Setting up a Washington State LLC is a process designed to be easy and convenient. Forming an LLC is a great way to run your business, thanks to liability protection and several other benefits provided by the law.
Now let’s get to the specifics. How to start an LLC in Washington state? We provide a quick guide here to take you through the necessary steps. There are also a few tips and ideas to help things get done better.
If you simply want the numbers, the Washington state LLC filing fee is $200. You’ll also need to submit annual reports, with a filing fee of $60.
So let’s get to the specifics!
1. Give Your Washington LLC A Name
A business or an entity must have a name. Choose a desirable name for your Washington LLC. The name you choose should be distinguishable and unique. It shouldn’t be the same as (or very similar to) existing entities in Washington state.
Moreover, it shouldn’t present a misleading or false business premise. So your LLC can’t have a name that confuses or misleads the general public. Using names like FBI, CIA, or other government agencies/departments isn’t allowed. Similarly, you can’t have words like Inc. or Corp. that misrepresent the company.
Once you’ve thought of a name, head to the Washington Secretary of State Advanced Business Search page. Searching for probable names should give you a good idea of availability. It’s usually a good idea to think of a few names, so you can quickly move to another if your top choice is unavailable.
Washington State LLC Name Designators
Every Washington State LLC must end its name with a proper designator. This is “limited liability company” or accepted variations thereof. These include:
- Limited Liability Co.
- Limited Liability Company
As you can guess, LLC is the most commonly used designator. Though the others are available for use too.
2. Appoint A Registered Agent
An LLC must maintain a registered agent in the State of Washington. A registered agent is a person or entity/company that receives communication or service of process on behalf of your LLC. Service of Process generally includes things like legal documents, lawsuits, summons, subpoenas, and other similar correspondence.
If you choose a person to be the registered agent, they must be adults and legal residents of the state. Similarly, any company allowed to do business in the state can function as the registered agent. An LLC can’t serve as its own registered agent.
Registered Agents are required to have a street address in the State of Washington. PO Box addresses aren’t acceptable. The registered agent must provide a signed consent signifying their agreement to fulfill this role.
To simplify, you, other members of the LLC, friends, or family members can be the registered agents of the LLC. Of course, this depends on fulfilling the address and residency criterion.
Many people choose commercial registered agents to fulfill this role. A big advantage here is that a commercial agent (company) will always be available during business hours. So you don’t have to worry about the delivery of mail.
Additionally, a company isn’t likely to go for a long vacation (which you, friends, or family are likely to do). So there’s minimal risk of missing important correspondence. It’s also useful in terms of privacy since the address of the registered agent is a matter of public record.
3. Washington LLC Certificate Of Formation
Getting the Washington LLC Certificate Of Formation is the key to forming your LLC. Receiving the LLC Certificate of Formation requires submitting an application/form to the Office of the Secretary of State, Corporations and Charities Division.
You can file this form via:
Filing the form online is the easiest and quickest method. You can use the Washington Corporations and Charities Filing System to submit the form online. If you don’t already have an account, you will have to register for a free account from the system.
There’s a $200 filing fee for submitting online. You can use MasterCard, Visa, Or American Express to pay the fee.
PO Box 40234
Olympia, WA 98504-0234
Submission by mail is slightly cheaper and costs $180. You can add another $50 for expedited filing. The preferred payment method is via check or money order payable to ‘Secretary of State’.
Once the state decides to award the Certificate of Formation, you will receive:
- Certificate of Formation
- A congratulations letter
4. Get An Operating Agreement
Any LLC should have an operating agreement. This is an internal document that is usually not required by law but is a critical part of running an LLC anyway. You won’t file this document with the Secretary of State or any other government agency. However, having an agreement in place makes things way easier for your LLC and business.
An Operating Agreement is an understanding/agreement between members of the LLC. It describes all important aspects of the functioning and operation of the company. An agreement could include things like the ownership of each member in the LLC, distribution of profits and losses, approach to taxation, and a lot more.
Having a clear agreement means the members have a good understanding of the structure of the LLC and their position within it. Also, should you ever find yourself in a court of law, an Operating Agreement can come in handy to back your legal position. It also serves as an excellent document to display that the LLC is being run as it should be.
Its importance for multi-member LLCs can’t be stressed enough. However, it should also be used by single-member LLCs.
5. Getting A Federal Tax ID (EIN)
Only apply for the EIN after you’ve received an approved Certificate of Formation for your Washington LLC.
The EIN (Employer Identification Number) is a Federal Tax ID issued by the IRS. To get it, you’ll have to file a form with the IRS. Getting an EIN is free, and it’s completed rather quickly if you file online.
However, some people may not be able to file online. This includes those without SSN, or cases where the LLC is owned by another company. In such situations, you can file Form SS-4. This form can be filed via mail or fax. I’d recommend choosing the latter because it works way faster than snail mail.
The EIN responsible party is the person who will be the contact of the IRS regarding your EIN. For a single-member LLC, this would be you. Multi-member LLCs can choose any member to fulfill that role.
Getting an EIN is important for several aspects of your business. This includes your business bank account, credit cards, hiring, and a lot more.
6. Filing Annual Reports Of Your Washington State LLC
Your obligations to create an LLC aren’t done simply after getting the Certificate of Formation for Washington State LLCs. Your company will have to file annual reports with the state to stay in good standing.
The first annual report is due the year after the LLC was formed. Reports must be filed by the last day of the LLC’s anniversary month. So if your LLC was formed on March 19, 2020, you must file the annual report by March 31, 2021.
The annual report filing fee is $60 and can be completed online. Once filed with the Corporations & Charities Filing System (CCFS) online, the annual report is approved instantly.
7. Get A Business License
Practically every business in the State of Washington has to get a business license. This business license is also a “bulk registration” that will register your business with several government departments, including the Department of Revenue (DOR). Many cities in the state also tie up into this license, so things can get easier for you.
The filing fee for a business license is $90 (one-time).
However, do remember that you might still need additional licenses and permits. This depends on the specific industry of your company and the city/county of its operation.
Taxation can be a complex subject, so if you’re unsure of anything, it’s best to seek professional help. Generally speaking, you can consider taxation in three categories:
Local taxes depend on the city/county of your business. These could include things like property tax.
State taxes are levied by the state of Washington and can depend on several factors, including revenue. So keep an eye out for your tax dues. These can include (but are not limited to) things like sales tax, B&O tax, other taxes.
Filing federal taxes depends on how you legally structure your LLC. For single-member companies, the taxation is very similar to a sole-proprietorship. In this case, income/losses from the company form part of your (personal) return filed with the IRS.
Multi-member companies are treated as partnerships. Members can file taxes with their 1040 return. Structuring plays an important part too. For example, you could elect to have the LLC taxed as an S-Corp.
As you see, there are a lot of factors to consider – actually a lot more than those listed here. So remember to get your taxation right, so your Washington LLC stays in the good graces of tax authorities.