You need to follow certain steps to start an LLC in Washington state. In this article, we’ll cover everything you need to know to get started.
Here are a few of the things you will learn by reading this article:
- The process for forming your Washington state LLC
- Additional tasks you need to handle after starting an LLC
- How long it will take to start your LLC
- What you can expect to pay
To start your Washington LLC, just follow the steps in this article!
Step 1: Name your Washington LLC
To create an LLC, you first need to choose a name.
In Washington, there are specific rules for naming an LLC. Some words are not allowed, while other words are required.
When choosing an LLC name, be sure to stick to the naming requirements. If you violate the rules, you won’t be able to use that name.
Words You Have to Use
Revised Code of Washington Section 23.95.305 says that an LLC’s name must identify the business as an LLC with one of the following words or abbreviations:
- “limited liability company,”
- “limited liability co.”
Words You Can’t Use
Section 23.95.305 also creates rules for certain words you can’t use.
Importantly, LLC names in Washington can’t include “Ltd.,” an acceptable abbreviation in many other states.
The statute also prohibits your LLC name from containing words such as “partnership” or “corporation” that make it seem like your business is a different type of entity.
Additionally, you can’t use any words or phrases that imply your business is a governmental entity. If you list a specific purpose for your LLC when you create it, its name can’t indicate that it has a different purpose.
Your name also can’t make it seem like your LLC does something you are not licensed to do, such as practicing law or medicine.
The big rule is this: if you need a license to do your job, double-check with the Secretary of State to make sure your company name complies with the law.
Finally, Revised Code of Washington Section 23.95.300 requires your name to be different or “distinguishable” from every other registered name. This stops customers from mixing up two different businesses that have the same name.
Research the LLC Name You Want
After choosing a name, use the Washington Secretary of State’s Corporation Search to see if someone else has taken your name.
You don’t need to create a user account to search. Just scroll down to find the Corporation Search function!
If somebody else has already claimed the name you want, then you can only register it if the other business consents in a record and changes its name to something else.
If your desired LLC name is available, Revised Code of Washington Section 23.95.310 allows you to reserve it for 180 days. You must submit a Name Reservation form and a $30 filing fee to the Washington Secretary of State to reserve your name. Expedited service is available for an additional $50 fee.
Washington LLC name reservation forms must be submitted by mail. You can complete the application online, then print and mail it to the Secretary of State at the following address:
Secretary of State Corporation Division
801 Capitol Way S
PO Box 40234
Olympia WA 98504-0234
Make sure you include a $30 check or money order paid to “Secretary of State” with your application. If you want expedited processing, make the check out for $80 and write “EXPEDITE” on the outside of the envelope.
Washington DBA: Using a Trade Name
When deciding on a name for your LLC, it’s important to remember that you don’t have to operate your business under that name. Many LLC owners choose to use a DBA (the abbreviation for “doing business as”) rather than their LLC’s actual legal name.
A DBA is the name your LLC will use in its everyday business. It will go on your website, your sign, and your business cards. By registering a DBA, you can refer to your LLC by a name that is not its legal name.
If your LLC’s legal name was “Seattle Window Washing, LLC,” you could use “Seattle Window Washing” as a DBA.
But what if you want to offer pressure washing services too? To reflect your expanding business, you can file for another DBA and begin trading under the name “Seattle Home Washing”.
In Washington, DBAs are called “trade names.” Revised Code of Washington Section 19.80.010 says that if you use a DBA, you must register it by applying for a business license from the Washington Department of Revenue (DOR). There is a $19 application fee.
Business Licensing Service
PO Box 9034
Olympia WA 98507-9034
To ensure that your application gets processed quickly, we recommend online filing. While paper applications can take up to three weeks to process, online applications are usually processed within ten business days.
Step 2: Appoint a Registered Agent for your LLC
A “registered agent” is a person or business that receives legal documents and other papers for an LLC.
Revised Code of Washington Section 23.95.415 requires all LLCs to designate a registered agent to accept service of process for the business.
Accepting service of process is a legal phrase that means receiving official legal documents during a lawsuit. So, if your business is sued, your Washington registered agent will receive the papers.
A registered agent must have an office in the state. They must also be available to receive documents during regular business hours.
In Washington, there are two different types of registered agents: commercial and non-commercial.
Any person or business with an office in the state can serve as a commercial or non-commercial registered agent. The difference is that a commercial agent must submit a statement to the Secretary of State that says they are “in the business” of serving as a commercial registered agent.
Because anyone can be a registered agent, many new business owners assume they should name themselves as their LLC’s agent. But the truth is, this is typically a bad choice.
Experienced LLC owners understand that using a commercial registered agent usually makes more sense. In exchange for a small fee, you can use a commercial agent to receive legal documents for your business.
You might think that a commercial agent is not worth the cost. In fact, serving as your LLC’s registered agent can seem like a good choice because:
- It’s cheap: You’re not paying someone else to do it for you.
- It’s easy: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important documents personally.
However, we strongly recommend that you do not name yourself as your Washington LLC’s registered agent for the following reasons:
- No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information.
- Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
- No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
- Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
- It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.
Hiring a registered agent service is a much better option. A commercial registered agent typically only costs about $100 a year. And your registered agent will immediately inform you when you receive documents, usually by email.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
We strongly suggest using a national registered agent service if your LLC will be doing business outside Washington state.
In order for you to conduct business in another state, you need to file an application for registration as a Foreign LLC and maintain a registered agent there. Appointing a single service provider as your agent in every state will save a lot of time and effort.
Step 3: File Your Washington LLC Certificate of Formation
A certificate of formation is a government form that lists basic information about your business. In Washington state, you must file a certificate of formation with the Secretary of State to create an LLC.
If you would like to avoid the hassle of handling your LLC filing yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
What to include in my Washington Certificate of Formation?
Revised Code of Washington Section 25.15.071 requires your LLC’s certificate of formation to list:
- The LLC’s name.
- The registered agent’s name and address.
- The address and county of the LLC’s principal office.
- The name and address of each person submitting the certificate of formation.
If you want to set a specific date for your LLC to end, you can include that date in your certificate. The law also allows you to include any other matters you want to in your certificate of formation.
Washington LLC Filing Fee
The filing fee for a certificate of formation is $200 if you file online and $180 if you file by mail.
Washington LLC Processing Time
If you file online, your certificate will usually be processed in 2 business days.
Mailed certificates are processed in the order they are received, so the processing time will vary with the office’s workload. You can request expedited service for an additional $50 state fee.
Step 4: Draft your Washington LLC Operating Agreement
An operating agreement is a legal document that directs the internal workings of an LLC. It describes each person’s rights and responsibilities and defines the governing structure.
In Washington, operating agreements are not required by law. However, they can be instrumental when setting up and running an LLC.
A written agreement ensures that everyone agrees about how the company will be managed. This can be helpful if you want to avoid future disagreements among team members.
For instance, a member may want to sell their interest in the LLC for many reasons. An operating agreement will describe the steps involved in purchasing an exiting member’s interest. It may also determine who receives their duties after they leave.
Operating agreements can be useful in many different situations because:
- They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
- They say what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
- They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
- They say how new members can join the company. They also have rules about how exiting members can leave.
- They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
- They say whether members or managers are in charge. They also say how to hire and fire managers.
- They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
- They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.
Operating agreements are vital for you as an LLC owner because they help set up rules for your company. All members should be involved when drafting these contracts, so everyone understands and agrees to their terms. Make sure you keep a backup copy somewhere safe.
Step 5: Get an EIN (Employer Identification Number) for Your Washington LLC
An Employer Identification Number (EIN) is a nine-digit tax identification number assigned by the IRS to a business. It is essentially a Social Security Number (SSN) for your LLC. It’s used for filing tax returns and conducting other necessary business with the U.S. Government.
Here are the most common times when you need an EIN:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If you answered yes to any of these questions, you will need to obtain an EIN for your LLC.
You don’t need an EIN for your single-member LLC if you’re filing tax returns using your Social Security number. However, having an EIN can be helpful for some purposes. It can prevent fraud and help to separate your business and personal finances.
You may also need to get an EIN before opening a business bank account, as most banks will ask for one.
It takes less than five minutes to get an Employer Identification Number (EIN), so there isn’t any reason not to do it yourself.
First Tasks After Registering your Washington LLC
After starting your Washington LLC, there are several things you need to handle. Taking care of these tasks will help you stay compliant with laws and industry standards.
Open a Business Bank Account
In Washington state, LLCs are not required to maintain separate business bank accounts. Still, keeping track of business costs will be easier if you open an account for your LLC. It will also help you make sure you get the personal asset protection offered by an LLC.
There are several reasons why opening an LLC bank account makes sense. Here are a few:
- Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.
- More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments.
- Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts.
The third point, asset protection, is crucial.
An LLC protects your personal assets by shielding them from business debts. If your business has been sued, only the assets owned by the LLC can be used. You’ll never lose any of your own funds. The idea that you and your LLC are different legal entities is known as the “corporate veil.”
When you mix your corporate and personal assets together, the corporate veil can be “pierced” in a lawsuit. So, if you treat the LLC’s assets like they belong to you personally, then you may not get any personal liability protection.
Using a business account helps separate your personal assets from your LLC’s. This will prevent the corporate veil from being pierced, which keeps your personal assets safe.
Get Business Insurance For Your Washington LLC
Insurance is essential when operating an LLC. Without it, you could lose everything due to legal issues or financial troubles. When selecting insurance for your business, remember your particular industry’s risk factors.
You should consider investing in different kinds of insurance, such as:
- General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
- Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
- Worker’s compensation insurance: All employers must provide workers’ compensation under Revised Code of Washington Section 51.08.070. You can choose between using the state’s worker’s comp system or self-insuring.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
- Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.
Keep Your Washington Company Compliant
You may need to follow some rules if you’re operating an LLC. Some examples include obtaining a business license or filing tax returns. You need to be aware of any new laws that will impact your company, so keep up to date with legislation affecting your industry.
Washington Business Permits and Licenses
If you’re forming an LLC, you may need to get a business license or permit from your local government. You can use the Washington DOR’s Business Licensing Wizard tool to find out what requirements apply to you.
Washington Tax Requirements
While Washington state does not have a personal income tax, LLCs must pay a business and occupation (B&O) tax of 1.5% on gross receipts. You can register to pay B&O taxes through the My DOR system.
Federal LLC Tax Filing Requirements
The IRS considers Washington LLCs to be “pass-through entities” for federal tax purposes. Much like an S corporation, you will report your LLC’s profits and losses on Schedule C of your personal income taxes.
You’ll need to pay Social Security and Medicare taxes even if you don’t employ anyone at your business. You must also withhold taxes from any employees’ wages.
Annual Report and other Filing Requirements
The State of Washington requires you to file an annual report for your LLC. You can file online through the Secretary of State’s website or submit a paper annual report. Either way, the filing fee is $60.
Washington Business Formation Quick Links
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Corporation Search/ online filing (SOS)
- My DOR
- Business Licensing Wizard (DOR)
- Naming Requirements: Revised Code of Washington Section 23.95.305
- Additional Naming Requirements: Revised Code of Washington Section 23.95.300
- Name Reservation: Revised Code of Washington Section 23.95.310
- Trade Names: Revised Code of Washington Section 19.80.010
- Registered Agent: Revised Code of Washington Section 23.95.415
- Certificate of Formation: Revised Code of Washington Section 25.15.071
Washington LLC FAQs
How much does it cost to start a Washington LLC?
The filing fee for a certificate of formation is $200 if you file online and $180 if you file by mail.
What is the processing time to form my Washington LLC?
If you file online, your certificate will usually be processed in 2 business days.
Mailed certificates are processed in the order they are received, so the processing time will vary with the office’s workload. You can request expedited service for an additional $50 fee.
What are the benefits of a Washington LLC?
It helps protect your personal assets from business debts. Plus, your LLC doesn’t have to pay income taxes as a corporation would.
Where do I check if my Washington LLC name is available?
You can use the Washington Secretary of State’s Corporation Search to see if someone else has taken your name.