If you want to start a Washington limited liability company (LLC), you need to know how much to budget. However, the true costs of forming a new LLC are not always apparent.
That is why we wrote this article: to inform you of the expenses associated with starting an LLC in Washington state.
Read on to learn:
- The cost to create a Washington LLC
- Optional expenditures that can help your company
- How to choose the best LLC formation method for your business
By the time you reach the end of this article, you will know how much money you will need to start your Washington LLC.
Total Washington LLC Cost – Starting at $270
According to the Washington Secretary of State’s Fee Schedule, the bare minimum cost of starting a Washington State LLC is $270.
- Certificate of Formation filing fee: $180
- Washington State Business License Application processing fee: $90
You may also need to get professional licenses or business permits to run an LLC in certain industries and locations.
Start your LLC the easy way
Forming your LLC is a checkbox that needs to be ticked. Easy, fast and worry-free. We reviewed the 13 most popular LLC formation services to figure out who truly understands what new founders need. Our recommendation:
We don’t make up scores.
Read our full review of Northwest
Best LLC Service 2022
- Formed 1,000,000+ LLCs
- $39 formation includes registered agent service
- Fast formation & same day filing
- Exceptional customer reviews
Washington LLCs – the Basic Costs
The price of forming a new LLC in Washington will vary based on several factors. However, the absolute minimum cost is $270. We’ve outlined all of your potential expenses below.
Certificate of Formation Filing Fee — $180
A Certificate of Formation is a legal document that officially starts an LLC. To form an LLC in Washington, you must submit one to the Secretary of State. While this might sound tricky, all you need to do is list some basic details about your company.
The filing fee for a Washington certificate of formation is $180 if you file by mail. However, a $20 expedite fee will automatically be added if you file online. This will make the total fee $200.
Washington State Business License Application Processing Fee — $90
Most Washington LLCs will need to get a business license from the Department of Revenue. Many will also need endorsements, registrations, and permits. You can use the Business Licensing Wizard tool to find out what is required for your company.
Luckily, many of these applications can be included in your Washington State Business License Application (BLA). This simplified application allows you to apply for many licenses, permits, and endorsements at once. There is a $90 processing fee.
Endorsements and Local Licenses — Various
Some LLC owners will also need state and city endorsements to operate their business legally. The costs vary based on your location and the type of business you have. You can learn more about professions that require licenses from the Department of Commerce and Insurance.
You can get many endorsements and licenses through the BLA. However, some must be applied for separately. The Business Licensing Wizard will let you know if you need to submit more applications.
Washington LLCs – Optional Costs to Consider
On top of these required costs, you may also want to budget some additional funds for a few extra expenses. While these costs are not mandatory, they can benefit your business.
Expedited LLC Filing Fees — $20 to $50
If you file your certificate of formation online, you will automatically be charged a $20 expedite fee, and your documents will be processed in 2 business days.
If you submit a paper filing, the fee for expedited service is $50. Paper expedited filings are typically processed in 2 business days when received by mail. However, in-person expedited service requests that are submitted before 3:30 p.m. will be completed the same day.
Registered Agent Fee — about $100 per year
Washington state laws require all LLCs to have a registered agent. A registered agent is a person or business with an office in the state that receives legal papers for the LLC.
You will include your registered agent info in your Washington certificate of formation. There is no fee if you ever need to change your agent.
Many new LLC owners think the best option is to be the registered agent for their own LLC. But what they often don’t know is that registered agents must always be available to accept documents during standard business hours and have their addresses listed online.
We recommend using a professional registered agent service for your LLC to avoid these issues. The cost is about $100 per year, and the business will take care of all the registered agent requirements for your LLC.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
Operating agreements are legal contracts that set the rules for LLCs. They explain important things like the members’ rights and duties and how to join or leave the business. While Washington does not require LLCs to have operating agreements, we strongly encourage new companies to make them.
There is no law stopping you from drafting your own Washington LLC operating agreement. But unless you have a background in business law or prior experience in the area, we don’t recommend this option.
An alternative is to engage an attorney to draft an operating agreement for your LLC. While this is definitely pricier, you will receive a high-quality and comprehensive document. But if you are looking to save some cash, an LLC formation service can write you an operating agreement for as little as $39.
DBA Fee — $5
Even if you got the LLC name that you wanted, you might want to use a different name in your day-to-day operations. One option is to drop the “LLC” from your company’s name to make it less formal. Or, you may want to use a completely different name in the future if your business model changes.
If you want to run your business under a name other than your LLC’s legal name, you must register a “doing business as” or “DBA” name. In Washington, DBAs are called “trade names.”
You will need to register your trade name with the Washington Department of Revenue. While you must have a business license to do this, you can include your trade name registration as part of your Washington business license application. There is a $5 registration fee per trade name.
Name Reservation Fee — $30
If you know what you want to name your LLC, but you aren’t ready to officially register, Washington law allows you to reserve a name for 180 days. Doing so will stop other people from taking the name during this time.
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.
Domain Name — about $20 per year
Your business will need to have a website to succeed in today’s market. But before you can build a website, you will need to get a domain name. Luckily, domains are fairly cheap and easy to purchase.
We advise you to buy your domain ASAP. If someone snags it before you can, you will lose your chance. “Domain squatters” watch for new LLC registrations and buy their potential domain names ASAP. Then they try to resell them for a profit.
You can buy a domain name from GoDaddy.com or a similar site for about $20 to $50 per year. These businesses often have sales, so you may be able to get a domain even cheaper.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit ID number that the Internal Revenue Service gives to companies. Think of it as a social security number for your business. Although some LLCs are legally mandated to get an EIN, others are not required to do so.
But even if the IRS doesn’t make you get an EIN for your LLC, we still suggest applying for one. One reason is that most banks need an EIN to open a business account. Additionally, an EIN can protect you from identity theft by keeping your SSN private.
You can get an EIN online or by mailing Form SS-4 to the IRS. It’s simple and free either way, so you don’t need to pay anyone to get an EIN.
Read More: How to Get an Employer Identification Number in Washington
Foreign LLC Qualification Fees — about $100 per extra state
Growing a business often involves expanding into other states. However, if you plan to do this, you will need to budget some additional funds. You don’t need to start a brand new LLC, but you will need to register as a foreign limited liability company in each state where you want to do business.
Foreign LLC filing fees can vary, but you should plan to pay around $100 per state.
Writing Formation Costs Off
The funds you invest in forming an LLC can typically be deducted from your income taxes as business startup costs. The IRS offers considerable guidance on this topic, so we suggest that you review the IRS website to learn which of your costs can be deducted.
Because LLCs are usually classified as “pass-through” tax entities, new LLC owners can typically deduct up to $5,000 in startup expenses in the first year.
Debbie decides to start a single-member LLC to open a craft store in Seattle, Washington. Her formation costs are as follows:
- Washington LLC Certificate of Formation: $180
- Online Expedite Fee: $20
- Washington State Business License Application Processing Fee: $90
- Operating Agreement: $60
- Registered Agent Fees: $100
- Name Reservation Fee: $30
- DBA Fee: $5
- Web Domain Costs: $25
Since LLCs are pass-through entities, the business won’t pay any income taxes. Instead, Debbie will report the money she makes from the LLC and any business deductions as her personal income for her federal taxes. (Washington has no state income tax.)
Debbie’s total startup costs were $510. Before she deducted her expenses, her total taxable income was $42,000. However, by deducting her start-up costs, she drops her taxable income to $41,490. This will lower her 2023 federal income taxes from $4,989 to $4,876.
While this is not a huge reduction, business owners who regularly deduct their expenses can see substantial tax savings over time.
Cheapest Way to Start an LLC in Washington
When deciding how to start your Washington LLC, make sure you select the best formation method for your specific needs. We’ve explained some of the most popular approaches below.
Formation Service – $39 + state fees
LLC formation services handle the whole process for you, from start to finish. They know how to file the required registration forms and will make sure that your company follows the rules.
Using an LLC formation service is often an excellent choice for starting a new business. Some of the benefits include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
However, while formation services are sufficient for many businesses, they are not the right fit for every LLC. The downsides of employing a formation service include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Retaining a lawyer allows you to lean on the wisdom of an experienced professional who has expertise in Washington LLC laws. But keep in mind that this proficiency comes at a price. Many attorneys charge an hourly fee for their services, and their rates are often several hundred dollars per hour.
Even though it’s expensive, working with an attorney offers some significant benefits:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
Still, the negative aspects of hiring a lawyer often outweigh the positives for the average LLC:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Lastly, you can always decide to form your LLC yourself. Just remember that your time is a valuable (and often scarce) resource. The time you spend working on LLC formation paperwork may be better spent working on other aspects of your business.
Regardless, there are still advantages to using a DIY approach:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
However, make sure you also consider the disadvantages:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Washington LLC Fees: How Much Will it Cost to Maintain your LLC?
To keep your LLC in good standing, you must file a Washington LLC annual report with the Secretary of State. You can file online or submit a paper annual report, along with a $60 filing fee.
You must also pay a $10 Business License Annual Renewal processing fee, and there may be additional fees assessed for renewing endorsements, local licenses, and certifications.
Some of your optional costs will also be due annually. Plan for the following expenses:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in Washington
Washington state does not assess personal income taxes. However, LLCs must pay a business and occupation (B&O) tax of 1.5% of their gross receipts. You can learn more about B&O taxes on the Department of Revenue’s website.
Washington LLC Formation Costs Quick Links
- Washington Online Filing System
- Washington State Business License Application
- Washington Business Licensing Wizard
- Washington Trade Name Registration
- Washington Fee Schedule
- Washington Secretary of State
- Washington Department of Revenue
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
Washington LLC Formation Costs FAQs
How much does it cost to start an LLC in Washington?
The minimum cost is $270. But depending on the type of business you are starting, and where you will operate, it may cost you more.
What is the cheapest way to start an LLC in Washington?
The do-it-yourself approach is the cheapest in terms of money spent. But make sure you account for the time you’ll need to spend. The most suitable method for most LLCs is an affordable business formation service.
Do I need to hire an attorney to form an LLC in Washington?
No. Most LLCs can be started without an attorney. A DIY approach or an LLC formation service will work for many businesses.
Can I pay to form an LLC more quickly in Washington?
Yes. Online filing is the fastest way to form your LLC. If you file online, an automatic expedite fee of $20 will be added to the total cost. You can also expedite paper filings for a $50 fee.