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Starting a Limited Liability Company (LLC) in Washington State can be straightforward if you know the necessary steps. An LLC provides personal liability protection for business owners and offers a flexible and tax-efficient business structure.
However, following the right steps and filing your Article of Organization is crucial. This guide will outline the seven essential steps on starting LLC in Washington State in 2023. By following these steps, you can get your business up and running quickly and efficiently.
Best Business Registration Services in Washington State
Software
Price
Business Formation
Annual Reports
Customer Support
Registered Agent Service
From $49 plus state fees
Can file for an LLC or Corporation
Prepare annual reports with expert help and automated technology
Solid customer support team
From $99 per year
$0 plus state fees
Can file for an LLC or Corporation
Annual report planning to help file correctly
Expert customer service, limited hours
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From $59 plus state fees
Can file for an LLC, Corporation, or a DBA
Report filing services available
Unlimited phone/email support during business hours
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From $0 plus state fees
Form an LLC, Corporation, or nonprofit
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Form an LLC, Corporation, or nonprofit
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From $79 plus state fees
Can file for an LLC, Corporation, Nonprofit, or a DBA
Create an annual report from a few simple questions
Customer support team can’t always keep up with demand
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Form an LLC, Corporation, or nonprofit
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$112.50 to $149.99
Pros on Starting LLC in Washington State
Protect Your Personal Assets
One of the advantages of starting an LLC in Washington State is that it can provide personal asset protection. This means your personal assets, such as your home, car, or savings, are protected from business liabilities and debts. If your LLC is sued or bankrupt, your personal assets are shielded from legal claims or financial obligations. This can give you peace of mind and protect your financial stability.
Low Filing Fee
Forming an LLC in Washington State is relatively affordable, with a low filing fee of $180. This fee covers the cost of filing your articles of organization with the Secretary of State. Compared to other states, Washington’s LLC filing fee is relatively low, making it an accessible option for entrepreneurs on a budget.
Simple to Create and Manage
Another benefit of forming an LLC in Washington State is that it’s simple to create, manage, regulate, administer, and stay in compliance. Forming an LLC is straightforward, and you can complete it in a few easy steps. You’ll need to choose a name for your LLC, file articles of organization with the Washington Secretary of State, obtain any necessary licenses and permits, and create an operating agreement for your LLC.
Once your LLC is up and running, it’s easy to manage and maintain. There are fewer formalities required for LLCs than for other business structures, such as corporations, so you won’t need to hold annual meetings or keep detailed records. You can also choose to have a single-member LLC, meaning you’re the only owner of the business, which can simplify the management process even further.
Tax Advantages
By default, LLCs are considered pass-through entities for tax purposes, meaning that the business doesn’t pay taxes on its income. Instead, the profits and losses of the LLC are passed through to the owners’ personal tax returns, and they pay taxes on them at their individual tax rates. This can result in lower tax rates for business owners and may allow for more deductions.
Also, Washington State doesn’t have a state income tax, which can further reduce your tax burden as an LLC owner. However, you’ll still need to file federal taxes and may need to pay other taxes, such as employment taxes, depending on the nature of your business.
Cons on Starting LLC in Washington State
Additional Paperwork and Maintenance
While LLCs are generally easier to manage than other business structures, they require additional paperwork and maintenance. For example, you’ll need to create an operating agreement, which outlines your LLC’s ownership structure, management, and decision-making processes.
You’ll also need to file an annual report with the Secretary of State and maintain proper records of meetings and financial transactions. If you’re uncomfortable with these tasks or need more time to complete them, an LLC may not be the best choice for your business.
Personal Liability in Some Circumstances
While LLCs offer personal asset protection in most cases, there are some situations where owners may still be held personally liable for business debts or obligations. For example, if you personally guarantee your LLC a loan or credit card, you’ll be responsible for paying it back, even if the business can’t. Also, if you engage in fraudulent or illegal activities as part of your LLC, you could be held personally liable for any damages or penalties.
7 Steps on How to Start LLC in Washington State
Follow these steps to learn how to open LLC in Washington state:
1. Name Your Washington LLC
When starting an LLC in Washington State, choosing a name for your business is the first step in forming. You need to choose a name to make your business stand out and be memorable to your customers.
Here are some things to keep in mind when naming your Washington LLC:
- Choose a name that reflects your business: Your LLC name should give potential customers an idea of what your business does. For example, if you’re starting a landscaping business, you might want to include “landscape” in your LLC name.
- Check name availability: You can use the Washington Secretary of State’s online database to search for existing business names. You should also check if the corresponding domain name is available for your business’s website.
- Reserve your name: If the name you want is available, you can reserve it for 180 days by filing a Name Reservation Request with the Washington Secretary of State. This will prevent another business from using the name while you complete the rest of the LLC formation process.
- Consider a DBA name: If you want to use a name other than your LLC name, you must file a DBA with the Washington Secretary of State. This will allow you to use a trade name for branding while keeping your legal LLC name intact.
- Keep it compliant: Your LLC name must comply with Washington State regulations, which means it must include the words “Limited Liability Company” or one of its abbreviations, such as “LLC.”
2. Choose your Registered Agent
In Washington State, every LLC must have a registered agent. A registered agent is a person or entity designated to receive important legal and official documents for your LLC. You can hire a registered agent service or act as your own agent, but it is important to understand the duties and regulations that come with this role.
If you act as your registered agent, you must be available during business hours to receive important legal documents and other official notices. If you hire a registered agent service, they will handle these duties for you.
3. Complete and File your Certificate of Formation
Once you’ve chosen a name and a registered agent for your Washington LLC, the next step is to complete and file your Certificate of Formation with the Washington Secretary of State. Here’s what you need to know:
- How to fill out the form: The Certificate of Formation is a document that outlines the basic information about your LLC, such as its name, registered agent, and business address. You can complete the form online or download a PDF from the Washington Secretary of State’s website.
- Filing cost: The filing fee for the Certificate of Formation is $180. You can pay this fee online with a credit or debit card or by mailing a check or money order along with your completed form.
- Where to get the form: You can download the Certificate of Formation form from the Washington Secretary of State’s website. If you prefer to file your LLC formation paperwork online, you can use the Washington Secretary of State’s online filing system, which will guide you through completing the form and submitting it electronically.
4. Create an Operating Agreement
An operating agreement is a legal document that states your Washington LLC’s internal operations and structure. The state does not require it, but having an operating agreement can be critical to the success of your business.
An operating agreement is essential for several reasons. First, it can help you and your business partners establish clear expectations and guidelines for how the LLC will be managed and run. This can help to prevent misunderstandings and conflicts down the road. Additionally, an operating agreement can help you protect your personal assets by clearly outlining the separation between the LLC and its members.
When drafting an operating agreement, it’s important to consider your business’s specific needs and goals. Some key elements to include might be the management structure of the LLC, the roles and responsibilities of each member, how profits and losses will be allocated, and procedures for decision-making and dispute resolution.
Many online resources are available for creating an operating agreement, including free templates that you can customize to fit the needs of your business. However, it’s always a good idea to consult a lawyer to ensure that your operating agreement is legally sound and protects your interests.
5. Get Your Business Permits and License
The permits and licenses you need will depend on the type of business you are starting and where you are located. For example, if you are starting a restaurant, you will need a food service permit; if you are starting a construction business, you will need a contractor’s license.
To determine which permits and licenses you need, contact your local city or county government office or check their website. They can provide you with information about the specific requirements for your business and location. You may also need to obtain permits or licenses from state or federal agencies, depending on the nature of your business.
6. Get your EIN
An EIN is a particular nine-digit number the IRS gives to identify your business entity for tax purposes. It’s like a Social Security number for your business. You will need an EIN to open a business bank account and pay taxes for your LLC. You need to keep your personal and business finances apart, and having a business bank account will help you do that.
When choosing a business bank account for your LLC, consider factors like fees, features, and customer service. Some banks offer free business checking accounts, while others may charge a monthly fee. Look for accounts that offer online banking, mobile banking, and integration with accounting software.
You can apply online through the IRS website or by mail to get your EIN. It’s a simple and free process, and you will receive your EIN immediately after completing the online application or within four weeks if applying by mail.
7. File your Washington LLC’s Annual Report
Once you’ve formed your LLC in Washington, you must file an Annual Report with the Secretary of State each year to keep your LLC in good standing. The report contains basic information about your LLC, including its name, address, registered agent, and members or managers.
Filing your Annual Report is important to maintaining your LLC’s legal status and avoiding penalties. It’s important to note that the report must be filed online, and the filing fee is $60. The due date for the report is the anniversary month of your LLC’s formation.
Filing the report is a straightforward process that can be done in minutes. You’ll need to provide the required information and pay the filing fee. The Secretary of State will then update your LLC’s information in their records. Please file your Annual Report on time to avoid your LLC being administratively dissolved or revoked. So, mark your calendar and file your report on time each year to keep your LLC in good standing.
Cost To Set Up an LLC in Washington State
The cost to step up an LLC in Washington is $200. This fee which is the filing fee is paid to the Secretary of State when filing the Articles of Organization. There may be other costs associated with getting an LLC, such as name reservation, which costs $30, agent fee, etc.
FAQs On Starting LLC in Washington State
Conclusion
Starting an LLC in Washington state can be a smart choice for entrepreneurs looking to protect their personal assets and manage their businesses easily. While there are some potential drawbacks, such as the annual report requirement and the need for a registered agent, the benefits of forming an LLC in Washington state include personal asset protection, tax advantages, and ease of management. By following the steps outlined in this guide, entrepreneurs can establish a strong business foundation and achieve their goals.
