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Washington LLC For Beginners: No Attorney Required

Washington LLC For Beginners: No Attorney Required

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Washington LLC For Beginners: No Attorney Required

Are you thinking of starting a business in Washington? If so, you’ll need to decide what legal structure to use. One popular option is an LLC, and I will explain how you can start a Washington LLC by yourself.

Related: Guide to starting a business in Washington

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Steps to Form a Washington LLC

Step 1: Choose a Name for the LLC

The first step in forming a Washington State LLC is to make sure the name you want is available.  

It’s critical to do a Washington LLC name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Washington. The Washington Secretary of State makes it easy to search and verify if your LLC name is available. 

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:

  • Limited Liability Company
  • Limited Liability Co.
  • L.L.C.
  • LLC

A comma may be used after the business name and before the designator.  “Cascade Creative Solutions LLC” and “Cascade Creative Solutions, LLC” are both acceptable.

If there is an LLC name you want to use, but you are not ready to register the LLC, file the Name Reservation Form with the Secretary of State to hold the name for up to 180 days.

If you plan to use a different name from the one that you register (perhaps you want to run multiple businesses under the LLC), you can use a trade name (sometimes referred to as a fictitious business name, assumed name, DBA, or Doing Business As name).  Registration of the Trade Name can be applied for at the same time as the Business License Application.

Before settling on a name, you may want to do a domain name search to match your business name and website address.

Step 2: Appoint a Washington Registered Agent

Every Washington Limited Liability Company is required to have a registered agent, which is simply someone with a Washington street address who will be responsible for any legal correspondence, most often if the business is served papers in the event of a lawsuit. Most LLC owners are their own registered agent, but it is possible to hire a registered agent like Northwest Registered Agent. The reasons why someone would hire a registered agent service include when the owner lives in another state or if the owner prefers that their personal address not be on public record.

The basic requirements to be a registered agent in Washington include:

  • The agent must be a Washington resident at least 18 years of age (Non-Commercial Registered Agent) or a Commercial Registered Agent service with a registered office in the state.
  • The agent must have a physical address in the state (PO Boxes aren’t allowed).
  • The agent must generally be available during normal business hours at the address provided to receive service of process.

Step 3: File the Washington Certificate of Formation

The paperwork to officially create an LLC in Washington is called the Certificate of Formation (called the Articles of Organization in many states). To submit the paperwork, either file online through the  Washington Secretary of State’s website. If you prefer to fill out and mail the application, download the Certificate of Formation Form.

Related: How to fill out the Washington LLC Certificate of Formation

When filling out the Certificate of Formation, a few sections and terms that can be confusing. I’ll go over some of these to help get your LLC started right.

Defer initial report: Every LLC is required to file an Annual Report, and the first one is named the Initial Report.  The Initial Report is due within 120 days of the LLC being approved.

It’s recommended to file the Initial Report along with the Certificate of Formation, as the option to defer will result in additional fees.

UBI number: UBI stands for “Unified Business Identifier” and is a unique identification number for entities in the state of Washington.  Most filers wouldn’t have filed for this number already and would choose “No.”

Principal office street address: In this section, enter the phone number and an email for the principal office.  This does not have to be an official business email. 
Next, enter the initial principal office’s street address, city, state, and zip code.  This address can be the LLC’s physical address, or the address where the business records are stored.  You may not use a PO Box for the designated office.

Address confidentiality program: If you are a part of the Washington Address Confidentiality Program, you can check this box.

Duration: In this section, you can indicate how long the LLC will remain in existence.  Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date.

Effective date: If you want the LLC to start as soon as possible, “Date of Filing.”  If you want the LLC to start later, enter a date less than 90 days in the future.  The main reason to consider delaying the LLC start date is when the filing is made close to the end of a calendar year, and the business isn’t going to have any activity until the start of the year.  You can eliminate the need to file a partial-year business tax return by delaying the start date until the following year.

Executor: An LLC Executor (known as an Organizer in most states) is someone involved with the formation of the Certificate of Formation.  The Executor may or may not become an LLC member, such as a mentor, attorney, or accountant, but any LLC initial member can be listed as an executor.  At least one person must be listed as an Executor.

Governors: A Governor refers to the members or managers of an LLC.

At least one governor needs to be listed.  Some filers will want to leave out the governors to protect their privacy.  The downside is that it may be difficult to obtain signing authority from the bank for any governors that are not listed.

Nature of the business: Here, you are asked to provide some basic information about what the business does.  Open the drop-down menu to look at the basic categories.  If your business isn’t listed in any category, you can type in detailed information in the box.

If you want to keep the business purpose more open-ended or not disclose what your business does, you can select  “Any Lawful Purpose” from the drop-down menu.

Step 4: File the Initial Report

Within 120 days of forming your LLC in Washington, an Initial Report will be due. The Initial Report is similar to the Annual Report that will be filed every year.

LLCs filed online through the Secretary of State’s website have the price of the initial report included in the formation cost. LLCs filed by mail will have to pay an additional $30.

If you are worried about making a mistake when forming your LLC, or just don't want to deal with filling out state paperwork, an LLC formation service will help guide you through the process. My top recommended services include:

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What To Do After Forming A Washington LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Washington LLC Operating Agreement

The LLC operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Washington operating agreement template

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN 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.

If an Employer Identification Number isn’t required, the LLC can use either the owner’s social security number or register for an EIN. 

Related: How to apply for an EIN

Apply for Business Licenses and Permits

In addition to forming the LLC, there will likely be various business licenses and permits needed before starting the business. Some common registrations include:

  • Business license application: All LLCs in Washington will need to apply for a Washington state business license. This registration will quickly get a business set up with the Washington State Department of Revenue, Department of Labor & Industries, the Employment Security Department, and any Specialty Endorsements and/or City Endorsements. 
  • Professional license: Certain services, such as barbershops, accountants, salons, and others, must be licensed.
  • Sales tax registration: In order to sell products and certain services and collect sales tax, a sales tax registration number from the Washington Department of Revenue will be necessary.
  • 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: What business licenses are needed in Washington?

File State of Washington LLC Annual Reports

LLCs are required to file an annual report with the Washington Secretary of State.  The annual report updates ownership information and other details.

Related: How to file a Washington LLC annual report

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in Washington or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

Washington LLC FAQs

Is an LLC right for you?

The Limited Liability Company (LLC) is a popular type of business structure that provides limited liability protection to its owners. This means that the personal assets of the LLC’s owners are generally protected in the event that the business is sued.

Unlike a sole proprietorship or general partnership, where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, similar to a corporation, and is how owners are able to protect their personal assets from business debts and lawsuits. Plus, it offers tax advantages, including pass-through taxation, meaning business income is taxed only once on your personal tax return.

However, the LLC isn’t always the best route for every business owner. Here are some reasons why an LLC might not be the right choice:

– Cost and formality: Starting and maintaining an LLC often involves more paperwork and state filing fees for the initial setup and annual renewal fees. If you’re running a very small, low-risk business, these costs and formalities might outweigh the benefits.
– Tax considerations: While LLCs offer pass-through taxation, which can be beneficial, they’re not always the best for tax purposes. For instance, businesses that could benefit from corporate tax rates or need to retain earnings within the company might find the corporate structure more advantageous. LLCs can elect to be taxed as corporations, but this adds complexity and may negate some of the simplicity of the LLC structure.
– Investment and growth: If you’re planning to seek significant external investment or grow your business rapidly, investors might prefer the structure of a corporation, particularly a C corporation. This structure allows for easier issuance of stock and can be more attractive to venture capitalists and angel investors.
– Professional restrictions: Certain professions may not be allowed to form LLCs in Washington. State regulations might require these professions to organize under different business structures, such as professional corporations (PCs) or professional service corporations (PSCs).
– Complex profit sharing: LLCs offer great flexibility in how profits are distributed among owners. However, this flexibility can also be a drawback if owners prefer the straightforwardness of the equal distribution of profits or if there’s a desire for reinvesting profits directly back into the business without individual tax implications.

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

The state filing fee to start an LLC in Washington is $200.

How long does it take to start an LLC in Washington?

It normally takes 2-3 business days to form an LLC in Washington when filing online or up to two weeks when filing by mail.

Is there a yearly fee for an LLC in Washington?

Each year, an annual report and $60 filing fee must be sent to the Washington Secretary of State.

What should I put for the purpose of LLC?

When filling out the Washington LLC Certification of Formation, a section asks about the nature of the business.

The nature of the business or purpose of the LLC is requesting some basic information about what the business does.  Open the drop-down menu to look at the basic categories.  If your business isn’t listed in any category, you can type in detailed information in the box.

If you want to keep the business purpose more open-ended or not disclose what your business does, you can select  “Any Lawful Purpose” from the drop-down menu.

Does Washington allow single member LLCs?

An LLC in Washington can be operated by one individual or many. An LLC owned by one person is referred to as a single-member LLC.

What is a Foreign Limited Liability Company?

A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state that wants to operate physically in Washington. Physically operating means having a presence, such as having an office or hiring an employee.

Related: What is a foreign LLC?

What is a Professional Limited Liability Company?

Businesses that require occupational licensing in Washington, such as accountants, architects, veterinarians, etc., can register for a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.

Related: What is a Professional Limited Liability Company?

Washington LLC For Beginners: No Attorney Required

Washington LLC For Beginners: No Attorney Required

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