Washington State is one of the few states that allows you to, with relative ease, establish a limited liability company. This article will provide a quick overview of what LLCs are and how they function in Washington State.
A limited liability company (LLC) is an organization that the state has granted limited liability for any legal obligations it may have.
In Washington State, this responsibility includes debts and liabilities incurred under operating agreements. These agreements are not filed or recorded publicly but remain between the partners and managers of the company.
LLC Washington State: Everything You Need to Know
Washington State LLC is formed by filing a Certificate of Formation with the Washington Secretary of States’ office. This filing is not required, however, and LLCs can be established without first filing this certificate.
1.Washington state has very few regulations regarding LLC formation. Once an operating agreement is in place, members of the company are free to do business under that company’s name without requiring any further filings or certificates.
2. The Washington State LLC may only have one member at a time. This means that should an LLC attempt to act as a corporation; it will be determined as illegal and liable for the debts or liabilities incurred through the regular operation of the company.
3. LLCs are not a good fit for every business. The Washington state statute provides very few details regarding how an operating agreement should be formatted and virtually no restrictions on what type of business it may or may not operate in.
For example, an LLC may not operate in a field that requires licensing. This includes businesses such as law, medicine, insurance, and real estate.
To start an LLC in Washington is Easy.
Washington State LLC is not difficult to start, and the Washington state statute provides very few details regarding how an operating agreement should be formatted. Therefore, an LLC can be formed without first filing the Certificate of Formation and then filing it later if changes need to be made.
First, a member must file their intent to form an LLC with the Washington Secretary of State’s office by filling out a form known as an Articles of Organization.
After this form has been received, a Certificate of Formation will be sent to the member to sign. The Certificate of Formation includes a reference to the operating agreement established and signed by all members and managers of the proposed company.
STEP 1: Name Your Washington LLC
The first step in establishing a Washington State LLC is to choose a name.
- Your name should include the words “Limited Liability Company” or LLC as part of it, and it may not include any words prohibited by the state.
- Using the word “Limited” in your name is highly recommended, as this provides notice to all third parties that you intend to limit their liability.
- Other words commonly used in LLC names are a corporation, company, and organization.
- Whatever name you choose, make sure there are no restrictions on its use under Washington State statute.
- Whether your company is for-profit or not-for-profit, it will need a “doing business as” name. This is the name that appears on your check, making it easier for your business clients to ensure they are properly sending their payments.
- Businesses may also register with the Washington state Secretary of State’s office as an assumed name, but this can be done only after the operating agreement has been filed with the state.
STEP 2: Choose a Registered Agent in Washington
This is a person or business located in Washington who will be responsible for ensuring that the state is notified of any changes to the company. This includes notifying the Secretary of State’s office if the company changes its address, is dissolved, or any other changes in its information.
Tips on choosing a registered agent service:
- The Washington registered agent may be a member of the company. It can be a person or business not involved with the LLC but would be responsible for filing the necessary paperwork. This can include accountants, attorneys, or any other person you have designated. You also have the option of using an assumed name, in which case no additional filing is required.
- The registered agent must be a resident of Washington. It is important to ensure that the agent is someone you can trust and available during regular business hours. The registered agent may also be responsible for serving any legal documents or notices to the Secretary of State’s office if necessary.
- You cannot use the same name as your business as your LLC’s registered agent.
STEP 3: File the Washington LLC Certificate of Formation
After you appoint a registered agent, the next step is to file the Certificate of Formation with the Washington Secretary of State corporations to officially start your LLC. Along with this document, you will also need to fill out a form entitled Articles of Organization.
- You must file the Certificate of Formation together with the Articles of Organization and receive a copy in both physical and digital format. You cannot file your company before filing the Certificate, but you can amend or change all other information later.
- The Certificate of Formation will include a reference to the company name you chose for your LLC, including additional information such as how long you expect it to be in business and whether or not it is a non-profit company. It will also provide information regarding your registered agent and his office address.
- When filing with the Washington Secretary of State, you will need to file a form called the Articles of Organization which includes a statement that you are forming an LLC.In addition, the Articles state whether or not you are planning on forming a profit-making LLC or not-for-profit company. It should also include information regarding the business you are running and where it is based.
- Included in the Articles of Organization are the name and home address of your registered agent. This registered agent information must match what was included with the Washington Certificate of Formation that was previously filed. The Secretary of State’s office will notify your registered agent of the date that the company was incorporated.
After filing this document with the state, you will receive a notification that it has been accepted.
STEP 4: Create a Washington LLC Operating Agreement
Your LLC will need to have a few key documents for it to run properly. Without these documents, your company may fail to operate as you had intended.
A good operating agreement for Washington LLCs protects all of its members and managers from any lawsuits that may arise from the company’s conduct. There are many different types of operating agreements available for you to choose from, but each has its own strengths and weaknesses.
The operating agreement that you choose will directly impact how your LLC operates, and no two operate the same.
The Washington state’s LLC laws do not require you to use an operating agreement. However, it is highly recommended that a company member makes sure they are familiar with the rules and how the business should run. It is best to consult with an attorney before creating one.
One of the key aspects of an operating agreement is that it should clarify who the members of your business are and how they can share ownership. It should also define any of the powers that each member holds.
If you are a single proprietor, you do not need to worry about this section much beyond listing yourself as a member of your LLC. However, if you have multiple owners, then this section will need to be much more detailed.
STEP 5: Get a Washington LLC EIN
You will need to apply for an EIN for your LLC to open an account with the IRS.
Normally, the business owner is the only person who needs to be listed on the application with their personal information. However, a few situations may require special permissions or exceptions.
With a Washington LLC, you will need to ensure that all of your owners have their own EINs and are included on this form. This can include any members who may be named as managers in the operating agreement as well.
If you will use your EIN for taxes or if you need special permission, you may be required to call the IRS and fill out a separate form. Alternatively, if you have a business name different from your LLC, you will need to fill out a separate form.
In addition, if your LLC is in partnership with any other businesses and you plan on filing taxes jointly with them, then it would be best to include the EIN from all of these businesses on your application.
Free LLC Legal Forms
Now that you understand how to create and incorporate your LLC, it’s important to note that the LLC legal forms can be found with the official forms provided by the Secretary of State or in various other locations. The Secretary of State is required by state law to provide these forms free of charge.
If you are looking for a complete list of Washington State LLC legal forms, we recommend this list provided by the Washington Secretary of State’s office. In addition to the basic forms, the list provides links to several free legal templates for member agreements, operating agreement guides, and templates for incorporating your business.
If you are looking for a resource that offers guidance on the basics or has a full array of additional resources and information, we recommend this official state government site. It contains detailed information on forming your LLC in Washington State and other helpful documents and resources.
Pros and cons of a Washington LLC:
A Washington LLC is a very flexible type of business. If you are looking to start a business, this is one of the best options for individuals and businesses alike.
- Flexible: With a Washington LLC, you can operate it in the way that best suits your needs. If you wish to incorporate a business by adding multiple members later, then it is easy enough to do so. This will allow you to fully customize your business and make it reflect your own personal values.
- Restrictions: Because a Washington LLC is run in such an “anything goes” manner, there are no restrictions on how the business and its management should be operated. This allows you to tailor it as you see fit.
- Liability: Like an LLC, your company is typically considered a “pass-through” business entity. This means that your income and losses will be listed on your personal tax return. However, it is also important to note that this type of business does not allow you to shield yourself from lawsuits or administrative penalties.
- If something were to occur with one of your members or managers and they were found liable for any damages or fees, the other members would not be held responsible. This can be a very difficult situation to handle when you do not have full protection or resources.
- Fees: The state of Washington does not provide any government funding for LLC tax filings. As such, it is highly recommended that you make sure that you have enough funds in your business account to cover any fees caused by the filing or updating of your documents.
- Lawsuit risks: Because an LLC is a “pass-through” type of business, it will be counted as part of your personal tax return. This means that if you are found liable for a lawsuit or financial penalty, then you could be personally responsible for the damages.
- If your business has suffered damages in the form of lost sales or income, then it may be in your best interest to have some sort of insurance policy that will indemnify you for some or all of these responsibilities.
- Tax filing requirements: Washington law requires that you register to do business in the state. This means that you must file a quarterly tax return with the IRS every quarter of the year, from January through March, June through September, and December through February. In addition, you will need to include your business’s profit or loss with your personal income tax return as well.
- The state of Washington also requires that you file a Washington LLC annual report with the state. This is done through the Secretary of State’s office and can be filed at any time during the year. However, it is a good idea to keep your Secretary of State’s office apprised of changes in your business so that they can properly update their records.
- As a C Corp, you will need to pay an annual corporate tax and additional taxes for earnings on capital gains, so long as your profits exceed $10,000. If you are operating as an S Corp or Limited Liability Co, then those taxes will be paid by the members of your LLC. You will also have to pay self-employment tax on top of state taxes, so long as you have other employees or are the sole member and employee.
Costs of starting LLC in Washington
Incorporation will require that you take a lot of time to plan and prepare for the process of incorporating your business. The Secretary of State will allow you to incorporate your LLC online, keeping these filing fees low and affordable for most.
There are also costs associated with other types of business operating in Washington. Additional state fees may be required if you choose to incorporate an LLC that has multiple members or title transfer agreements with other types of businesses.
It is important to note that the fees and requirements can vary depending on your type of business, so you will need to make sure that you thoroughly review all of the forms before submitting them.
- $53 to file articles of incorporation
- $90 for a one-year renewal
As with any other business, exact costs will vary depending on your type of business and the taxes you must pay. For example, if you include multiple members, filing fees will be higher than running the business alone.
If you need professional assistance or guidance throughout establishing your LLC, then it is important to make sure that you are prepared for any consultation fees that may be involved. Depending on the type of business you are looking to establish, you may find that consulting with professional accountants or advisors is required before the state will register your LLC.
Make sure that you think about all of the steps required to incorporate your business and determine how much time and money you need to invest before registering. That way, you can plan accordingly and make sure that you are prepared for any additional costs at the beginning.
Costs can vary greatly depending on your needs. If you need professional advice and guidance from an established professional, costs can be up to thousands of dollars.
However, if you are looking to obtain legal advice from someone relatively inexperienced or not qualified, then costs can be as low as a few hundred dollars. In either case, make sure that you know the type of guidance and assistance you will need when filing your LLC.
Separate Your Personal and Business Assets
The law states that members can be held liable for the acts of the LLC. Because of this, it is important to make sure that your LLC has separate ownership from your personal assets.
Having a low percentage of ownership may provide you with some sort of liability protection. Still, it is best to have enough distance between you and your business to avoid any confusion in court.
1. Opening a business checking account:
When you are ready to open a business bank account, it is important to ensure that you do not use the same name as your LLC. This means that if your business is called “Bacon LLC,” then you will need to look for a different name for your personal checking account.
You can make sure that your personal and business assets are separate by using a business title or something similar so that everyone knows that it is an LLC account.
2. Getting a business credit card:
Another way that you can keep your personal and business assets separate is by using a business credit card. It is important to remember that once your LLC has been registered with the state, you are legally required to run all business-related expenses through this account.
This means that if you run out of cash or need to pay for a professional service, then you will need to pay for it with your LLC credit card. You can make sure that your LLC has a business credit card by applying for one in the trade name of your business.
3. Hiring a business accountant:
Because you will be running your LLC as a sole proprietorship, it is important to keep good business-related records. This means that you will want to hire someone to help maintain these records and properly file all of your taxes.
While the initial report costs may be higher for a sole proprietorship than for an LLC, in the long run, this will save you money. If you are hiring a CPA to file your taxes, they will charge a fee based on your business’s gross income. It is best to contact a professional accountant that specializes in LLCs and S Corps.
In general, the cost of hiring an accountant will be higher if you are dealing with sole proprietorship tax planning than with S Corps or LLCs.
The costs associated with hiring an accountant will vary depending on the type of business you are running and the services that you are looking to receive. Make sure that you plan accordingly and look for ways to save money throughout the year.
Get Business Insurance For Your Washington LLC
Business insurance is a type of insurance that covers your business against claims made by employees, customers, or other third parties. Insurance can be purchased specifically for different types of businesses, and the state regulates policies. Talk to your agent to find the most appropriate policy for your type of LLC.
The cost of policy premiums can vary widely depending on the type of insurance policy that you choose.
In general, it is much cheaper to purchase business insurance policies for your business when it first begins rather than purchasing it after it has been established and running. That way, you can take advantage of the lifetime coverage that many policies offer.
It is important to make sure that your Washington LLC has a business insurance policy in place before you begin performing any work.
Create Your Business Website
Depending on the type of business you are starting, it may be a good idea to have its own website. With this website, members of the public searching for your services or products can find you more quickly and easily.
It is important to remember that Google often indexes websites, so all of your hard work will go to waste if you don’t have a professional-looking site. It will be worth every penny to have a professional-looking and properly functioning website for your business to promote it and increase the amount of business you are bringing in.
You can create your Washington website using one of the many online services available. These tools often offer free initial website creation and hosting for small businesses and low or no cost for more advanced site design needs.
Send Out a Press Release
It is important to give the public a chance to get to know your new business. By sending out a press release, you will be able to reach thousands of people with your business name and information about what you do.
You can distribute this information via the internet or local media outlets to attract new customers and increase the amount of business you bring in. When distributing your press release, it is important that you follow certain guidelines.
Know where your audience is:
The first step in any good marketing plan is to know your audience. When doing press releases, you need to know which media outlets offer the type of coverage your business needs and how they are likely to respond to the information you release.
For example, if you are looking for a Washington state newspaper with a large local following, then you will want to try and send them your information directly instead of sending it out through other outlets.
Use a service:
The second step in your press release is to decide which service you will use to distribute it. There are many different online and offline services that will help with the distribution of your press releases.
It is important to find a provider that has been used by other professionals in the industry before so that you can get a better idea of its effectiveness.
Write it yourself:
Now that you have chosen an outlet and selected a provider, you need to write up your press release. The most important thing to remember is that you should not try to sound like a professional journalist.
Instead, you want to write it in a way that sounds natural and will attract the attention of non-professional readers.
Contact the press:
When your release is ready, you need to contact the provider and let them know that you are ready for it to be sent out on their site.
Washington Business Permits & Licenses
In order to conduct business in the state of Washington, you must have various licenses and permits. It is important to obtain these licenses and permits as soon as possible but typically before you begin engaging in business.
The state has a number of different agencies that deal with business permits and licenses. Like the Department of Labor and Industries, some are concerned with licensing for safety reasons, while others, like the Department of Revenue, are concerned with taxable items.
The following are the most commonly required business license application and permits:
Business License or Business Permit from Washington Department of Revenue:
On your first visit to Washington, you should make sure that you have a business license. The business license from the Department of Revenue is used to collect state tax for services that you provide.
You can apply for your license online or in person. Once you have your license, be sure that you use the right tax for your type of business when performing any services on behalf of clients.
Business Operator License or Business Permit from Washington Department of Labor and Industries:
For a business to operate, it must be registered with the labor department.
The business operator license or permit will allow you to perform this service even though the state does not require it.
Business Permit from the District of Columbia:
While Washington does not have its own district of government, it has a number of laws regarding businesses located inside its boundaries.
As such, any company that has employees in D.C. must have a business permit from the District of Columbia. In order to be permitted and obtain this permit, you must submit an application online and pay a $200 filing fee.
Washington LLC Taxes:
There are a number of taxes that your LLC will be required to pay.
Depending on your location, you will likely have to pay federal, state, and local taxes.
Business Income Tax:
In Washington, an LLC is subject to the same income taxes as an individual. This means that all services performed by your company are taxed at 6.5%.
Partnership Income Tax:
The partnership is taxed at the same rate as the LLC. As such, any income that you receive will be taxed at 6.5%.
Sales and Use Tax:
You must be registered with the Washington Department of Revenue to collect sales tax on purchases you make from suppliers located in the state.
The rates are set by the state and can vary depending on what services you are providing or whether you have employees.
Washington Franchise Taxes:
In addition to other types of taxes, the state also has franchise taxes that are usually charged on businesses that operate within the state.
These charges are based on various factors, including the value of your business and how long you have been operating in Washington.
Once you have found a suitable location to run your business, you need to get employees on board. This is typically your first step in running a successful company, as having the right people on staff will allow you to focus on other aspects of the business that simply cannot be done alone.
As with any other type of business, it is important that you do not make employment decisions without doing some proper research first. You should always talk to other professionals in the area who have hired local employees before and ask them for advice.
You should also talk to your employees and get input from them so that you can find someone that works well with everyone.
When hiring employees, there are a number of items that you need to consider carefully.
- You need to know exactly what type of job they will be doing. The best employees for a business will be ones who have ambitions similar to the company owners.
- Finding the right person for the job is not something that you can do overnight. It will take some time before you find the right person. As such, you should be sure to set aside as much time as possible to interview possible candidates.
While each business is different, there are a few qualities that are common amongst great employees. The first is ambition; the best employees are ones who want to move up and achieve more in their careers. They have also been shown responsibility in the past and have demonstrated an ability to execute it well.
In summary, running and owning a real estate business in the state of Washington is not all that difficult. It is simply a matter of doing your research, gathering necessary licenses and permits, hiring employees, and then getting up to speed with the local laws.
Once you have done these things, you will be off to a great start in your venture. But, as with any other business, you will need to work hard to ensure that your company is successful.
It is important that you take the time to consider all of the factors mentioned in this article before making a decision on whether or not this type of business is right for you. Now that you have all of the information available, you can make an informed choice about whether or not this type of business is right for your company.