Like many other states, Washington offers special business entity types for professionals. If you want to start your own business as a professional, a Washington professional limited liability company could be a good option.
A professional limited liability company (PLLC) is a special type of LLC for people licensed to render a “professional service.” Broadly speaking, the term professional service covers jobs that require a license or other legal authorization. Some examples of professional services in Washington include:
Any professional who renders one of these services can form a Washington PLLC. Keep in mind, however, that all the members of the PLLC must maintain the proper licenses and remain compliant with the rules specific to their profession.
Naming your business is a step sometimes overlooked in the excitement of starting a new business venture. Remember, though, that there are a couple of things to consider when it comes to naming your PLLC.
Many states impose certain restrictions on naming your PLLC, and Washington is no exception. The name of any PLLC in Washington must contain some variation of the phrase “professional limited liability company,” such as “professional limited liability co.,” “P.L.L.C.,” or “PLLC.”
Before committing to a name, it’s important to check that it isn’t already in use. If you’ve decided on a name but you aren’t quite ready to claim it, ZenBusiness offers an affordable name reservation service. Alternatively, if you’re ready to get your business’s website up and running, we also offer a helpful domain name service.
Your registered agent is your business’s contact to receive annual reports, notices, and legal documents (like subpoenas or service of process) on behalf of the corporation. Washington requires all registered business entities to have a registered agent with a physical address in the state.
Designating a registered agent is one of the first things you will need to do when forming your business. Rather than go through the trouble of finding one yourself, you always have the option to use ZenBusiness’s registered agent service, which makes the process quick and easy.
In Washington, the Certificate of Formation is the same as what other states call the “Articles of Organization.” This document will contain the initial information about your PLLC, including its name, registered agent, and the principal office where the PLLC will keep its records.
The individuals forming the PLLC are called the executors, and the Certificate of Formation must include the name, address, and signature of each executor.
At this point, the executors also decide whether the PLLC will be member-managed or manager-managed. The members own the PLLC, and they can choose whether they will run the PLLC themselves (member-managed) or delegate certain day-to-day operations to managers instead (manager-managed).
Your PLLC’s operating agreement contains the rules by which your PLLC will operate. Typically, the operating agreement will specify what to do in certain situations and how the PLLC will operate on a daily basis. Some common provisions include:
Ultimately, an operating agreement helps a PLLC’s members understand what’s expected of them.
Washington PLLCs may have tax obligations at three levels: the federal level, the state level, and the local level in the town or municipality in which it’s based.
PLLCs are typically pass-through entities for tax purposes, which means that the federal government doesn’t tax the PLLC directly. Instead, each member reports earnings on their individual tax returns.
Washington is one of just a handful of states that doesn’t assess a business income tax. Washington does, however, assess what’s called a “business and occupation tax.” This tax applies to a business’s gross receipts. Consulting a tax professional can help you get more information about the business and occupation tax and how it will apply to your PLLC.
Various local taxes may be assessed depending on where your PLLC has its office. Local taxes can differ greatly depending on the location and the type of business services rendered.
As you might guess, a crucial part of any Washington PLLC is the proper licensing or permitting of its members. Beyond the individual licenses of the members, there may be industry-specific regulatory or professional licenses as well.
Unfortunately, there’s no one place to find a list of the available licenses which may apply. For example, similar licenses may be required separately by both a state agency and the federal government. It’s up to you to research your industry and obtain the required licenses and permits. We can help by providing you with a business license report listing the specific permits and licenses you may need based on your industry and location.
Insurance is important for a PLLC because PLLCs offer less liability protection than other business entities, like a professional corporation. If a Washington PLLC doesn’t have professional malpractice insurance, its members will be personally liable for what that insurance would cover.
In addition to malpractice insurance, PLLCs may want to consider general business insurance to protect against potential losses or liability. Further, if you have any employees, Washington law requires you to either carry workers’ compensation insurance through the Washington State Department of Labor and Industries or be self-insured.
Opening a business bank account has several benefits that might not be immediately obvious. First, a business bank account allows you to accept checks made out to your business. When a client or customer writes one of these checks, your business will seem more legitimate than if they were making out the check to you personally.
Second, a business bank account keeps your money separate from the money belonging to the PLLC. This separation is one way in which a PLLC, like other business entities, protects its members from some liability.
Finally, having a business bank account allows your business to take a wider variety of payment options. For example, credit card merchant processors often require a business-specific bank account.
To set up a business bank account, you’ll need a federal employer identification number (EIN). An EIN is also necessary for hiring employees. ZenBusiness can help you obtain an EIN, avoiding the confusing red tape in the process.
ZenBusiness offers a suite of services to help you manage your PLLC. From reserving a name and registering your domain, to help you set up a business bank account, ZenBusiness can help take some of the stress out of the process. We’ll take care of the paperwork while you take care of business.
The Washington Secretary of State offers both online and paper filing options. The filing fee depends on which option you choose, but in general you can expect to pay a few hundred dollars. However, because fees are frequently subject to change, it’s best to check directly with sos.wa.gov for up-to-date fee information.
No. Any licensed professional can form a PLLC without the help of a lawyer.
Yes. In addition to PLLCs, Washington also offers the option for professionals to form a professional corporation (PC). While similar to PLLCs, PCs typically offer stronger liability protection but have less flexibility in how they operate.
Yes, but not always. While Washington’s statutes don’t prohibit professionals from different fields from forming a PLLC together, the individual rules of that profession might. For example, Washington’s Rules of Professional Conduct prohibit lawyers from sharing fees with non-lawyers.
By default, PLLCs pay taxes as “pass through” entities. This means that the PLLC only pays applicable taxes through its members on their personal income tax returns. In comparison, professional corporations are typically “double taxed,” which means they also pay taxes at the entity level.
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Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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