Get Real Founder Stories and Practical Frameworks Delivered to Your Inbox Weekly!

How To Form A Corporation In Washington

By: Startup 101
Last Updated: November 15, 2024

Share With Friends

X
Email

Table of Contents

Table of Contents

Get Exclusive Startup Stories and Trending Business Ideas Delivered to Your Inbox

A corporation is a business structure that provides personal liability protection by separating the owner’s personal assets from the business’s assets. Thus, a corporation is liable for the business’s actions and finances, while the owners (known as shareholders) are not.

Corporation Pros

  • Corporations provide liability protection for the shareholders
  • A corporation can raise non-debt financing by selling shares of the business
  • Taxation may be lower than a sole proprietorship or partnership

Corporation Cons

  • Corporations are more complex and expensive to set up than sole proprietorships, partnerships, and Limited Liability Companies (LLCs)
  • At a minimum, corporations are required to hold an annual board of directors meeting and shareholders meeting, take minutes at the meetings, issue shares, etc., to maintain the entity’s liability protection.

Generally, Corporations are chosen over Limited Liability Companies when a significant amount of funding is being raised from investors. However, due to the cost and complexity of a Corporation, most small businesses are better off forming an LLC.

Related: How To Form An LLC In Washington

The following steps are to create a domestic Corporation, which is the most common type for businesses. The other types of Corporations in Washington include a foreign Corporation (an out-of-state Corporation wanting approval to physically operate in the state), a professional Corporation (designated for Corporations offering professional services), or a non-profit Corporation.

Related: Washington Business Checklist

Steps to Forming a Corporation in Washington

Step 1: Choose a Name

The first step in forming a corporation in Washington is selecting a name.

The name of the corporation has to be different from other entity names in the state of Washington.  Check corporation name availability in Washington.

The name of the Corporation must include one of the following designators at the end of the business name:

  • Corporation
  • Incorporated
  • Limited
  • Company
  • Or an abbreviation of one of those words – Corp., Inc., Ltd., or Co.

A comma may be used after the business name and before the designator.  For example, “Common Grounds Coffee Inc.” and “Common Grounds Coffee, Inc.” are both acceptable.

If you want a name but are not ready to register the Corporation, you can file the Name Reservation form with the Washington Secretary of State. The name reservation will hold a name for up to 180 days.

While a Corporation has to select a unique name that another Washington Corporation isn’t using, that doesn’t guarantee that the name isn’t currently used by someone else.  Before registering a Corporation name, be sure to do a trademark search to verify it is available for you to use.

Step 2: Choose a Registered Agent

To have a Corporation in Washington, a Washington Registered Agent must be identified to act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the Corporation.  This can either be a resident of Washington or a commercial registered agent service.

You can act as the Corporation’s Registered Agent in Washington, and you are not required to pay for a registered agent. The requirements to be a Registered Agent include someone generally being present at a registered address during normal business hours.  A PO Box is not allowed.

Related: Do I Need To Hire A Registered Agent In Washington?

Step 3: File the Washington Articles of Incorporation

Next, you can start filing the Articles of Incorporation with the Secretary of State. The Articles of Incorporation can be filed on the Secretary of State’s website or in paper form.

The information requested includes:

  • The corporation’s name must contain the words “Corporation,” “Incorporated,” “Limited,” “Company,” or an abbreviation.
  • Number of shares the Corporation is authorized to issue
  • Class of shares (common stock is most common).
  • The effective date of the Corporation. If you want to finalize the paperwork of the Corporation but not have it start for up to 90 days in the future, enter the future date. Otherwise, choose upon filing.
  • Duration of the Corporation. Most will choose perpetual existence as the end date of the business hasn’t been determined. Some businesses (such as an investment fund or real estate investment) will have a final date already established to close the Corporation.
  • Registered Agent’s name and physical address. An important step in filing the Articles of Incorporation is to have the Registered Agent sign their consent to serve as the Corporation’s Registered Agent.
  • Name, address, and signature of the incorporator(s).   These can be one of the owners of the Corporation or someone helping with the formation of the entity.

The Washington Articles of Incorporation can be filed online or submitted by mail.  The mailing address is:

Washington Secretary of State
Corporations Division
801 Capitol Way S
PO Box 40234
Olympia WA 98504-0234

Featured Corporation Formation Services

Best for beginners
Pricing: $0 + State Fees

Best overall pricing
Pricing: $0 + State Fees

Best privacy protection
Pricing: $39 + State Fees

Step 4: Create Corporate Bylaws

Bylaws are the general guiding principles and procedures for a business’s operations. For example, the bylaws may include the name of the corporation’s officers, the responsibilities of the board members, terms of office, procedures for removing or adding a new director or shareholder, policies for authorizing new shares, when shareholder meetings will be held, and more.

Step 5: Hold the Initial Board of Directors Meeting

During the first board meeting, the board of directors will, at minimum, elect the corporation’s officers (the President, Vice President, Treasurer, and Secretary). They will also typically review and approve corporate bylaws, choose a bank, issue shares of stock, and decide whether the Corporation will be taxed as a C corporation or S corporation.

It’s critical to remember that taking meeting minutes at all meetings is necessary to protect the shareholders from lawsuits and court actions. The minutes provide a written record of all decisions and actions taken during the meeting. Minutes aren’t filed with the state but should be stored along with other corporate documents.

Step 6: Issue Shares of Stock

The corporation can exchange shares of stock in exchange for money or services. The number of shares of stock issued cannot be more than the number of authorized shares listed in the Articles of Incorporation.

Step 7: Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Like an individual’s social security number, the EIN identifies the Corporation for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file tax returns, and more.

The EIN is free when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Step 8: Elect the Corporation’s Form of Federal Income Taxation

By default, a new corporation will be taxed by the Internal Revenue Service (IRS) like a C-Corporation.  C-Corporations pay corporate taxes on their profits, and the owners pay personal income taxes on their dividends.

A Corporation can elect to be taxed as an S-Corporation. S-Corporations are taxed as “pass-through entities,” meaning the Corporation does not file corporate taxes. Instead, the profits (or losses) “pass through” to the shareholders, who then report this income on their individual taxes.

For most small businesses, the S-Corporation tax election is the most beneficial because it eliminates the double taxation of the C-Corporation. This tax election can be changed; however, it is highly recommended to talk with an accountant before making this decision.

Step 9: Open a Bank Account

Opening a bank account for your Corporation is important for liability protection as the bank account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original Articles of Incorporation showing the creation of the Corporation in addition to the bylaws.
  • Driver’s licenses of the members.
  • Depending on the age of the Corporation, a Washington Certificate of Good Standing may be needed to prove the business entity is active and in good standing with the state.

Step 10: Apply for Business Licenses and Permits

Depending on what your business does and its location, various business licenses and permits will likely be needed before starting your business. Some common registrations include:

  • Business License Application: All LLCs in Washington will apply for a state business license. This registration will quickly get a business set up with the Department of Revenue, Department of Labor & Industries, and the Employment Security Department, and any Specialty Endorsements and/or City Endorsements.  The fee for the Business License Application is $19.
  • Professional License: Certain services, such as barbershops, accountants, salons, and others, must be licensed.
  • Sales Tax Registration: To sell products and certain services and collect sales tax, you must register for the Unified Business Identifier (UBI) with the Washington Department of Revenue.
  • Business and Occupation Tax (B&O Tax): Even though Washington has no income tax, it does assess a tax on business income. All businesses generating over $12,000 in sales annually will pay this tax.

Related: How To Register A Business In Washington

Step 11: File the Initial Report

Corporations in Washington state must file an Initial Report with the Secretary of State within 120 days of formation.

Step 12: File Annual Report and Business License Renewal

Corporations are required to submit a Washington annual report to the Washington Secretary of State.

Suggest a Story: Have you or someone you know started a business with an inspirational story that should be featured on StartUp101? If so, please let us know here.

Some (but not all) of the links on StartUp101.com are affiliate links. This means that a special tracking code is used and that we may make a small commission on the sale of an item if you purchase through one of these links. The price of the item is the same for you whether it is an affiliate link or not, and using affiliate links helps us to maintain this website.

StartUp101.com is also a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Our mission is to help businesses start and promoting inferior products and services doesn’t serve that mission. We keep the opinions fair and balanced and not let the commissions influence our opinions.

Search

READY TO START YOUR BUSINESS?

Get Real Founder Stories and Practical Frameworks Delivered to Your Inbox Weekly!

Get Real Founder Stories and Practical Frameworks Delivered to Your Inbox Weekly!