talented workforce, and taxation are determining factors in choosing a business structure. The chosen structure will further define the actual cost of forming an LLC in Washington or a corporation. We have listed several focal points that will help you determine the right structure for your business.
- Ownership Control – The structure of ownership or ownership control in an LLC is different from that of a corporation. There are certain business structures like sole proprietorships that have a single owner. An LLC can have single or multiple owners. Corporations and partnership firms conversely, cannot operate with single ownership. A corporation has to issue shares and each shareholder is considered an owner of the company.
- Funding or investment – The cost to form a corporation in Washington as well as any other business type, and operational costs are considered to be a part of capital investment. A new business always requires funds and the operational costs for certain entities can be more than for others. The state provides grants and funding options to all businesses but getting an investment from VCs and other private sources is easier for corporations in comparison to an LLC.
- Taxes – State taxes or business taxes are one of the central points that will help you choose a business structure. If you form an LLC in Washington, then it will be considered a pass-through entity in terms of taxation, whereas a corporation undergoes double taxation. The entity type selected will also determine the state taxes one is liable to pay.
- Limited Liability Protection – Liability Protection is another paramount basis for identifying the best structure for your business. Liability protection helps business owners avoid any personal liability for company debts
- Complexity – There are a few particular entity structures that have a complex registration process. They call for more documentation and may require written laws concerning the way management functions, duties, and the way operations are conducted.
Washington LLC Costs
A limited liability company is one of the most popular entity structures due to its many benefits. The lower cost to form an LLC in Washington is just one of several other advantages this type of business structure offers. You can choose to form a sole proprietorship and treat it like a single-member LLC (SLLC) or start a Multi-member LLC and elect S Corporation status. If you are interested in forming an LLC in Washington, then let us take a look at the several costs you may encounter.
Costs of forming an LLC in Washington
The cost to form an LLC in Washington should include the initial new business registration fee, as well as annual maintenance costs. Making the business operational may include several other expenses. The principal fees are:
- Reserving a business name is the primary step to forming an LLC in Washington. You will have to file the name reservation form along with a fee of $30.
- According to state laws, you will need to hire and maintain a registered agent for the service of process. The cost or fee would vary depending on the service you select.
- The business registration fee is the single most significant cost to form an LLC in Washington. You will have to file a Certificate of Formation along with a filing fee of $180. If you want to expedite the process, there is an additional fee of $50.
Annual maintenance costs for a Washington LLC
Once you have registered your limited-liability company in Washington; it is critical that you meet all state requirements including the annual business maintenance requirements. This includes the Washington LLC annual fee for keeping the business active and operational. The fees involved are included in the following:
- Annual Report – Filing annual reports is a mandatory annual requirement for all LLCs.
- The Washington LLC maintenance cost for an annual report is $60. The report has to be submitted annually by the end of the LLC’s registration anniversary month. Failure to submit this report can lead to penalties and even dissolution of the company.
- Taxes – Since a limited liability company is considered a “Pass-through Entity”; the company will not file any taxes on the business income. Instead, the owners or members will have to file taxes on their share of profits. There are other taxes that your company may have to file and are considered part of the cost to form an LLC in Washington.
- Business Licenses – Once you have filed the Certificate of Formation, you will need to apply for a business license or permit to operate in the state. This is another form of Washington LLC maintenance costs and will vary according to the type of licenses, the number of permits or licenses, and the county where your business is located. It is important to remember that business licenses have to be renewed annually.
There are several processes involved in a new business formation as well as keeping the business active and operational. There are different expenses involved including a Washington LLC annual fee. We, at IncParadise, can assist you with the registration of your LLC in Washington and provide guidance and expertise wherever you may require it.
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Washington Corporation Cost
A modern-day business corporation is also known as the C Corporation and is another well-favored legal structure. A corporation works differently from an LLC and although the cost to form a corporation in Washington or incorporation cost is the same as that of a limited-liability company. If you have an interest in forming a Washington Corporation then let us take a look at some of the expenses you may encounter.
Cost of forming Washington Corporation
The Washington corporation maintenance cost includes the initial registration costs as well as various annual fees. The principal costs related to forming a Washington Corporation are:
- When you start a new business, You will need to decide on a name for your company. To identify a name, conduct a business name availability search, and then reserve the chosen name with the office of the Washington Secretary of State. The name reservation fee is $30 and it is an essential cost to form a corporation in Washington.
- The state laws require you to designate and continuously maintain a registered agent in the state according to WA Rev Code § 23B.05.010 (2012). The role of a registered agent is to facilitate service of process. The fee or cost will vary depending on the service chosen by you.
- The third and most cardinal Washington corporation maintenance cost is the new business registration fee. You will have to file Articles of Incorporation with a filing fee of $180. If you want to expedite the process, there is an additional fee of $50.
Annual maintenance cost for Washington Corporation
Aside from the initial costs to form a Corporation in Washington, there are a variety of expenses concerning the annual maintenance of your business. The annual requirements will help your business to remain in compliance with all state laws. The costs include the following:
- Annual Report – An essential annual cost for a Washington Corporation is filing the annual report. The fee for filing an annual report is $60. The report has to be submitted annually by the end of the incorporation anniversary month. If you fail to submit this report then it can lead to penalties.
- Taxes – A corporation has a different tax structure from any other business entity. A corporation also undergoes double taxation. The state of Washington does not have any corporate income tax but depending on the type of activity, a company may be subjected to business and occupation (B&O) tax.
- Business Licenses – After filing the Articles of Incorporation, applying for and obtaining a business license is important. A business license or county permit will allow you to operate in the state. This is another form of Washington corporation maintenance cost and will vary depending on the county, as well as the type of permits or licenses being issued. These licenses and permits must be renewed annually or on dates as prescribed by the county.
The cost to form a Corporation in Washington will also include obtaining an Employer Identification Number (EIN). We, at IncParadise, can not only guide you concerning fulfilling annual maintenance requirements but also help you with the process to incorporate in Washington.
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Need any Assistance in Forming Your Washington LLC or Corporation
There are certain processes and costs involved when you register an LLC or incorporate in Washington. These include initial new business registration-related processes as well as annual business maintenance. We at IncParadise, can provide valuable assistance by handling your incorporation or new business formation requirements while ensuring your company is compliant with all state laws.
IncParadise is one of the leading business incorporation and Washington registered agent service providers. We have helped thousands of corporations and LLCs with formation requirements. We also provide a wide variety of additional services like getting a tax id, foreign qualification, and S corporation status among others.