After countless weeks and months of research and considering whether your product or service is unique enough to stand out from the competition, you’ve decided to take the plunge. It’s time to turn that dream into reality by starting your own business.
But to do that, it takes more than just creating a product, marketing it, and selling it to your target audience — whether that’s a professional or consumer crowd. You also need to make your business legal. And that means working closely with the Washington Secretary of State.
This guide to starting an LLC in Washington will give you the basics, so you can go forth with confidence, armed with the essential information you require to navigate the system and get established the right way.
The 5 steps to form an LLC in Washington:
To form an LLC in Virginia, you have to register your business with the Virginia State Corporation Commission. Before you can file this paperwork, however, you have to complete a couple of other steps, including choosing an LLC name, designating a registered agent, and formulating an Operating Agreement.
As part of establishing an LLC, you also have to apply for an Employer Identification Number (EIN) with the IRS. Finally, you have to figure out your tax obligations at the federal and state levels.
While it might sound like a lot, these requirements are easily accomplished through a planned, step-by-step approach. The below points break down the process into manageable actions, allowing you to get on your path to establishing your own LLC.
Starting a Washington LLC isn’t complicated, but it does demand careful attention to detail. Before you can file your Certificate of Formation (the official paperwork that establishes your LLC), you have to complete a series of steps. These include choosing a unique name that meets Washington state’s criteria, appointing a registered agent to accept legal correspondence for your business, and formulating a comprehensive Operating Agreement.
It might sound like a lot, but it’s absolutely manageable. The key is to break it down into bite-sized steps and complete these steps in the correct order. The below guideline takes you through the process of establishing your Washington LLC from A to Z. You can use these pointers as your personal checklist as you move toward your goal of becoming a legitimate business owner.
Step 1: Name Your Washington LLC
Before you register your LLC in Washington, you need to have a name for it — ideally, one that is unique tells people who you are and what you do or offer and resonates with your target market. You must be sure that your LLC name isn’t taken by another company in the state and is unusual enough to be distinguished. Slight variations in spelling, punctuation, and suffix will not suffice.
Also, beware that Washington state law requires you to include some variation of “Limited Liability Company” as the name’s suffix. You have a few possibilities: You can end your company’s name with the full “Limited Liability Company,” shorten it to “Limited Liability Co.,” or use the abbreviations “LLC” or “L.L.C.”
The state additionally prohibits certain words and combinations of words from appearing in LLC business names. You cannot use words that would suggest your LLC is a financial institution, like “banker,” “banking,” “trust,” or “cooperative.” You also can’t combine the words “trust” and “loan.” Finally, you may not use any combination of two or more of the following words: “savings,” “association,” “society,” “home,” “loan,” or “building.”
Adhering to these criteria, make a list of possible names and run them through the Washington Secretary of State’s Corporation Search to confirm availability. To garner more results (and make sure the name isn’t too close for comfort to another business), just enter the name’s key portions. The more detailed your query, the fewer results you’ll receive.
As you search for available business names, check if relevant domain names are available for those business names. A website is an affordable marketing tool that can drive customers to your business. You want a domain that aligns with your LLC name, making the website easy for search engines to find. You can verify if a domain is available through an easy online search.
Once you’ve found an available name, you might not be ready to take the next step and file your Certificate of Formation right away. Washington gives you the option to reserve a name by submitting a Name Reservation form. This costs $30 and places a 180-day hold on your intended name, preventing any other entities from registering their businesses.
You can also pay an additional $50 for expedited processing. However, it’s important to note that requesting a name reservation doesn’t mean that Washington has approved your name request. It only prevents other LLC registrants from using your intended name when they submit their LLC forms.
If you plan to use an alternate name for your LLC, you’ll need to complete this process twice. Known as a trade name or “Doing Business As” (DBA) name, you’ll first need to check that your trade name is available and compliant with Washington’s requirements. Unlike your LLC’s official name, your trade name should not have any business entity suffix, including “Limited Liability Company,” “LLC,” or “L.L.C.” The trade name should also not include any words relating to financial institutions, such as “bank,” “trust company,” “credit union,” or other similar words or phrases.
Once you’ve found an acceptable DBA name, you will need to register it when submitting a Business License Application. While the application requires you to pay a $19 fee, including a trade name registration will cost an additional $5 per name.
Finally, once you’ve found the perfect name and confirmed its availability, consider whether you want to trademark it. Trademarking a business name gives you exclusive rights to use it at the state or federal level, depending on the type of trademark. If you’re interested in registering a trademark with Washington state (after confirming its availability), you should fill out Washington’s Trademark Registration form, which costs $55 to submit. You’ll need to mail it to the following address:
Office of the Secretary of State Corporation & Charities Division
801 Capitol Way S
PO Box 40234
Olympia, WA 98504
The above trademark is valid only within the state of Washington, However, if you are expecting to do business outside of Washington, you may want to register your trademark with the U.S. Patent and Trademark Office, as a federal trademark can broaden your protections. Of course, you should also check their search engine to make sure your desired name isn’t already trademarked.
Step 2: Appoint a Registered Agent in Washington
Every LLC needs to have a registered agent — a person or entity acting as the point of contact for all service of process documents. If your company is subpoenaed or sued, the state of Washington will deliver papers to your registered agent. The registered agent must have a Washington residency in the form of a permanent address in the state and be authorized to do business in the state.
As the owner, you can list yourself as your company’s registered agent; however, this option is not always in your best interest. If you are served with a lawsuit, for example, you don’t want to receive this paperwork at your place of business, with customers around. What’s more, since registered agent details are public, your personal information will be easily available.
Instead, you may benefit from hiring an outside registered agent service. Hiring a registered agent service like ZenBusiness protects your personal information. It also ensures that important paperwork doesn’t get lost or forgotten, as you can arrange to receive alerts from your registered agent when important documentation arrives.
Step 3: File Washington Certificate of Formation
Once you’ve decided on a business name and appointed a registered agent, the next step is making your Washington LLC official. To do so, you’ll need to complete your Certificate of Formation and file it with the Washington Secretary of State. This is the official document that formally establishes your LLC as a recognized legal entity in Washington. You can file online or download a printable Certificate of Formation, fill it out in dark ink, and mail it for filing. Below is the information you will need to provide to file:
- Registered agent name and address. As noted above, this is the person or business who will receive legal documents on behalf of your business, be available during regular business hours, etc.
- Principal office address and contact information. You will need to provide a phone and email contact for your business. Your business street and mailing address (if they are different) are also required. Please note: Unless you are acting as your own registered agent, this address is not the same as your registered agent’s address.
- Duration. You will pick if your company has a perpetual duration, if it expires after a certain number of years, or if it expires on a specific date.
- Effective date. This is the date your business begins to exist. You can select the date of filing or a different date, but the date is not allowed to be more than 90 days from your filing date. It also cannot be prior to the filing date.
- Executor. Washington requires each business to have at least one executor. An executor is a person forming the LLC and signing the Certificate of Formation. An entity is not allowed to be its own executor.
- Governor. Washington also requires each business to have at least one governor. A governor is a person or entity listed on the business’s annual report.
- Nature of the business. You will need to let the state know what kind of work you will be doing. There is a drop-down menu to select from, but you can select “other” and write a description in the comment box if you do not see an accurate description.
- The return address for filing. This is the email and address where you want follow-up correspondence on your application to go.
When filing your Certificate of Formation with the Washington Secretary of State online, you will be required to pay a nonrefundable filing fee of $200. Online applications are typically processed within two business days. You can file a paper application for $180, and applications are processed in the order in which they are received. Once you finish your application, you will receive a Washington State Unified Business Identifier (UBI). Make sure to keep a record of that number, as you will use it when dealing with other state agencies. Within 120 days of your LLC’s formation, you are required to file an Initial Report, which is really the first Annual Report your LLC will file every year. You have the option of filing this at the same time as filing your Articles of Organization. For more information on the Initial Report and Annual Report, see “How much does it cost to start an LLC in Washington?” below.
Step 4: Create an Operating Agreement
An Operating Agreement is where you put in writing how the business will be run, the breakdown of responsibilities, how profits will be shared, and more. All partners in the LLC will sign, and it then acts as a binding contract.
Washington does not require a business to have an Operating Agreement. Since it is not a state requirement, you might be tempted to skip this step — especially if you are a sole-proprietor LLC. However, there are several reasons to go ahead and take the time to create the document:
- Protection. Operating Agreements go a step further in protecting members’ assets. Without it, the lines may get blurred, and your LLC may look more like a sole proprietorship, which opens you up to increased liability.
- Clarification. When all you have is an oral agreement with your partners, miscommunication will inevitably happen and often cause disagreements. Having everything in writing gives you a document to refer back to when settling a disagreement.
- Avoiding state default rules. Each state has a set of default rules governing LLCs, but they are very general — meant to apply to a wide variety of businesses. Without an Operating Agreement, you will have to rely on these rules. By putting an agreement in place, the financial and legal matters you set out will supersede the default rules.
What does an Operating Agreement look like? What’s contained inside will depend on the specifics of your business, but there are a few things you will want to include:
- Percentage of ownership and distribution of profits and losses
- Voting rights and responsibilities
- Division of roles and responsibilities with members and any managers
- Required meetings
- Buyout and buy-sell rules
Once the Operating Agreement is complete, it should be kept with important business formation information. You will not file it with the state.
Step 5: Apply for an EIN
A federal Employer Identification Number (EIN) is a unique nine-digit code. It’s used for identification purposes on your business tax filings and other financial paperwork. Every Washington LLC needs an EIN. The only exception is if you are a single-member LLC with no employees (and sometimes even then an EIN is required). Still, it’s smart to get an EIN anyway, as it can help with practical things like opening a business bank account.
To obtain your EIN, all you have to do is call the IRS Business and Specialty Tax Line at 800-829-4933. If you prefer, you can apply for your EIN online. You will get your identifier immediately after submitting your application, free of charge.
How much does it cost to start an LLC in Washington?
Starting an LLC in Washington is relatively affordable. Filing your Certificate of Formation will only cost you $180 if filing by mail. You must also provide an Initial Report within 120 days, which will cost you $10 to file by mail or $30 to file online. This Initial Report contains details about the LLC’s business and mailing address and the registered agent.
You can also file your Certificate of Formation online. This costs $200 but automatically includes the cost of the Initial Report. Whether filing online or by mail, you can select expedited processing for an additional $50.
Going forward, your Washington LLC will also have to file an Annual Report. This can be done via mail or online. The filing fee is $60. The Annual Report is due each year by the end of the month in which you formally created your LLC. If you fail to meet this deadline, you have to pay an added $25 late fee. Expedited filing of Annual Reports is likewise available for $50.
In addition to these costs, you may have licenses, permits, and insurance to pay for when starting your Washington LLC. This will depend largely on the type of business you run. For example, if you work in the foodservice industry, you need a business license, health permit, and possibly a liquor permit — to name just a few.
What are the benefits of an LLC in Washington?
LLCs aren’t the only type of business you can form in Washington. However, 90% of ZenBusiness customers, along with the majority of entrepreneurs, choose to form an LLC over all other types. Compared to corporations, limited partnerships, and other forms of entities, LLCs come with enticing benefits. The reporting requirements for LLCs are less tedious than those of a corporation, for instance, and they allow for flexible management structures.
Forming your LLC in Washington state means you’ll reap the following added benefits:
- Skilled labor. Washington highlights its expert workforce as a major boon for business owners. One-third of workers have a postsecondary degree. The state’s many colleges and universities frequently work with businesses in public-private partnerships, feeding the workforce.
- Excellent supply chain. Geographically, Washington is ideally situated for doing business. It’s on the coast, well-connected via ports and on-land transport. It’s also equidistant between Europe and Asia, allowing for promising international business opportunities.
- Favorable tax situation. Washington is one of the few states to have neither personal nor corporate income tax. The state also offers incentives to spur growth, for example, tax deferrals and credits.
For a more in-depth look at why an LLC might be a better option for you, see our breakdown of what an LLC is and how it compares to a corporation.
How is a Washington LLC taxed?
Here are the basics. You will need to take care of taxes at the federal, state, and local levels. The first step is to get your federal tax ID number (EIN). Note: If your business is a sole proprietorship without employees, you can likely use your Social Security number, but having a separate one for your business will better protect your confidentiality.
At the federal level:
- Taxes are paid on members’ personal tax returns for sole proprietorships, partnerships, and most LLCs.
- Owners typically make quarterly estimated tax payments during the year using form 1040-ES.
- You can elect to have your LLC treated as a C corporation or S Corporation for tax purposes using the IRS Form 8832 for a C corporation and Form 1120-S for an S corporation. In doing this, you will need to file a business tax return and report your earnings on your personal taxes.
At the state level:
- While Washington does not have a personal or business income tax, there is a Business & Occupation (B&O) tax, sales and use tax, property tax, and some industry taxes. You can find out more details by visiting the Washington Department of Revenue’s website.
- Small businesses often will file an excise tax return. How often you need to file is assigned to you after you submit your business license application and is based on the estimated amount of tax you owe.
At the local level:
- Most of Washington’s cities and towns have a local sales tax rate, which will be collected by the Washington Department of Revenue.
- Most also have a business and occupation tax that the cities collect on their own — for more information on these taxes, you will want to contact the city or town where you do business.
- Sales tax is based on location, and businesses are required to charge the rate of the location where the product or service was delivered.
- To determine the correct rate, the state has provided an online lookup tool.
State employment tax:
- Unemployment tax (also called unemployment insurance tax) is paid quarterly to the Employment Security Department (ESD).
- Tax calculations are based on a rate supplied to your business by ESD and multiplied by each employee’s wages.
Workers’ compensation premiums:
- Workers’ compensation premiums are also paid quarterly to the Department of Labor and Industries.
- Rates are calculated on the risk classification your business will receive from the department and multiplied by hours worked by employees in that classification.
- Employers can deduct a portion of the rate from an employee’s pay — the amount of which will be included in your rate notice.
Washington LLC FAQs
- What is the processing time to form my Washington LLC?
If you file by mail, your Certificate of Formation will be processed with the Washington Secretary of State in the order in which it is received. If you file online, your paperwork will be processed within two business days.
- Do I need to file my Operating Agreement with the state of Washington?
No. The Operating Agreement is kept internally by the owner and partners or managers. While some states legally require LLCs to have an Operating Agreement, Washington is not one.
- What tax structure should I choose for my Washington LLC?
As an LLC, you have different tax classification options to choose from. The majority of LLC owners opt for the default status. Under this set up, profits are passed through the LLC to the members. You pay taxes only on your individual income tax return. Since Washington doesn’t have personal income taxes, this is favorable. rnrnNote that the LLC will likely be subject to other state taxes, however. Washington requires LLCs to pay business and occupation taxes, for instance. These are calculated based on your business’s gross receipts. The tax rate varies depending on the type of business.rnrnAt the federal level, if your LLC has multiple members, the IRS will designate it as a partnership. This means each partner pays taxes on their share of the business. Alternatively, you can have your LLC taxed as a corporation federally, but this is usually advisable only for much larger and more profitable businesses. A tax professional can advise whether this makes sense for you.
- Does Washington allow a Series LLC?
A Series LLC is a special business structure that allows multiple limited liability companies to operate under one “parent” organization. The LLCs operate independently, with their own members, Operating Agreements, assets, and liabilities. Washington does not allow Series LLCs (only a minority of states do).
- Which licenses and insurance are required for an LLC in Washington?
To obtain a state business license in Washington, you will first need to review the requirements. If you qualify, the next step is starting a scenario with the Business Licensing Wizard on the Washington Department of Revenue website. You can choose to fill out the business license application and accompanying paperwork online or on paper to mail. You will also be required to pay a filing fee of $19. rnrnAlthough the Business Licensing Wizard helps, it’s still up to you to research what federal, state, local, and industry-specific licenses and permits your LLC requires.rnrnWhen it comes to insurance, the Office of the Insurance Commissioner for Washington state put together this handy guide on who needs insurance and how to obtain it.rnrnIn both instances, we recommend hiring a professional service like ZenBusiness to do the research for you. We will provide you with a comprehensive package of all the licenses and insurance required for your Washington LLC and help you file any necessary paperwork.
- What is the Washington State LLC Initial Report?
All LLCs in the state of Washington need to file an Initial Report within 120 days of being formed and should be submitted to the Washington Secretary of State. The Initial Report is the first version of the annual report required each year.
- How do I dissolve an LLC in Washington?
If you decide that the time has come to dissolve your LLC, the state of Washington requires that you fill out a Certificate of Dissolution form. While filing the form is free of charge, you can pay a $50 fee if you prefer the process to be expedited.
- How do I add members to my LLC in Washington?
Adding a member to an LLC is relatively straightforward. You’ll first need to review your Certificate of Formation and Operating Agreement, as these documents should outline how your business handles the addition of new LLC members. If your LLC is member-managed, you may need consent from specific members before adding a member. Similarly, if your LLC is manager-managed, you may need approval from the manager. rnrnOnce the addition of the member has been agreed upon, you will need to amend your Operating Agreement or draft a new agreement entirely to document the changes. Considering Operating Agreements are internal documents, you will not need to refile any paperwork with the state or immediately notify the IRS.