Washington LLC – How to Form an LLC in Washington? (8 Steps)

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Washington-LLC How to Form WA LLC

A limited liability company (LLC) is one of the most popular ways to structure a business. This legal structure combines many of the legal advantages of a corporation and the tax benefits of a sole proprietorship into one flexible package.

Since you are considering forming your LLC in Washington, it may interest you to know the state has one of the fastest-growing economies in the country. Also of note for business owners, you can enjoy a low corporate tax rate and, best of all, for small business owners and their employees, no income tax. This means you can take home even more of what you earn.

So, if you are looking to structure a domestic or foreign business in the state of Washington, you are in the right place. Let us show you how to form an LLC in Washington in 8 easy steps.

Step 1: Choose Your Washington’s LLC’s Name

Choose-Your-Business-Name

The first step to forming an LLC in Washington is to choose a name for your business, and there are a few rules you should be aware of. First, the name must include the words “Limited Liability Company,” “Limited Liability Co.,” or either of the-0QQ3 abbreviations “LLC or L.L.C.”

Also, you must choose a name that is easily distinguished from the names of other entities previously filed with the Secretary of State. To help you find a name that isn’t already taken, you may search for availability on the Washington Secretary of State’s business name search.

Finally, if you find a name you like but you aren’t ready to file your business just yet, you may want to reserve your name. If you choose to reserve your chosen name, you can file a name reservation form with the Washington Secretary of state. This will reserve the name for 180 days, but it will cost $30 for most entities and an additional $50 to have it expedited.

Using a DBA

You may wish to use a business name other than the full legal name of the owners, and this is known as a trading name or DBA (Doing Business As) — here’s a full guide on how to file for DBA. Another reason to use a trading name in Washington is that you are operating under a name other than the one you filed with the Secretary of State.  
A trade name can be a real advantage if you have different products or services that you would like to provide with a name other than the one you provided on your Certificate of Formation. But, if you want to do this, Washington requires you to file your DBA with the Washington Department of Revenue.

To do this, you must file a business license application with the Washington Department of Revenue and pay a five-dollar fee. You may register as many DBAs as you like and they will remain registered indefinitely. However, this does not protect the name from anyone else using it. To do this, you would need to file a trademark either with the State of Washington (this will only apply in Washington) or with the United States Patent and Trademark Office.


Step 2: Select a Registered Agent in WA

Registered-Agent-Service

Your LLC is required to appoint a registered agent to receive paperwork from the state or federal government. This person or service needs to be available during business hours to make sure someone is there to sign the legal documents so that the sender knows that your business received them.

The registered agent you choose needs to have a physical address in Washington. You’ll also need to have a registered agent in each state that your business is registered in. Hiring a registered agent service could make this easier because some of these services offer registered agent service in every state, which will help you avoid having to hire a separate registered agent for every state you do business in.

Additionally, hiring a registered agent can keep your home address private if you are running your business from home; otherwise, it will end up on public record. Plus, it can protect you from embarrassment in front of your customers if your business ever ends up getting served. Also, you don’t need to worry about receiving documents on time, even if your business doesn’t have normal business hours.

Some LLC formation services will even provide registered agent service for free for the first year if you pay for one of their LLC formation packages. If you purchase this service separately, you will probably pay approximately $100 to $200 a year. What a registered agent service provides varies. Some of these services just provide basic registered agent service. Whereas others will provide alerts for upcoming compliance deadlines and even file some documents for your LLC for an additional fee. You may find this very helpful if you’re busy. It saves you from having to worry about falling out of good standing with your state and possibly incurring fines as well.

Step 3: File Your Articles of Formation for Washington State

File-Article

Filing your Articles of Formation is how you officially start your LLC. There is certain information you’ll want to have on hand when you fill out your Articles of Organization, and we will list these things below.

  • Unified Business Identifier (UBI): You will put this number if your business has filed with another state agency in the past. Do not enter the UBI of a general partnership or sole proprietorship if you have one. If your business does not have a UBI, just mark no, and it will be assigned one after you successfully finish filing.
  • The Name of Your LLC: You need to use the formal name you have chosen for your business. Be sure you have complied with all applicable state laws when choosing your LLC’s name.
  • The Address of Your LLC: This is the operating address of your business, not the mailing address. Although, if you hire a registered agent service, you will probably list their address in this spot.
  • Duration of the LLC: You will list the end date for your LLC if you have one. Otherwise, you will list the LLC as perpetual.
  • Date of Formation: This will be the date your Articles of Organization are processed by the state or a later date if you choose.
  • Registered Agent: You will need to list the name and address of your registered agent. The Registered Agent’s signature must also be included. The address must be in Washington, and your registered agent needs to be available to receive legal documents during business hours.
  • Executor Information: This is the name, address, and signature of the person forming the LLC.

Step 4: Draft an Operating Agreement

Operating-Agreement-

The state of Washington does not require an Operating Agreement, but it’s generally advised for members to draft one. The agreement details how the LLC will be managed along with the rights and responsibilities of the members. Without an operating agreement, your LLC will be subject to state default laws for operating an LLC. There are several things you should include in your operating agreement, and we will discuss these items.

  • Management Structure: It’s essential to clearly establish how your LLC will be managed. You’ll want to put in the agreement whether your LLC will be member-managed or manager-managed. Also, if you choose a manager-managed LLC, you should include the procedure for choosing a manager and for replacing a manager.

Also, you may want to reserve some management decisions for the members. If this is the case, it is best to specify which decisions are reserved for members in the operating agreement.

  • Voting:  The operating agreement should specify which decisions require a vote and what percentage of members are required to vote for an action for it to be approved. The agreement should also detail how many votes each member will get.
  • Ownership: The operating agreement should clearly state what percentage of the business each member owns. Generally, a member’s percentage of ownership will be based on the amount that they invested. However, this is not always the case.

A member may bring certain skills or property to the LLC that may entitle the person to a larger share of ownership. Also, in some cases, members could receive a larger share of the LLC than their investment would indicate based on the amount of work they are expected to do. This is something the members need to decide and put in the operating agreement to avoid misunderstandings.

  • Exiting Members: It’s possible one of the members will eventually want to withdraw from the LLC. If this happens, the members will need to decide if the LLC will continue and, if so, how the exiting member’s shares will be distributed. To avoid any problems, you should specify what will happen in these cases. Will the exiting members be required to sell their shares to other members? This should be planned for ahead of time and put in the operating agreement.
  • Profits: Profits and losses are typically divided based on ownership shares. These shares should be detailed in the operating agreement. You should also state in the operating agreement how often profits will be distributed. Also, don’t forget that the members need to pay taxes on any profits whether or not the profits are distributed.
  • Dissolution: You will probably eventually dissolve your LLC, so it is best to prepare for this ahead of time. You’ll want to mention how many members need to agree to dissolve the LLC before it can be dissolved and how the ending value of the LLC will be divided.

You do not need to file your operating agreement with your Articles of Formation, but you will want to keep it safe. This document often proves critical if a dispute occurs between members, and courts will often rely on this document to settle them.


Step 5: Abide by Washington Tax Codes and Regulatory Requirements

TAX

There are a variety of tax obligations your LLC may have, and you need to make sure your LLC complies with these requirements. We will list a few common requirements below.

  • Business Licenses: Most businesses in Washington are required to have a business license. Cities and counties typically require a business license as well. So, it is quite likely that your business will require a state business license and one for each area of the state it operates in. You should be able to register for most state, city, or county business licenses you need online at the Department of Revenue Website. You can also apply for your business licenses by mail. If you have any trouble obtaining any city or county business licenses, check with city or county officials. Also, if you’re providing a professional service, you may need to obtain a professional license. You can find out if you need one by contacting the Washington State Department of Licensing.
  • EIN (Employer Identification Number): An EIN is necessary for a couple of different reasons. If you have a single-member LLC, you will need an EIN if you hire any employees or choose to have your LLC taxed as a corporation. If you have more than one member in your LLC, you will need to have an EIN whether you have employees or not.
  • State Taxes: Washington does not have an income tax for businesses or individuals, but they do have a business and occupation tax. This tax is imposed on gross business income. Additionally, any business that makes $12,000 or more in revenue must collect sales tax and register with the Washington Department of Revenue.

Step 6: File Your Annual Report in WA

Annual-Report

Every LLC doing business in Washington must file an annual report whether the LLC was formed in Washington or another state (a foreign LLC). The report needs to be filed yearly with the Secretary of State of Washington. Although, the first annual report needs to be filed within 120 days of the date of formation for your LLC.

For future annual reports, the Washington Secretary of State will send a notice to the Registered Agent for your LLC informing you of the due date for the annual report. Your registered agent should receive this notice approximately 45 days before the annual report is due. Annual reports can be filed by mail or online, and the filing fee is $60. There are several details that you need to include in your report, which we will list.

  • The Name of Your LLC: In this section, you need to provide the name of your business and the UBI number. A UBI number is a nine-digit number that allows you to do business in the state of Washington and registers you with a variety of state agencies. It is sometimes called a business license number or a tax registration number. You can find this number on the form you will receive after forming your Washington LLC. The business name and UBI on your annual report must match what the Washington Secretary of State has on record.
  • The Registered Agent for Your Business: You need to list your registered agent. You can have a commercial or noncommercial registered agent, but you must mark which of these options you have.

If you choose a commercial registered agent, they must be registered with the Office of the Secretary of State. They must also be in the business of receiving legal documents or permitted on behalf of your LLC.

If you choose a noncommercial registered agent, the person needs to be willing to accept legal documents on behalf of the LLC. If you choose an individual, you must then include the first and last name of the person. If you choose an entity, you need to write the full name. Whereas, for an office, write the president, secretary, or member. Also, be sure to include the physical street address, which must be in Washington.

  • Principle Office: You will list the address where your LLC’s records are kept. This must be a physical address, but it does not need to be in Washington.
  • LLC Member or Manager Names: You will list the people who are governing the LLC. For a member-managed LLC, this will be the members. For a manager-managed LLC, this will be the managers.
  • Nature of Business: Here, you will describe the type of business your LLC conducts in Washington.

If your Annual Report is late, there will be a $25 fee. If the report is more than 120 days late, your LLC may be dissolved.


Step 7: Obtain a Business Bank Account & Credit Card

Bank-Account-and-Credit-Card

You’ll find there are several good reasons to open a business bank account for your LLC. The best reason is to keep your LLC’s finances separate from any of the member’s finances. Maintaining this separation is vital to ensuring your limited liability. If you do not keep your business finances separate and one of your creditors sues your LLC, the courts could decide to remove the limited liability protection for the members of your LLC. This is called piercing the corporate veil. If this happens, the court could potentially access the members’ assets to satisfy debts.

Another reason you might want to get a business bank account is to make taxes easier. If you use your business bank account for your business transactions, you will have them conveniently separate from any personal transactions.

As a member of an LLC, you will be classified as a sole proprietorship or partnership. So, unlike a corporation, there is no corporate tax. An LLC is a pass-through entity. The income will pass through the LLC, and you will include the income on your personal tax return.


Step 8: Get a Business Credit Card in Washington

Obtaining a business credit card for your business can be a good way to grow your business while increasing your business’ credit. Also, it’s an additional way to keep your personal and business finances separate.

By using a business credit card for your LLC instead of your personal credit card, you help establish a credit history for your business. As you develop a good credit history for your business, you may be able to access other forms of credit, such as bank loans. This can be quite helpful, as new small businesses can have trouble obtaining loans due to a lack of credit history. Obtaining new sources of credit can really help you grow your business. The extra purchasing power will give you a lot more options for your business.

Having a separate business credit card is also another step you can take to help keep your business and personal finances separate. It’s best to keep your business finances totally separate if you want to protect your limited liability. You’ll also have an easier time come tax season if you’ve kept your business finances totally separate.


Best Washington LLC Creation Services

It’s possible you may want help filing your LLC with the state, and there are many LLC creation services that can make the process easy. So, let’s take a look at two of the best.

#1 – ZenBusiness

ZenBusiness is one of the most affordable services you can use to file your LLC at only $49, and with their Worry-Free Guarantee, they will continue to handle your annual reports and other compliance deadlines.

ZenBusiness can also file for your DBA and even provide you with a registered agent. Best of all, the registered agent is free for the first year. Interested? Check out my full review of Zenbusiness here.

$49

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Rating: 4.8/5
Review count: 4000+

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Form an LLC today with ZenBusiness for only $49. They Have 98% customer satisfaction rating and over 4000+ verified reviews.


#2 – IncAuthority

IncAuthority is one of the oldest and most trusted names in LLC formation services. Among the crowd, IncAuthority stands out most of all because their starting package comes at the low price of $0 plus state fees.

Beyond their free plan, IncAuthority offers multiple tiers of paid plans that can provide you services such as expedited processing and a business website domain. Like ZenBusiness, IncAuthority can provide you with free registered agent service for the first year.

Here’s an in-depth review of IncAuthority.

$0+State Fees

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Rating: 4.8/5
Review count: 4500+

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Form an LLC today with IncAuthority starting at $0+state fees. They’re one of best-known services with lots of great customer experience.


Conclusion

Forming an LLC is a great way to protect your personal assets and potentially lower your tax burden. Forming an LLC in Washington isn’t difficult, and it is known as a great state for doing business with a fast-growing economy. So, it’s time to get started, and now you have the tools to start forming your LLC today.

Learn How to Form an LLC in Other U.S. States:

Alabama
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California
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Indiana
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Kentucky

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Michigan
Minnesota
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Missouri
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New Hampshire
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New Mexico
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Ohio
Oklahoma
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Rhode Island
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Vermont
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Washington
West Virginia
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About the Author
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Founder & author

Ian Broderick is an avid author and owner of LLCGuys.com. He's been involved with the LLC formation field for over 4 years. On top of that, he has worked in several well-known LLC formation service providers. Now he decided to share his knowledge and advice with everybody. Since there are a lot of questions and concerns surrounding this field - his aim is to make LLCGuys a top-notch information provider in regards to LLC creation, service reviews and etc..

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