Forming an LLC in Washington State can be a daunting task, especially if you are unsure how to do it.
This article will discuss how to form an LLC in Washington state and how to do so the right way.
We will cover all aspects of forming a limited liability company, such as how much it costs, the process of filing a certificate of formation with the Secretary of State, and paying taxes. We'll also discuss business licenses and identification numbers.
There are many reasons why someone would want to become an LLC owner, and we hope this blog post helps answer your questions and removes any uncertainty about how to set up your new company.
Start a Washington LLC Today
Starting an LLC in Washington is easy and does not require much effort on your part.
All you need to do is file the documents required by the Washington Secretary of State, file it with the Secretary of State, and pay a filing fee.
You can do all of that in just a couple of days, and once you're done, you can begin operating your LLC business.
Once your LLC is formed, you can take advantage of the many benefits that come with owning an LLC, such as preventing business liability and providing you with personal liability protection.
Create an LLC in just a Few Steps
There are a couple of steps you need to take in order to get your business on its feet. You'll have to:
- Come up with a name for your limited liability company.
- Get a registered agent in Washington.
- Fill out the certificate of formation. This is a simple form that specifies your business name and address, as well as how many members it has and the purpose of your business.
- Put together an operating agreement.
- Obtain a unique business identifier from the IRS.
We'll go over each one of the steps you need to take so that you can begin to conduct business as soon as possible.
Step 1: Name Your Washington LLC
First of all, you need to choose a business name.
This is the official title of your business, and it can't be used by any other business that's operating in Washington or doing business there.
If you want to make sure no one else has chosen this exact same business name for their LLC, you should check if the name is available online.
In the state of Washington, an LLC name can't contain any of the following:
- Business contact information such as a phone number or email address
- Words that could be considered pornographic in nature
- Offensive language, including swearwords and racial slurs
If you want to reserve your business name ahead of time with the Washington Secretary of State, you can do so.
The reservation fee is $30 ($50 for an expedited process) and will be valid for 180 business days.
Keep in mind that all business names must be registered with the Washington Secretary of State, so if your business name has already been taken by another business, you won't be able to use it.
It's also possible to get a DBA, which is a business name that you might use when conducting business.
Step 2: Look for a Registered Agent
A registered agent is someone who agrees to accept legal documents on behalf of your LLC when you're not available.
These can include lawsuits, tax notices, and other official notifications from the state.
It can be an individual or a business entity. All that matters is that it's registered in the state.
In Washington, a registered agent must be located in the same county where your company's principal office address is listed.
A Washington registered agent is easy to find. You can look for an agent by asking your personal attorney or using a registered agent service.
Step 3: File Washington Certificate of Formation
Washington LLC certificate of formation should be filed with the Washington Secretary of State.
In order to file the certificate, you must have a business name that is distinguishable from other names on record in Washington.
The certificate needs to contain all necessary information such as:
- LLC name and physical street address
- Registered agent's name
- LLC purpose - it could be simply "to engage in any lawful act or activity for which LLCs may be organized under the laws of Washington."
You need a certificate of formation to establish an LLC in Washington. It's the most important legal document you'll have to get.
You can either send it by mail or file online. The online filing fee is $200, while filing by mail is $180. There's a $60 annual renewal fee.
Step 4: Put Together an Operating Agreement
A Washington LLC operating agreement is a crucial part of the formation process.
It's where you define your business, its management structure, and share distribution in case of dissolution or sale.
You should consult with an attorney to help form one if necessary.
However, Washington state law does not mandate operating agreements, so you don't really have to hire an attorney, but it is recommended.
The operating agreement should include information such as:
- What the LLC will do
- How much money each member is putting into their initial contribution
- Roles and responsibilities of all members
- Restrictions on the transfer of interest
- Dissolution or buyout provisions in case a member wants to leave the business.
Even though an operating agreement is not a must, it's still a good idea to have one to ensure smooth operations.
Don't skip this important part of LLC formation even though you can.
Step 5: Get an Employer Identification Number
Finally, you can get your employer identification number (EIN), so you can start doing business.
You can get your EIN by completing the SS-4 form and sending it to Internal Revenue Service (IRS).
A federal employer identification number is a nine-digit number that identifies your business for tax purposes.
However, it will also be needed when you open bank accounts and apply for loans.
Also, employer identification numbers are not required by law if the LLC has no employees, i.e., it's registered as a sole proprietorship.
However, it's still beneficial to have EIN if you don't plan to hire employees, so visit the IRS website for more information.
A Business Bank Account: Should You Open One?
It's always a good idea to have a business bank account that's separate from your personal one. You can open business bank accounts at banks or credit unions, and you'll need the following documents:
- Certificate of formation of your LLC
- Operating agreement (optional)
- Tax ID number for your LLC (EIN).
Separating personal assets from business ones is important to reduce the risk of liabilities and losses in case your LLC gets sued.
It's also beneficial for tax purposes since you will have different filing requirements depending on whether you are operating as a sole proprietor or an LLC with employees.
Having two bank accounts makes it easier to keep track of what belongs where, helps separate business expenses, and maintains the personal asset protection of an LLC.
LLC Business Licenses in Washington
After the LLC formation process, you'll need to check if you need a business license to operate your LLC in Washington.
Business licenses are required for any business that sells, leases, or provides its products and services to the public.
Depending on what your business does, the license may be called something else (for example, a food service establishment permit).
A professional LLC is one where at least one member has a profession like lawyers, doctors, contractors, etc., who are providing their service to the public. They always need a business license.
Washington LLC Tax Requirements
If your Washington LLC sells goods and services to the public, then it must collect sales tax from its customers.
The LLC is responsible for paying this money to the state.
The amount of income taxes your Washington LLC needs to pay depends on how many members are in the company and their shares or ownership percentages.
You'll have to register for a seller's permit through the Washington Department of Revenue website to pay the sales tax.
Federal and state taxes are not required for LLCs that don't sell to the public. However, they do need a federal tax ID number anyways.
In Washington, you also need to pay the occupation and business tax.
This is a business tax that LLCs have to pay through the Washington Department of Revenue in addition to state and federal income taxes.
How Much Does It Cost to Start an LLC in Washington?
It costs $200 to file the legal documents online or $160 by mail. In addition to that, there is an annual fee of $60 and a name reservation fee of $30.
How Long Does It Take To Get an LLC Approved in Washington?
It takes about 7-10 days to get an LLC approved in Washington State.
You can pay for the expedited process, which will get your LLC approved in about four days if you file by mail.
If you file online, you can have your LLC in 2-3 business days.
How Does an LLC Work in Washington?
A Washington LLC is a pass-through entity. That means the LLC is not taxed for its income, and all profits or losses are passed through to the members, who then report it on their personal tax returns. It includes limited liability for LLC owners and all its members.
How Do I Form a Single Member LLC in Washington?
You need to fill out the certificate and file it with your Washington Secretary of State.
You also need to provide a federal employer identifier for your business if you plan on hiring employees or contracting work outside of any member's personal services.
How Is a Washington LLC Taxed?
LLCs in Washington pay sales taxes and occupation taxes. LLC members pay federal income taxes, not the LLC itself.
Can I Form an LLC on My Own?
Yes, you can form an LLC on your own. However, it would be best to consider hiring a business attorney to ensure that the formation documents comply with all state and federal laws.
How to Dissolve an LLC in Washington?
You can dissolve an LLC in this state by filing articles of dissolution with the Washington Secretary of State.
Can I Have a Foreign LLC in Washington?
Yes, you can have a foreign LLC in Washington. However, the LLC must file a certificate of authority with the Secretary of State before transacting business within this state.
With a little bit of research and information, you should be able to set up a Washington state LLC in no time.
You can find all the necessary forms online on the Secretary of State website for free.
Online filings make the entire process much faster and far more efficient than ever before.
Setting up a Washington limited liability company is not always easy.
It's essential to know the basics of how an LLC works and what you need to set one up, but it can be more complicated than that if you want to do everything by the books.
This post isn't meant as legal advice, so make sure you consult with a professional before setting your business up or making any decisions about your company's future.