Washington LLC: How to Get Started

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Seattle, Washington skyline to inspire entrepreneurs to start a Washington LLC

Estimated reading time: 15 minutes

Creating an LLC in the state of Washington makes a lot of sense. Not only does the Evergreen State have a higher-than-average unemployment rate of 4.6 percent, but a booming tech industry drives more than 17 percent of Washington’s annual economic activity. 

In addition, a robust network of accelerators and incubators helps connect startups to local resources and capital investment.

Let’s dive into how to start an LLC in Washington step by step, so you can turn your business idea into a business plan of action.

Choose a Business Entity for Your Washington LLC 

To understand how to start a small business in Washington, you need to understand entity formation.  Limited Liability Companies (LLCs) and Corporations are the most popular business types.

Corporation

A corporation is a legal entity created separately from those who own and operate it. This means that a corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S and C corporations.

Limited Liability Company

LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, LLC formation protects the owner’s personal assets and also shields them from personal liability similar to a corporation. They also possess the “pass-through” tax benefits of a partnership.

There are two types of LLCs. LLC run by just own person (single-member LLC) and LLCs run by multiple people (multi-member LLCs)

Starting a LLC in WA can be difficult and confusing, especially as a first time business owner. But with a company like Inc Authority in your corner, you’ll not only have your LLC formed for you, but you’ll also get expert guidance beyond business formation, so you never have to wonder or worry about what to do next!

What About DBAs?

DBAs (which stands for “doing business as”) grant business owners the ability to conduct business under an assumed name. A DBA is also referred to as a fictitious business name and is an authorization by the state for your business to operate under an assumed name. 

For sole proprietors and owners of LLCs, DBAs offer an affordable way to gain legal recognition for the secondary name of your choice.

  • Sole proprietors: For sole proprietors starting a new business, DBAs are a budget-conscious way to gain legal status and work under a creative company name.
  • LLC owners: If the name on your LLC paperwork and your business name differ, DBAs offer the opportunity to operate as an LLC under a different legal name.

Lastly, a DBA provides privileges like the ability to open a bank account, create enforceable contracts and establish federal employer tax status (getting an EIN). It’s possible to file multiple DBAs, allowing a single LLC to operate different businesses under the same legal umbrella. If you’re starting a business or expanding your LLC in WA, get the proper legal recognition early on to start off on the right legal footing.

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Create a Business Name

Forming a Washington business requires you to figure out your corporation or LLC name and reserve that name. Name reservation is actually one of the biggest decisions you’ll make. It may not seem as important as choosing the type of business entity, but it is. As a matter of fact, many legal issues can arise from choosing the wrong name for your business startup.

Under Washington law, an LLC name must contain the words “Limited Liability Company” or “Limited Liability Co.,” or the abbreviation “LLC” or “L.L.C.” Likewise, your LLC’s name must be distinguishable from the names of other business entities already on file with the Washington Secretary of State. Names may be checked for availability at the Washington Secretary of State business name database.

Additionally, you may also reserve a name for 180 days by filing a name reservation with the Washington Secretary of State. The reservation must be filed by mail.

You don’t have to use your LLC’s official legal name registered in your Certificate of Formation when you conduct business. Instead, you can use a trade name, also called a fictitious business name, “DBA” (short for doing business as), or assumed name. To do so in Washington, you must file register your trade name with the Washington Department of Revenue. You can register the trade name at the same time you obtain a state business license or later. You may register online, or complete and mail a Business License Application form.

Washington LLC Registration  

Let’s take a look at how to register a business in Washington, including payables such as the cost, government fees, and so on.

State Filing Fee

The cost to start a Washington limited liability company (LLC) is $180. The Washington Secretary of State charges this fee to file the Certificate of Formation by mail and $200 if filed online (processed in 2-3 business days).

Certificate of Formation

A Washington LLC is created by filing a Certificate of Formation (called articles of organization or articles of incorporation for corporations) with the Washington Secretary of State. The certificate, which may be filed online or by postal mail, must include:

  • the LLC’s name
  • whether the LLC’s period of duration is perpetual or limited
  • the effective date of formation–upon filing of the certificate or a later date
  • the name, signature, and address of the LLC’s registered agent
  • the LLC’s principal office address, and
  • the signature of executor

Operating Agreement

An LLC operating agreement is not required in Washington, but is highly recommended. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity.

Issues that should be defined by your LLC Operating Agreement include:

  • Member powers
  • Rules for meetings
  • Members’ voting rights
  • How your LLC will be managed
  • Guidelines for losses and profits
  • Buyout provisions

Last but not least, once the operating agreement has been adopted, it will provide protection for the members of your LLC. When the members of your LLC have agreed on the terms of your operating agreement and have signed the document, you should keep the agreement in a secure location.

In the absence of an operating agreement, Washington State LLC law will govern how your LLC operates. An operating agreement does not need to be filed with the Certificate of Formation.

Inc Authority can remind you to do or do for you if you choose to have us handle the paperwork.

Washington State Filing Fee:$180 (by mail) / $200 (online)
Filing Time:2-3 business days
Annual Report$60

Mail to:

Secretary of State
Corporations Division
P.O. Box 40234

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Get Your Employer Identification Number or EIN

The next step you’ll want to tackle is getting your EIN or Tax ID number (TIN). This number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.

Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services and credit cards, and pay for any LLC cost that WA laws require.

Lastly, to apply for your EIN, you’ll need to complete form SS-4, which can be found on the IRS website.

Assign a Registered Agent for your LLC in Washington

There are an estimated 38 million home-based businesses in the U.S., so if you’re thinking about starting a business in your home, you’re definitely not alone.

But did you know that all businesses are required by law to have an address where they can accept service of legal documents (like a service of process) from the state or government agencies during normal business days and hours? Without an office, that would be your street address or P.O. box.

As you can imagine, that’s not always possible (or advisable) with a home-based or foreign-filed business. That’s where a registered agent comes in.

A registered agent is a responsible third-party in the same state as your business who receives official government notifications (usually tax forms and notice of lawsuits) on behalf of your LLC in WA.

Even if you aren’t planning on starting a home-based business or foreign LLC, having a registered agent is still advisable because it will:

  • Limit third party access to your personal information
  • Ensure that you never miss important documents
  • Protect the privacy of owners
  • Eliminate junk mail
  • Ensure you’re never served with legal papers in front of your clients
  • And more!

Setting up a Registered Agent Service

Every Washington LLC must have a registered agent. The registered agent may be a Washington resident or a corporation or LLC authorized to do business in Washington. The registered agent must have a physical street address in Washington.

Open a Business Bank Account

To keep your personal and business expenses separate and to stay in good standing with the Internal Revenue Service (IRS), you need to open a business bank account for your LLC or corporation.

Additionally, setting up a separate bank account for your company makes it easier to for you do business, manage a cash balance, complete, and file your income tax returns with the Washington Department of Revenue, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. Bank accounts also provide better protection in the event of legal action.

Likewise, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions.

Types of Business Bank Accounts

Not all business bank accounts are created equal. So, it’s important to distinguish between the good, the bad, and the best business bank accounts.

Checking Accounts

A business checking is the most common type of business bank account and the first one you’ll want to open for your business. This because business check accounts allow you to: 

  • Accept deposits (over-the-counter cash, checks, credit card, and electronic deposits). 
  • Pay for business-related expenditures (payroll, taxes, business insurance, vendors, lenders, and everything imaginable that you’ll need to operate your business). 
  • Keep detailed records of all expenses and income.
  • Protect your money. This account is Federal Deposit Insurance Corporation (FDIC) insured, meaning you’re covered up to $250,000 by the federal government should anything happen to the bank or your money.
  • Support dual signatures. If you have a partnership or employees, you may wish to make it required that two signatures be present whenever a withdrawal or deposit is made.

Savings Accounts

This one should come as no surprise. A business savings account (like a personal savings accounts) lets you safely save money in a bank.  You don’t need this right away though, only when you have an abundance of capital sitting in your business checking account, will you need to open a savings account. It allows you to: 

  • Make saving money a habit. The most successful companies (think blue chips like Wal-Mart, Amazon, General Mills, Hershey’s, and General Electric) all have solid reserves of capital.
  • Protect your business during a cash-crunch. Incidentally, 80% of businesses fail because of cash flow problems.
  • Save money so that you don’t have to take out expensive business loans.
  • Maintain liquidity. With a business savings account, you can liquidate assets to buy equipment, purchase real estate, and make other big purchases for your business. 
  • Build business credit. Yes, having a business savings account can actually help you establish and build business credit.

Business Certificate of Deposits

A business certificate of deposit (CD) is a term account that offers maximum security and a guaranteed rate of return. You agree to lend your business’s money to the bank for a set period of time at an agreed-upon interest rate. The interest rates are usually higher than you’d receive from a business savings account or interest-bearing business checking account. 

Here are the main features of a business certificate of deposit:

  • It pays out 1% or more in interest. Some CDs pay over 2% in interest
  • You cannot liquidate the account until the term expires. This means you can’t spend the money. 
  • The longer the term, the higher the interest rate.
  • Different banks offer different term limits. Some CD terms are for a week, months, or even years.

Money Market Accounts

This is a lesser-known type of business a bank account and isn’t for every business owner. You’ll want this type of account if you have a lot of money saved, want higher interest rates than a business savings account or interest-bearing business checking account, but still want some access to your money.

Here are the main features of a business money market account:

  • Six withdrawals per month. 
  • Deposit money anytime.
  • Deposit as much money as you like.
  • Higher interest rates (currently between .1% and 1.6% APY)
  • Require a minimum balance.
  • Penalties if you withdraw more than six times in a month. Ask your banker what the penalty is if you withdraw more than six times.

How to Open a Business Bank Account

Opening a business bank account is as simple as gathering some information together and completing an application. Here are the steps to open a business checking account:

1.    Do your due diligence. Research different banks and discover what each one offers. Then decide which one will work best for your business type. An easy way to do this research is to check out some of our business bank reviews.

2.    Get a tax ID number. You can get one free EIN from the IRS. If you think you already have one, here’s how to look up an EIN.

3.    Pull together your business formation documents

4.    Gather your business license or business name filing paperwork.

5.    Call the bank and find out what other items you’ll need to open a business bank account. Every bank has different requirements, so make sure you check with them first before attempting to open a business bank account. Sometimes this information will be listed on the bank’s website.

6.    Go in person or online to complete all necessary paperwork and submit your business documents.

At Inc Authority, we make getting a business bank account easy. How so? Well, when you form your business with us, you gain access to a free Bank of America business checking account. So, don’t wait! Form your LLC in WA today!

Tax and Regulatory Requirements

Additional tax and regulatory requirements may apply to your Washington LLC. These may include:

EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN if it will have employees or you elect to have it taxed as a corporation, instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.

Business Licenses: Washington State requires all businesses to obtain a state business license. A county, city, or other local business license will likely be required as well. You will likely need licenses in every location where you do business—not just where you’re based.

Check the Washington State Department of Revenue Business Licensing site for the requirements for your business and location. You can register and obtain your state license and many county and city licenses online at the Washington Department of Revenue website, or by mail using the Business License Application form.

For information about local licenses not handled through the Business License Application, contact each Washington city or town in which you will be conducting business. Depending on your occupation, a professional license may be required as well. For more information, visit the Washington State Department of Licensing website.

Department of Revenue: All businesses with $12,000 or more in revenue—or that are required to collect sales tax—must register with the Washington Department of Revenue. Lastly, Washington has no income tax on individuals or businesses, but it does impose a business and occupation tax on gross business income.

Annual Report (Annual Renewal)

Every Washington LLC and foreign LLC authorized to do business in the state of Washington must file an annual report (also known as an annual renewal) with the Secretary of State.

The initial annual report must be filed within 120 days of the date you filed to create your LLC. Subsequent annual reports are due on dates determined by the Washington Secretary of State. The Secretary of State will send a renewal notice to the LLC’s registered agent approximately 45 days before the Annual Report is due.

Lastly, the Initial Report and Annual Report may be filed online or by postal mail. The fee for filing Initial and Annual Reports is $60.

Getting Started with Your Washington LLC

Forming a professional LLC or corporation in Washington is an exciting opportunity, but like starting any business it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?

We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the licenses and permits needed to run your business. Additionally, we can also advise you on the things you need to pay, such as LLC cost, WA state fees, and other payables.

Not to mention we offer a ton of free management and report tools to help make running your business as simple as possible. Please contact us or visit our website today to get started!

Incorporating is the most powerful thing you can do to legitimize your business. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your free LLC today and enjoy the protection due to you and your business under the law.

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