Establishing your business as a corporation can be a wise move. This helps protect you legally and financially if your business should face liability issues. Choosing the right location for your corporation can bring added benefits. Washington state is a smart choice, offering incentives for business owners and a well-connected coastal location ideal for expansion. Find out how to establish your Washington corporation below.
How do I form a Corporation in Washington?
Steps to form your Washington Corporation
- Name Your Corporation
- Appoint Directors
- Choose an Washington Registered Agent
- File the Washington Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit your Corporation’s first report
To form a corporation in Washington, you must submit the Articles of Incorporation to the Secretary of State. You need to take care of a few other steps before you can file this official paperwork, however. Tasks you’ll need to take care of range from appointing directors to naming a registered agent. To assist you in the process, we’ve provided an overview of how to start a Washington corporation:
Step 1: Name Your Washington Corporation
Additionally, Washington state has legal requirements for naming corporations, including:
- The name must be distinguishable from any other formally registered business on the record. Use the online Corporations and Charities Filing System to see if another business or nonprofit has already registered the name you want.
- The name must include the words “Corporation,” “Incorporated,” “Company,” or “Limited,” or the following abbreviations: “Corp.,” “Inc.,” “Co.,” or “Ltd.”
- The name may not include prohibited phrases like “bank,” “banker,” “banking,” “trust,” or “cooperative.” Certain word combinations are also prohibited, like “industrial” and “loan,” as well as any combination of the following words: “building,” “savings,” “loan,” “home,” “association,” and “society.”
Once you’ve chosen a name, you may want to reserve it with the state so that no one else can take it. Complete the Name Reservation form and submit it to the Secretary of State’s Corporations and Charities Division (the address is on the form). You can also complete it online. To do so, create a user account with the Washington Corporations and Charities Filing System (you can also use this for other tasks to come). The name reservation filing fee is $30.
You may want to conduct business under a name different from your official business name. If you go this route, Washington requires you to register a “doing business as” (DBA) name, referred to in the state as a “trade name.” You can request a trade name when submitting your Business License Application to the Washington State Department of Revenue (more on that below). The fee for submitting the business license application is $90, plus an added $5 fee for any trade name you want to be registered.
Before making the final decision on your business name, make sure it hasn’t been trademarked by anyone else first. Use the state’s trademark search engine to see if your desired name is free of trademarks at the state level. If you want, you can file for a Washington trademark of your own with the Secretary of State. To check for federal trademarks, go to the United States Patent and Trademark Office (USPTO) website. You can also apply for a federal trademark here with the Trademark Electronic Application System (TEAS), but be aware that this is more involved and expensive than getting a state trademark.
Step 2: Appoint Directors
Directors oversee a corporation’s daily operations. Washington mandates that these individuals act in the best interests of the corporation. Note that Washington often refers to directors as “governors.” While directors can be owners, this isn’t mandatory.
A Washington corporation must name at least one director. The director requirement can be dispensed with if the Articles of Incorporation or a shareholder agreement specifies an alternative to performing the oversight duties typically carried out by directors. Directors should be named at an organizational meeting before filing the Articles of Incorporation. This is also a chance to draft bylaws and determine share distribution.
Step 3: Choose an Washington Registered Agent
Washington defines a registered agent as a “person or business named to receive legal documents on behalf of the corporation.” The registered office is where the registered agent is physically located. Every corporation in Washington is required to have a registered agent.
A third-party registered agent not located at your business entity or home address is preferable for a couple of reasons. First, registered agent details are public. You don’t want people showing up at your home. Second, registered agents receive legal mail, including lawsuits. You don’t want these arriving at your company, starting rumors among employees or clients.
Step 4: File the Washington Articles of Incorporation
You can now file your Washington Articles of Incorporation, the documentation to formally establish your corporation as a legal entity. Note that this is called a Certificate of Incorporation in some states, so you may hear the terms used interchangeably.
You can file your Articles of Incorporation online through the Secretary of State’s Corporations and Charities Division. Create a new user account if you didn’t make one to reserve your business name. To complete the paperwork, you need the following information:
- Corporation name
- The effective date of incorporation
- How long the corporation’s duration should be
- Name, address, and signature of each incorporator
- The number of authorized stock shares (a minimum of one share of stock required)
- The class of stock shares (For example, preferred stockholders get annual dividends, while common stockholders do not. If not specified, common stock is the default.)
- Registered agent name and registered office address
- Signature of registered agent, consenting to the appointment
You can also download the paperwork, print it out, and send it in by mail to the address specified on the form. Whether submitting online or by mail, the filing fee is $180.
Step 5: Create Corporate Bylaws
Corporate bylaws are in-house documentation specifying how your corporation is run. Although Washington doesn’t require you to file bylaws with the Secretary of State, you should have this document readily available. It establishes how your corporation is managed, helping prevent disputes and ambiguity, and can be used to legitimize your corporation in the eyes of banks, creditors, private investors, or the IRS.
Create your bylaws during your initial organizational meeting when you appoint the corporation’s directors. Items you may want to include are:
- A description of the corporation’s business purpose
- Names, rights, and duties of business owners
- Names and responsibilities of directors
- A description of the corporation’s management structure
- Organizational details regarding director, board, and shareholder meetings
- Guidelines for how corporate stock is issued
- Guidelines on how and when financial reporting is conducted
- Procedures for replacing directors
Step 6: Draft a Shareholder Agreement
A shareholder agreement details the rights and obligations that shareholders (people who hold stock in the corporation) have. For example, they might be required to give a certain time commitment. Draft a shareholder agreement alongside your bylaws.
The shareholder agreement may include items like:
- Names and contact information of shareholders
- Voting rights of shareholders
- Responsibilities of shareholders
- Whether the shareholders have rights to purchase shares before they’re made available to the public
- The processes through which shareholders may transfer or sell stock
- How dividends should be paid out
- What happens to shareholder stocks if the corporation terminates operations
- How amendments may be made to the shareholder agreement
Since this is a legally significant document, you may want to consult a professional to ensure it’s comprehensive and binding.
Step 7: Issue Shares of Stock
Unlike a limited liability company (LLC), a corporation is required to issue shares of stock. This is why you had to designate a minimum value of one when asked about the number of authorized stocks in the Washington Articles of Incorporation. Your corporation can’t issue more shares than what is specified in the Articles of Incorporation.
Once the corporation issues stocks, they can be bought and sold. Private stocks are usually issued to individuals related to the corporation in some way, such as founders, directors, or employees. Public stocks can be bought by members of the general public with no corporate affiliation.
Your corporation must track all stock issues. Before issuing any shares, a Washington corporation must register with the state’s Department of Financial Institutions. If you issue shares publicly, you must file quarterly reports with the U.S. Securities and Exchange Commission (SEC).
Step 8: Apply for Necessary Business Permits or Licenses
You must submit a business license application to the Washington Department of Revenue when starting your business and pay a filing fee of $90. Add an extra $5 for every “doing business as” (DBA) name (also called a trade name) you want to use. The form can be submitted by mail (the address is on the form) or via the Department of Revenue’s online portal.
Additionally, certain professions must provide credentials. The Washington State Department of Licensing has a list. Depending on the type of business you operate, additional state licenses and permits will be required. The state’s business licensing wizard can get you started. There are local, state, and federal requirements to consider, so you’ll need to do some research to make sure you haven’t missed anything.
Step 9: File for an EIN and Review Tax Requirements
An Employer Identification Number (EIN) is like a Social Security number but for businesses. It’s used to identify your corporation on financial paperwork like tax returns. You will need an EIN for your corporation. Apply for one through the IRS online. It’s free.
You must also register a Washington business tax account to track tax filings and obligations at the state level.
Step 10: Submit Your Corporation’s First Report
Every Washington corporation must submit an annual report. The “Initial Report” (the first report) is required within 120 days of the submission of the Articles of Incorporation. It contains details regarding the corporation’s name, owners, registered agent, contact details, and the directors (referred to as “governors”). You can submit online or download the paperwork and submit it by mail. A $10 filing fee applies.
How much does it cost to start a corporation in Washington?
For startup costs, expect to pay $180 when filing the Articles of Incorporation and $90 for the business license application. You must pay a $10 filing fee for the Initial Report. If you choose to register a DBA/trade name, add $5 for every name registered with the business license application. Reserving a business name costs $30. There is also the cost of reserving a domain name, which varies depending on the provider.
To maintain your Washington corporation, expect to pay $60 for the annual report filing every year. You will also have to uphold any relevant permits or licenses required to operate your business.
ZenBusiness can support you with these administrative complexities, providing business package services to help keep you compliant with Washington laws.
What are the benefits of a corporation in Washington?
Establishing your corporation in Washington brings added benefits like:
- Coastal location: Washington is set along the West Coast and has port access, making it an ideal hub if you are thinking of international expansion.
- State Trade Expansion Program: The STEP provides financial support to small businesses wanting to develop their export trade.
- Tax incentives: Washington offers diverse tax incentives for businesses, including deferrals, exemptions, and credits.
Given the advantages, it can be tempting to start a Washington corporation right away. However, this is a complex business model, with unique reporting and tax obligations. Talk to a business and/or tax attorney before establishing your corporation to avoid such troubles.
How is an Washington corporation taxed?
A corporation in Washington state may be classified as a C corporation, an S corporation, or a nonprofit corporation. It’s important to note that Washington does not have a personal or corporate income tax. You may still wish to file as an S corporation at the federal level, though, in which case, make sure to complete IRS form 2553 to qualify.
However, corporations still must pay a gross receipts tax called the business and occupation (B&O) tax. The tax rates for this will vary depending on how your business is classified by the state. Additionally, nonprofits in Washington are not exempt from paying the B&O tax.
Washington also has additional taxes that may be levied, depending on the type of business you operate and other factors. Possibilities include payroll taxes and sales and use tax. Finally, any state corporation is subject to tax reporting and payment at the federal level.
Washington Corporation FAQs
Does running a corporation in Washington involve more paperwork than running other types of businesses?
According to the state’s overview of business structures, yes. In terms of formation and maintenance, corporations rank “medium/high” in terms of difficulty (compared to a limited liability company, which has a “medium” ranking, or a sole proprietorship, which ranks “low”).
Corporations have stricter documentation requirements in terms of annual reports, tracking shares, and more.
What is the difference between an LLC and a corporation in Washington?
While these are both formally recognized business entities, a corporation may issue shares while a limited liability company (LLC) may not. They also have different obligations when it comes to taxes, reporting, and more.
How do I change my corporation’s name in Washington?
You can change the name of your corporation in Washington by filing Articles of Amendment either online or by mail.
How many people are needed to form a corporation in Washington?
A single person can form a corporation in Washington.
Can I form my Washington corporation online?
You can form a Washington corporation online by using the Secretary of State’s Corporations and Charities Division website.
How do I dissolve my Washington corporation?
To dissolve your corporation, you will need to file the Articles of Dissolution with the Secretary of State’s Corporations and Charities Division.
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