How to Apply for an LLC in Washington

Starting a limited liability company (LLC) in Washington state involves several key steps. First, you must choose a business name and register your LLC with the Washington Secretary of State. Next, you will need to draft an operating agreement, which outlines financial and managerial details about your LLC. Furthermore, you must obtain any necessary business licenses and permits based on your industry and location. Additionally, you should set up accounting procedures and apply for an EIN from the IRS to handle employment taxes if you plan to hire employees. With these key steps completed, you will be on your way to successfully starting your Washington LLC.

Understanding LLCs

An LLC, or limited liability company, is a business structure that combines aspects of partnerships and corporations. LLCs provide liability protection for the owners, called members, so their personal assets are generally protected from business debts and lawsuits. At the same time, LLCs allow pass-through taxation like partnerships, avoiding double taxation on business income.

Some key advantages of the LLC structure include:

• Personal liability protection for members
• Pass-through taxation flexibility
• Less recordkeeping than a corporation
• Ownership flexibility through membership interests

Forming an LLC establishes a legal business entity and also provides flexibility in structuring ownership stakes. Overall, LLCs allow business owners to both limit personal liability and avoid double taxation on earnings.

Choosing a Name for Your LLC

When starting an LLC in Washington, one of the first steps is choosing a business name. Here are some tips for choosing your LLC name:

• Check name availability by searching the Washington Secretary of State database. Make sure your desired name is not already taken by another business.
• Include words that describe your business. For example, “Washington Marketing Solutions LLC.”
• You must include the words “Limited Liability Company,” “Limited Liability Co.,” or the abbreviation “LLC” or “LLC.” at the end of your LLC name.
• Avoid using words that could be confused with government agencies or restricted words that require additional paperwork.

Choosing a unique, descriptive name will help establish your LLC’s brand and make you easier to find online. Check requirements and search for availability to find the perfect name to start your Washington LLC.

Selecting a Registered Agent

One of the requirements for forming an LLC in Washington is designating a registered agent. This is a person or business authorized to receive legal documents on behalf of your LLC. When selecting your registered agent, consider the following:

• They must have a physical street address in Washington, not just a P.O. Box
• They should be available during normal business hours to receive legal documents
• Using a third-party registered agent service can save you time and effort over appointing yourself or your co-owners
• Compare registered agent services to find one with a good reputation that fits your budget

Some popular registered agent services in Washington include Northwest Registered Agent, MyCorporation, and IncFile. Be sure to research a few options before selecting one.

Filing Your LLC Paperwork

Once you have chosen a business name and registered your LLC with the Washington Secretary of State, there are a few more steps to complete your LLC paperwork.

• Draft your operating agreement – This document outlines the ownership structure, member responsibilities, profit/loss distribution, voting rights, and other governance rules for your LLC. While not required in Washington, having an operating agreement is highly recommended.
• Get an EIN from the IRS – An Employer Identification Number (EIN) will be needed to open business bank accounts and file taxes.
• Set up accounting procedures – Decide how you will account for income and expenses, whether you will manage books in-house or hire an accountant.
• Understand Washington business taxes – Be aware of state and local business licensing, sales tax, employment taxes and other tax obligations.

Additionally, you may need licenses and permits depending on your industry and location. Use the Washington Business License Finder to determine if you need additional licenses or registrations.

Following these steps ensures you have legally created your LLC and have the necessary systems in place for accounting, taxes and compliance before opening for business.

Drafting an LLC Operating Agreement

An operating agreement is a document that outlines the ownership structure, financial and functional details, rules, and regulations of your LLC. While an operating agreement is not legally required in Washington, it is highly recommended for all new LLCs to have one. Here are some tips on drafting an effective LLC operating agreement in Washington:

• Specify ownership percentages and distribution of profits/losses. If you have multiple members, detail what percentage of the business each person owns and how profits and losses will be divided.
• Outline member responsibilities and voting rights. If certain large business decisions require a unanimous vote while day-to-day decisions just need a majority vote, your operating agreement should specify the different thresholds.
• Establish rules for member changes. Your operating agreement should explain what happens if a member wants to sell their stake, dies, or needs to leave the business for any reason.
• Detail financial record keeping and tax requirements. Your operating agreement should specify who is responsible for bookkeeping, how often financial reports are distributed to members, and other accounting procedures.

There are free LLC operating agreement templates available online that you can customize to meet your specific business needs. Using a template can help ensure you cover all important bases in your Washington LLC operating agreement. Some key areas that the agreement should cover include membership changes, voting procedures, capital contributions, profit/loss distribution, roles and responsibilities, record keeping, and what happens if the business dissolves.

It’s highly advisable to have an attorney review your finished LLC operating agreement before finalizing it. An attorney can help make sure your agreement complies with Washington state laws and offers adequate protection. Consider scheduling a consultation with a business attorney as you draft your document. Investing in proper legal guidance early on can help prevent issues down the road.

Obtaining Tax Identification Numbers

One of the key steps in forming an LLC in Washington is obtaining federal and state tax identification numbers. These identification numbers are necessary for handling taxes properly and operating your business legally.

At the federal level, you will need an Employer Identification Number (EIN), which serves as a Social Security number for your business. You can easily apply for an EIN online through the IRS website. At the state level, you will need to register for a Washington Business License (UBI) number. This entails filling out a simple registration form through the Washington Department of Revenue.

• Apply for federal EIN even if you don’t have employees
• Register for Washington UBI number to properly collect/pay sales tax
• Make sure to include tax ID numbers on LLC formation documents

Properly obtaining federal and state tax IDs are crucial early steps when starting an LLC in Washington. These identification numbers enable you to operate legally and handle your business taxes appropriately.

Pros and Cons of Starting an LLC in California

Starting a limited liability company (LLC) offers several advantages for small business owners in Washington. Some of the key pros of establishing an LLC include:

• Limited personal liability – An LLC helps protect your personal assets if your business is sued or has debts.
• Tax flexibility – LLCs can choose tax treatment as a sole proprietorship, partnership, or corporation.
• Credibility – Forming an official LLC can make your business appear more legitimate to customers.

However, there are also a few potential downsides to consider:

• Increased legal and tax requirements – LLCs require more recordkeeping, paperwork, fees, and compliance rules.
• Self-employment taxes – As an LLC owner, you may have to pay self-employment taxes on your earnings.

Overall, an LLC is the most flexible business structure for many small businesses in Washington weighing liability protection with tax and legal considerations.

Cost Considerations

When starting an LLC in Washington, there are several costs to consider. The initial filing fee is $180 if filed online or $200 if submitted by mail or in person. You may also need to pay:

• An annual business license fee, which ranges from $15 to $933 depending on your gross income
• Fees for reserving your business name and submitting trademark registrations if you want additional legal protections
• Accounting, legal, consulting, or other professional services fees to establish your LLC

On top of state fees and costs, you may need licenses, permits, insurance and other expenses related to your industry or business activities. Carefully research all expected startup and recurring costs before forming your Washington LLC.

Economical LLC Formation Options

When starting an LLC in Washington, it’s important to keep costs low, especially when just launching your business. Here are some of the most economical options for LLC formation:

• Use an online service like LegalZoom or Incfile to form your LLC. These services charge $100-200, saving you lawyer fees.
• File yourself using the Washington Secretary of State website. Filing fees are $180, but you save on preparation fees.
• Use DIY templates like those from Nolo to prepare your articles of organization and operating agreement.

While the DIY route has minimal costs upfront, consider consulting a business lawyer to ensure everything is set up correctly. This can save you money in the long run by preventing costly legal mistakes. On the other hand, services like LegalZoom provide a more comprehensive solution with good customer support.

Pre-Formation Steps

Taking the proper pre-formation steps when starting a limited liability company (LLC) in Washington can ensure your business gets off to a good start. Here are some key things to do before formally creating your LLC:

• Choose a unique business name that is distinguishable from other companies registered in Washington. Use the Secretary of State’s database to search names.
• Draft an operating agreement detailing ownership stakes, voting rights, member responsibilities, distribution of profits and losses, etc. While not legally required, it is highly recommended.
• Obtain an EIN (employer identification number) from the IRS if you plan to have employees.
• Set up accounting procedures for handling the LLC’s finances and tax reporting obligations.
• Understand licensing and permit requirements for your type of business by checking with the Washington Business License Service.

Taking care of these key pre-filing items will ensure your Washington LLC is properly positioned for success right from the start. The formation process itself can then go more smoothly.

Comparing Business Entity Types

When starting a business in Washington, you have several options for structuring your company. Some of the most common business structures include sole proprietorships, partnerships, corporations, and limited liability companies (LLCs). Here is a brief comparison of some key factors to consider when choosing an entity type:

• Formation Requirements – Forming an LLC requires filing articles of organization, while corporations have more complex filing requirements. Sole proprietorships and partnerships require no formal registration but should still obtain business licenses.
• Liability Protection – LLCs and corporations provide personal liability protection, meaning the owner’s personal assets are shielded from business debts and lawsuits. Sole proprietors and partnerships do not.
• Taxes – LLCs and partnerships pass profits and losses to the owners to report on their personal tax returns. Corporations file business tax returns and pay taxes at the corporate level.
• Ownership Flexibility – LLCs can have unlimited owners and more flexible ownership arrangements compared to corporations.
• Administrative Complexity – LLCs have fewer ongoing compliance requirements and corporate formalities than corporations.

In summary, LLCs provide personal liability protection while allowing taxation flexibility and less administrative maintenance than corporations. This makes LLCs a popular choice for small businesses and startups in Washington [1]. However, all entity types have pros and cons to evaluate.

After Filing Your LLC

Once your articles of organization have been filed with the Washington Secretary of State and approved, there are still a few more steps you need to take to properly set up your LLC.

• Obtain an operating license or permit if your type of business requires one in the state, county, or city where you are located.
• Set up an Employer Identification Number (EIN) for your LLC for federal tax purposes.
• Create an operating agreement detailing ownership stakes, voting rights, profit/loss distribution, roles and responsibilities, etc. This is one of the most important steps for structuring your LLC.
• Set up any necessary business accounts, such as bank accounts, credit card processing systems, software platforms, etc.
• Understand any specific Washington state tax requirements for LLCs regarding sales tax, B&O tax, annual reports, etc.

Additionally, you’ll want to take care of business licensing and permits on an ongoing basis, file annual reports, keep careful records, and follow all other compliance requirements for Washington LLCs. Staying legally compliant protects your personal assets and allows your LLC to operate smoothly. Consider connecting with a small business lawyer or accountant if you need assistance managing your LLC’s regulatory responsibilities.

Business Licenses and Permits

When starting an LLC in Washington, you may need to obtain certain business licenses and permits depending on your industry and location. Some common licenses and permits include:

• Business license – Most cities and counties in Washington require a general business license to operate. Fees vary by location.
• Sales tax permit – If you plan to sell goods, you’ll need a Washington sales tax permit to collect and remit sales tax.
• Industry-specific licenses – Certain industries like construction, childcare, healthcare, alcohol sales, etc. require special licenses and permits from Washington state departments.
• Zoning permits – If you have a physical business location, make sure you comply with any local zoning laws and acquire necessary zoning permits.

Consult the Washington Business License Finder for state and local license requirements. Plan ahead to account for processing time when starting your Washington LLC.

Growth Considerations for Your LLC

As your Washington LLC grows, there are some key things to consider. First, registering as a foreign LLC if you plan to do business outside of Washington. This involves filing paperwork and paying fees in other states. Second, consider your business structure as you scale. At some point, converting from an LLC to a corporation may make sense for liability or tax reasons. Third, examine your LLC tax classification. As your income and number of owners grows, switching from being taxed as a pass-through entity to a C corporation could save you money.

Some other quick growth tips for Washington LLCs:

• Review your operating agreement to adjust ownership splits or management roles
• Maintain proper recordkeeping and accounting from the start to make tax reporting easier
• Understand workers’ comp requirements as you begin hiring employees

Additional Resources

Forming an LLC in Washington involves several steps. Luckily, there are useful online resources that can help guide you through the process. The table below contains additional information on starting an LLC in Washington.

Additionally, consulting with an accountant or business attorney can help ensure you complete all necessary steps when forming your Washington LLC. With the right information and support, you’ll be well on your way to operating your business.

Conclusion

Starting an LLC in Washington state involves several key steps. You need to choose a business name and register it with the Secretary of State’s office, draft an operating agreement, obtain necessary business licenses, set up accounting procedures, and comply with annual filing and tax requirements. Taking the time upfront to carefully complete each step will ensure your LLC is properly established and maintained.

Forming an LLC can be complicated, but well worth the effort for the liability protection and flexibility it provides. Make use of helpful resources like the Washington Department of Revenue and the Secretary of State website to understand all requirements. You may also benefit from working with professionals like lawyers, accountants, bankers and insurance agents when starting your Washington LLC.

• Choose a unique LLC name
• File Articles of Organization
• Create an operating agreement
• Obtain business licenses
• Set up accounting
• Comply with annual reporting

FAQs

What are the requirements to form an LLC in Washington?

Some key requirements include: choosing an available business name; designating a registered agent; filing articles of organization; and paying fees. You’ll also need to obtain licenses and permits.

How do I choose a name for my Washington LLC?

You’ll need to pick an available business name that complies with state naming guidelines. Check the Washington Secretary of State database to ensure your desired LLC name hasn’t already been taken.

What are the steps to form an LLC in Washington?

1. The main steps are:
2. Choose and register your LLC name
3. Appoint a registered agent
4. File your articles of organization with the state
5. Create an operating agreement
6. Get an EIN from the IRS
7. Set up your LLC taxes
8. Obtain necessary business licenses

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

The filing fee to form an LLC in Washington is $180. You may also incur registered agent fees, operating agreement creation fees, and licensing costs.

What are the ongoing compliance requirements for a Washington LLC?

You must file an annual report and renew your business license. LLCs in Washington may also need to collect and pay taxes, keep meeting minutes and financial records, hold member meetings, file biennial statements, and more.

Does my LLC need to register in Washington if it was already formed in another state?

Yes. Out-of-state LLCs must register as a “foreign LLC” with Washington’s Secretary of State before doing business in the state.

Frank Gogol

A seasoned SEO expert, Frank has a long history of working with and for startups. Starting in mid-2018, Frank served as the SEO Strategist for Stilt, a fintech startup that provided fair loans for immigrants in the US and other underserved markets. While with the company, he scaled site traffic from zero to more than 1.5 million unique visits per month, driving the bulk of the company’s lead generation until it was acquired by J.G. Wentworth in December 2022. As employee #5 at Stilt, Frank was witness to, and part of, the successful building and sale of a fintech company, uniquely positioning him to create content for founders about all things startups.

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