Starting an LLC in Washington State
An LLC (limited liability company) in Washington state is a business structure that protects your personal assets from business debts and offers tax benefits and a flexible management structure. To start an LLC in Washington, you need to file a Certificate of Formation and an Initial Report with the Washington Secretary of State, Corporations and Charities Division. The filing fee is $180 and $10 respectively.
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1. Choose the Right Name for Your Washington LLC
The first step in forming an LLC in Washington is choosing a business name that complies with state naming requirements and is easily searchable. The name must include the phrase “limited liability company” or its abbreviation (LLC or L.L.C.).
The name cannot include words that may confuse the LLC with a government agency, and certain restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual.
Check if the name you want is available by doing a Washington state LLC name search on the Washington Corporations and Charities Filing System.
2. Appoint a Registered Agent in Washington
Washington state law requires all registered businesses to appoint a registered agent. This person or entity serves as the official point of contact for receiving legal documents and other important communications on behalf of the business.
Requirements for a Registered Agent The registered agent must satisfy two conditions:
- They must have a permanent address within the state of Washington
- They must be authorized to conduct business within the state
Can You Be Your Own Registered Agent?
While it's possible for an LLC member to act as the registered agent, it may not always be the best choice. For instance, if the company is served with a lawsuit, receiving this paperwork at your place of business where clients and customers are present may not be ideal.
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3. Prepare a Certificate of Formation
The process of forming your LLC in Washington involves creating a document known as the Certificate of Formation or the articles of organization. This document lays out the basic information about your LLC and is filed with the Washington State Corporate Commission.
To prepare your Certificate, gather the following information:
- LLC name
- Registered agent's name and address
- Purpose for forming the LLC
- Effective date of formation (either at the time of filing or a later date)
- LLC's duration (in most cases, this is indefinite)
- Management structure (members or managers)
- Signature of the person forming the LLC and the registered agent
4. Get a Business License
To be legally operating in Washington, it is required to have a valid business license. You can obtain this license from the Washington State Department of Revenue for your LLC. It typically takes about 10 business days for the processing of the request, however, in some cases where city or state endorsements are needed, it may take up to three weeks.
The cost of the license will depend on the type of business you have and the endorsements required.
5. Create an Operating Agreement
An operating agreement is a document that outlines the way your LLC will operate and conduct business. While Washington state doesn't require it, having a written operating agreement is important for resolving disputes, clarifying financial arrangements, and preventing misunderstandings that could lead to litigation.
The operating agreement should include, but is not limited to, the following details:
- The name and main address of the LLC
- The duration of the LLC
- The registered agent's name and address
- Information related to the Certificate of Formation
- The purpose of the business
- Details about members and their contributions
- The division of profits and losses
- The process for admitting and removing members
- The management structure of the LLC
- Indemnification and liability provisions
6. Get an EIN for Your Washington LLC
An EIN, or Employer Identification Number, is a nine-digit number assigned by the IRS to help identify businesses for tax purposes. It serves as a Social Security number for a business.
An EIN may also be referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).
You'll need an EIN to open a business bank account, file and manage Federal and State taxes, and hire employees. If you previously had an EIN as a sole proprietorship, the IRS requires you to obtain a new one when converting to an LLC.
Getting an EIN is a simple process that can be done for free from the IRS, either online or by mail.
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