How Much Does an LLC Cost in Washington (A Complete Guide)
If you intend to establish a limited liability company (LLC) in the state of Washington, there are requirements, procedures, and finances to consider.
To assist you with the process, our panel of business experts collaborated to provide all you need to know about setting up an LLC in Washington.
Together with my team, I spend months researching and opening LLCs firsthand to learn about processes, laws, and all requirements, so you can have a better foundation.
Quick Summary
- An LLC in Washington costs $180 if filed through email and $200 if processed online.
- All LLCs are required to file an annual report with the Washington Secretary of State, which costs $60.
- The business tax rate in Washington, as stipulated by the Department of Revenue, is 0.015% of the gross income derived from your LLC’s operations.
- Personally, I formed an LLC in Washington, and my total expenses were approximately $250, including state filing fees and a registered agent service.
Cost to Start an LLC in Washington
An LLC in Washington costs $180 to file by mail, which will be processed in the order received.
However, an extra $20 is charged if you file online, and it is processed in two business days. From my experience, if you need to set up a business quickly, make sure that you check the expedited service option.
If you apply on a Friday, please note that expedited service won't be available until the first business day.
As you read further, we will reveal other extra costs you should note when starting an LLC in Washington. Considering the projected 9,181 business formations within the four quarters of 2023, according to the U.S. Chamber of Commerce, understanding these financial aspects is crucial for potential business owners [1].
1. LLC Formation Fee ($180 - Mandatory)
The Washington LLC filing fee is $180 for the Certificate of Formation. This filing is done by mail and is processed in the order it is received.
You can also file online, which will cost you $200 and is normally processed in two business days.
The filing fee for an LLC in Washington is not a one-time expense. You may need to pay it annually or as required by the state. Know that a registered agent can help with tracking and ensuring that you meet the annual filing requirements and deadlines.
2. Registered Agent Service Fee ($50-$300 - Optional)
A Washington registered agent service fee costs around $50 to $300, depending on the services you need and the company or individual you choose to work with.
When I started my LLC, I decided to use a registered agent service to ensure all legal documents and reports were handled efficiently.
Having a registered agent for your business is very important. A registered agent is an individual or entity who receives legal documents and other proceedings, such as annual reports, on behalf of your business entity.
This registered agent must have a physical address to receive notifications.
Washington has a business and occupation tax rate that varies based on classification.
If you don’t want to hire a registered agent to cut costs, you can become your own agent or ask a close friend to become one.
However, you or your friend must be willing to perform all the expected activities of a registered agent.
If you wish to resign as a registered agent, you must file with the Secretary of State’s office by providing a statement of resignation and following the procedures outlined. Alternatively, you can file online using the corporations and charities filing system.
Should you wish to change or update a Washington registered agent, you must go online and file a statement of change for free, so long as your business is registered with the Washington Secretary of State.
3. Name Reservation ($30 - Optional)
You can reserve a company name in Washington for just $30 if you are not ready to start your Washington LLC but already have a name for it. Before that, make sure you look up an LLC in Washington to check if your desired name is available.
After a $30 fee, your name reservation lasts 180 days. Unused names become available to other businesses afterward.
You can also expedite your name reservation for $50. To do this, you must fill out the form and send it through mail to the Secretary of State with the word "EXPEDITE" clearly stated on the outside of the envelope.
Washington Business And Occupation Tax
The Washington Business and Occupation Tax is a gross receipts tax that is measured based on your business's gross income.
Washington does not have an income tax, so it applies the business and occupation tax to the gross income from activities rather than the cost of doing business.
The Washington Business and Occupation tax rate is 0.015% since it falls under the classification of services and other activities, as noted by the Department of Revenue. I found this information crucial when managing the taxes for my own LLC in the state [2].
Usually, the business and occupation tax rate is reported and paid on the excise tax return or by electronic filing.
However, if your business is new, you must register with the Department of Revenue first. Once you do that, you will receive information about filing.
Note that monthly excise tax returns are due on the 25th of the following month; quarterly excise tax returns are due by the end of the month following the close of the quarter; and the due date for the annual excise tax returns is April 15th.
Expenses Following the Approval of Your Washington LLC
Below is a list of other LLC filing costs you might incur while setting up your LLC in Washington. Having a checklist like this one really helped me and my team stay organized, within the budget, and on time.
1. DBA ($5 - Optional)
You will pay a $5 fee for the DBA registration and the business license application processing fee, which is non-refundable [3].
DBA, otherwise known as “trade name,” is a Washington LLC cost for an LLC operating under a name different from the one registered with the office of the secretary of state.
You can register infinite trade names, but you should know that doing so does not stop other businesses from using the name.
To register a trading name, you must file a business license application online with the “My DOR” link.
2. EIN
The employer identification number (EIN) is the federal tax identification number used to identify a business entity, open a business bank account, etc.
It is also important that you have an EIN since an LLC is one of the entities that are required to have one.
To get an EIN for your LLC, simply apply online, and you will be given one by the Internal Revenue Service (IRS) immediately for free.
3. Certificate Of Existence
The Washington Certificate of Existence is a document that shows that your business is fully functional and submits annual reports to the Washington Secretary of State.
To get a Washington certificate of existence, you need to pay the filing fee of $20 or $70 if you wish to expedite the certificate.
After that, ensure that your UBI number is present in the Certificate of Formation, and then enter this number in the secretary of state’s online document order form.
Once this is done, you should expect your Certificate of Existence within two weeks or two days if you choose the expedition process.
4. Annual Report ($60 - Mandatory)
The LLC annual report fee is $60 per year. Once your business is up and running in Washington, you will be asked to file an LLC annual report with the Washington Department at the end of the month your business was formed and approved to keep your business in the state’s Good Books.
Compared to other states, Washington doesn't require an initial LLC Annual Report during formation. Instead, the fee is annual and due at month-end (which makes it easy to track) following your business formation to maintain good LLC standing.
5. State and Local Business License
You need a state and local business license for your business. For the state license, you only need to complete the Washington state business license application and pay a $50 fee, after which you will be given an LLC business license and a UBI number.
You may also need to get a local license in the city in which your business is located.
The cost, however, varies and could be anything from $200 and above.
"License fees significantly differ across professions—for example, a cosmetologist pays $25, while a real estate appraiser faces a $620 charge. Typically, one must cover the cost of the state exam, submit an application to the appropriate board, and settle all associated licensing fees."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions
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FAQs
What Is The Cheapest Way To Get A Washington Foreign LLC?
The cheapest way to get a Washington foreign LLC is by handling the formation process yourself and becoming your own registered agent.
What Is the Lifespan Of An LLC?
The lifespan of an LLC is estimated to be 30 years. However, this will depend on the state where the LLC is located.
Do LLCs Pay Tax In Washington?
LLCs must pay tax in Washington, and this tax is called the business and occupation tax, calculated based on the gross income from business activities. Other business entities pay this same tax in Washington too.
References:
- https://www.uschamber.com/small-business/new-business-applications-a-state-by-state-view?state=wa
- https://dor.wa.gov/taxes-rates/business-occupation-tax/business-occupation-tax-classifications
- https://dor.wa.gov/manage-business/grow-business/register-trade-names
