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How to form your LLC in Washington

Washington is considered the leading producer of lumber and is home to small businesses and large enterprises. The Real Gross Domestic Product (GDP) of the state is generated by several big industries including computer software development. The state offers several benefits for entrepreneurs to enjoy when they form an LLC in Washington, including a variety of tax incentive programs. This article has been created to provide you with guidance on the topic of starting an LLC. The guide will provide you with insight into various business requirements like the Washington LLC operating agreement, local licenses and permits, and taxes among others.

LLCs in Washington

Entrepreneurs prefer to start an LLC in Washington because it has one of the top pro-business climates in the nation. Today, the state situated in the Pacific Northwest region is home to more than 600 thousand small businesses and this includes several Fortune 500 companies like Amazon, Expedia, Alaska Airlines, clothing merchant Nordstrom, and Microsoft among others . The state not only has a strong industrial base but also small business incentives and grants programs that aid with business growth and expansion.

What is an LLC in Washington?

A limited liability company (LLC) is a type of business structure that provides limited personal liability. An LLC may have a single owner (member) or multiple members. The tax classification of an LLC by the IRS is that of a “pass-through entity”. It is also considered to be a hybrid entity as it has similar characteristics to a C Corporation as well as a partnership. If you want to form an LLC in Washington then you may choose from any of the following structures:

  • Single-Member LLC similar to Sole Proprietorship
  • Multi-member managed LLC
  • Manager-managed LLC
  • A series LLC
  • Manager-Managed LLC
  • Foreign limited liability company

What are the benefits of forming an LLC in Washington?

If you want to establish a limited liability company then a Washington LLC registered agent can help you with the process. There are several facets to this particular type of entity but above all, it offers several benefits. Some of the advantages are:

  • Limited Personal Liability – Business debts are an important aspect of any company. Now, if you register a Washington LLC online then unlike certain other forms of entities, an LLC will enjoy limited liability protection. This simply means that as the owner or member of the said LLC, you will be protected from liability due to any debts of such an LLC.
  • Tax Flexibility – One of the greatest advantages of an LLC is the ability to elect the type of taxation it will follow. A limited liability company may elect to be taxed as a C Corporation, S Corporation, sole proprietorship, or partnership.
  • Membership Flexibility – When you set up a limited liability company, you will be able to enjoy certain flexibilities in terms of management structure. This means that the core members of such a limited liability company may include individuals, partners, trusts, estates, or other business entities.

Forming an LLC in Washington

Washington is quite a popular state among entrepreneurs and you can register a Washington LLC online. The state has a sound business infrastructure that includes the availability of a skilled workforce, a strong culture that promotes creativity, the availability of low-cost energy, and a robust supply chain. There are however several key areas to focus on when starting a limited liability company as these will pave the way for conducting business skillfully and efficiently.

1. Choose your Washington LLC name

One of the most important aspects of any new LLC in the state of Washington is the business name. A business name is essentially the identity of the company and is used for several purposes including registering a business, marketing, and branding activities. There are certain naming guidelines you will be required to follow governed by WA Rev Code § 25.15.011 (2016). The guidelines require the name to contain words like “limited liability Company”, “limited company” or abbreviations like L.L.C or LLC.

Once you have selected a unique name, you will need to conduct a Washington LLC name search. This process of business name availability search ensures you can reserve the chosen name with the office of the Washington Secretary of State. You will be required to file the name reservation form along with a fee of $30 and mail it to the Secretary of State, Corporation Division.

2. Choose a Washington LLC registered agent

If you are interested in starting an LLC in Washington, there are necessary steps that must be taken. The new business registration process varies from one state to another and correct information is a crucial detail that cannot be overlooked. You will also have to maintain compliance with all state laws. A limited liability company is required to continuously maintain a registered agent in the state pursuant to WA Rev Code § 25.15.021 (2016). A Washington LLC registered agent like IncParadise can assist you with the process of new business formation.

IncParadise can be your Washington LLC registered agent as we are committed to providing a service of process, as required by the Revised Code of Washington. We can also assist with the process of helping you register a Washington LLC online.

3. File a Certificate of Formation with Washington SOS

The foremost requirement to start an LLC in Washington is the Certificate of Formation for a Limited Liability Company. You will be required to prepare and submit the Certificate of Formation pursuant to WA Rev Code § 25.15.071 (2016) along with a filing fee of $180. A Washington LLC registered agent like IncParadise can help you with the submission process. The certificate can be hand-delivered or mailed to the Office of the Secretary of State, Corporations & Charities Division. You can expedite the process by filing an additional fee of $50.

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4. Prepare Washington LLC operating agreement

To successfully form and operate an LLC in Washington, you will require an operating agreement. It is a type of legal document, which will allow you to shape the financial as well as the working relationship of the LLC with its members or co-owners in such a way that it benefits the business. This document is an internal document and is not required to be submitted to the state. A Washington LLC operating agreement helps with protecting overall business operations. Some of the key areas of a basic operating agreement are:

  • The percentage interests of each member in the LLC
  • The rights and responsibilities of the members
  • The voting powers
  • The allocation of profits and losses
  • The capital contribution
  • The future changes to the membership structure
  • The rules for holding internal meetings
  • Dissolution or buyout

5. Obtain a Washington LLC EIN

Once you register a Washington LLC online; you will be required to maintain annual state requirements. One such requirement is that of state or business taxes. To file these taxes, you need to possess a tax ID. If you own a single-member LLC then you will require a Social Security number (SSN) to file taxes but if it is a multi-member LLC then you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

6. Open a Bank Account

When starting a new LLC, apart from creating a Washington LLC operating agreement; the second most vital step is opening a business bank account. This is also known as a checking account and plays an essential role in protecting business interests, further aiding in the overall growth of the business. One of the greatest advantages of having a business account is that it will help you to maintain a record of all your business expenses thus simplifying tax reporting.

7. Obtain necessary business licenses and permits for Washington LLC

When you form an LLC in Washington, there are several state requirements for each business to meet. Apply for your state business licenses or permits post registration. Different types of licenses that may be applicable depending on business structure, location, and activity. Once you have acquired the necessary license, your business can become operational. It is critical to remember that business licenses are also an annual requirement like a Washington LLC annual report. Licenses and permits for Washington LLC can be categorized under:

  • Business License Tax Certificates – This is a general license mandatory for every domestic LLC and that is issued by the Department of Revenue, Business Licensing Service. You will need to provide your Unified Business Identifier (UBI) and EIN while applying. The fee is $90.
  • County or City Licenses – This is a type of license that is also known as a local license. Every county in Washington has different rules and regulations for licensing. You may need a single or multiple Washington business licenses or permits to operate in any said county.

    Example: If you start a business in Kings County or are planning to install amusement devices then you need a county license. A Pool table license starts at $100 per table and will be a maximum of $500 per establishment.

  • Professional and occupational licenses – The requirement of this license depends on which specific area or activity the business focuses on. Certain professions associated with business like Athletic Trainers, Accountants, Security Services, Cosmetologists, and Vehicle manufacturers are areas where licensing is regulated by the Washington state department of licensing.

The Washington business licensing regulations and requirements may seem confusing and complex. A top Washington LLC registered agent like IncParadise offers a “Business License Research Report” service. This is a detailed report containing a list of filing instructions, supporting document requirements, and fees for all business licenses and permits in this state.

8. File an LLC annual report

Once you register Washington LLC online and obtain the necessary permits and licenses, the next step is to meet all required annual state compliances. One of the most pivotal requirements for several businesses, including a limited liability company is filing an annual report. This report has to be submitted to the office of the Washington Secretary of State – Corporations Division according to WA Rev Code § 25.15.106 (2016). You are required to file the Washington LLC annual report each year by the end of the LLC registration anniversary month.

Example: If you have filed the Certificate of Formation on August 10, 2022 then your Washington LLC annual report will be due on August 31, 2023. The fee for filing this report is $60 and there can be penalties involved for late or no filing.

9. Comply with Washington LLC taxes and other regulations

Once you register your Washington LLC online, you will be required to comply with annual maintenance requirements. State taxes are equally as important as the Washington LLC annual report. The type of state or business taxes will depend primarily on the entity structure, and for an LLC, the most integral is the Business & Occupation Tax. This is a gross receipts tax that is measured on the value of any products, gross income, or gross proceeds from sales.

If your Limited Liability Company has employees then you may also be required to pay employer taxes. Apart from this, sales and use taxes may also be applicable if you are selling some form of goods to consumers within the state.

Know more about starting an LLC in Washington!

The process to register a Washington LLC online may include several questions concerning different aspects of your new business formation. We have created a special section of Frequently Asked Questions for addressing some of these queries.

Is Washington a good place to start an LLC?

The state of Washington has been consistently ranked as one of the top states for starting a new business. The state is home to large corporations, single-owner, startups and work-from-home businesses. Some of the salient highlights of the state are:

  • A rapidly growing economy with a 5.7 percent increase annually
  • Energy costs for businesses are quite low as compared to other states in the country
  • A variety of landscape that promotes tourism including a 3,000-mile coastline
  • Washington is currently ranked 7th in the country for higher education resulting in the availability of a talented workforce
  • Wasahington is home to a strong creative community and a diversity of industries

How much does it cost to register an LLC in Washington?

If you want to form an LLC in Washington then you will be required to submit a Certificate of Formation. The initial cost to register an LLC is $180. If you want to expedite the process then the total fee along with the registration fee would be $230. Apart from the initial cost, additional costs include the Annual Registration, Business Licenses, Name Reservation, and hiring a Washington LLC registered agent among others.

What are the annual fees for a Washington LLC?

The annual fee will vary depending on the type of documents being submitted. Once you start an LLC in Washington, you will need to file annual reports ($60 filing fee), name reservation ($30) and business license ($90 non-refundable fee) issued by DOR. It is important to note that the fee for county licenses will vary according to license type and county.

What are the disadvantages of forming an LLC in Washington?

Choosing to form an LLC in Washington is one of the best structures that you can choose to form. Since a limited liability company is governed by Washington state law, this may affect the way an LLC can behave in certain scenarios, especially in cases of dissolutions. The biggest disadvantage is a transfer of ownership, which is a much harder process for an LLC, than for a corporation.

Do I need a registered agent for my Washington LLC?

Yes. If you are planning to conduct your business in the state of Washington then you will need to operate your company according to the state laws. The Revised Code of Washington requires every LLC to hire and maintain a Washington LLC registered agent according to WA Rev Code § 25.15.021 (2016). You can also change your registered agent by filing a statement of change with the secretary of state in accordance with RCW 23.95.430.

Does an LLC need a business license in Washington?

Yes. A business license is required for any company to be operational. You may incur a penalty if you conduct business without proper licenses or permits.

Can I register a foreign LLC in Washington?

Yes. You can register and operate a foreign LLC in the state. You will need to file a Profit Foreign Registration Statement pursuant to WA Rev Code § 25.15.321 (2016), with the office of the Secretary of State, Corporation & Charities Division. This process is known as the “Qualification of Foreign LLC” and without it; you will not be allowed to conduct business in Washington.

Can I cancel my LLC in Washington?

If you want to cancel it or close your company then the LLC has to undergo the process of dissolution. According to state laws, WA Rev Code § 25.15.265 (2016), you will be required to file a Certificate of Dissolution with the Secretary of State, Corporations & Charities Division. There is no fee for dissolution.

Ready to form a Washington LLC?

A Limited Liability Company is one of the most popular structures that you can form in Washington. There are several advantages to forming this structure over other business structures including tax benefits. If you want to start an LLC in Washington then IncParadise can assist you with the process of registration for your new business.

IncParadise is a highly reputable Washington LLC registered agent and we have helped with the registration of more than 10,000 businesses. We also offer a wide variety of additional services like foreign qualification, EIN assistance, and certificate of good standing in Washington among others.

Do you want to register your LLC in Washington?