Having a Washington State LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Washington.
On this page, you’ll learn about the following:
- How to Start an LLC in Washington State
- After Starting your Washington State LLC
- Washington Foreign LLC
- Why an LLC in Washington State
- Best Businesses in Washington
- Washington LLC Formation Review
How to Start an LLC in Washington State
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start a Washington State LLC.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Washington state, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Washington State business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Washington. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Washington state. The cost of a name reservation is $50.
Important Quick Links:
Secretary of State
801 Capitol Way S
P.O. Box 40234
Olympia, Washington 98504-0234
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Step 2: Assign a Registered Agent in Washington State
A registered agent, or business entity, is a person that will act or work on your behalf. This person or business will receive significant tax forms, legal forms, government filings, a notice of lawsuits, and other official government correspondence in Washington state. Choosing a Washington registered agent for your LLC is required.
Make sure your registered agent is a resident of Washington. It could also be a business. Here are the recommended agents and employees for you:
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Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Washington State. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Certificate of Formation in Washington State
A Certificate of Name Reservation is needed to file a Certificate of Formation, as other states call it. You need to make reports of this certificate with the Washington Secretary of State, which costs up to $200 to file. LLC cost in Washington State includes other fees and taxes. You may file them online or by mail.
This Washington State Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Washington, like if it is a member-managed or managers-managed.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Washington State LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county. To know more about online filing, visit the Washington Certificate of Formation.
How to File by Mail
If you prefer filing real-life forms for your Washington state LLC registration, then you can download the Washington Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature. You may also file in person by visiting the office on business days.
Mail To: Secretary of State
P.O. Box 40234
Secretary of State
801 Capitol Way S
Olympia, WA 98501
Step 4: Create Your Washington State LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to an LLC operating agreement Washington state does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Washington State LLC later.
Step 5: Filing a Washington State LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Washington State LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Washington State LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Washington business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Washington State LLC annual report or biennial report
- Already existing LLCs that wish to operate in Washington State must register as Washington foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Washington Foreign LLC
To register a Washington foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Washington. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Washington Foreign LLC to know more about having a foreign LLC.
Why an LLC in Washington State
Washington is one of the major business states in the United States. Biggies like Amazon, Starbucks, Microsoft, Boeing, and such have their companies in Washington State. With a GDP of $440 Billion, the state has around 250,000 companies’ headquarters. Also, the state offers a massive reduction in tax liabilities along with multiple business funding options. If you’re planning to start Washington State LLC, then the state has many advantages to offer.
Best Environment for the start-ups
For any startup, it is necessary to have a business-friendly environment in the state. Washington State, having so many big companies, has the perfect environment for an LLC to start. Export hub, innovation, creativity, low-cost, and massive tax and loan incentives make it easier for the new LLCs.
Foreign Trade Zones
Places like Seattle, Greys Harbor, Tacoma, and Vancouver are considered foreign trade zones in Washington state. Any LLC that operates in these places will be eligible to enjoy the benefits of FTZ. Job creation, development of the area, improvement in industrial activities will bring tax benefits in these areas.
Opportunity Zone Program
139 places are considered Opportunity Zone in Washington state. Businesses that are operating in these places will get tax incentives and loan facilities. Further, the LLCs can invest the capital in these areas to better understand difficult and poor places.
Sales & Use Tax Exemptions
Like many other neighboring states, Washington State also has tax exemptions. There are some industries where an entrepreneur can enjoy sales and use tax exemptions. They are as follows-
- Producing alcohol fuel, biodiesel
- Manufacturing parts of machinery, industrial equipment
- Manufacturing airplanes
- Manufacturing farm machinery, parts, and equipment
- Manufacturing livestock nutrient management equipment
Profit Distribution is flexible
Along with massive tax benefits and incentives, LLCs can benefit from the LLC structure in Washington. According to the LLC structure, the profit distribution is remarkably flexible. Unlike the partnership, the profit in LLC will be distributed as per the contribution of members instead of equal or 50-50 distribution.
No matter your business form, there’s always banks for small business to grant loans and incentives to save more while starting limited liability business in Washington state.
Best Businesses in Washington
If a business person is willing to form an LLC in Washington, it is important for them to gain complete knowledge. It is common that many businesses are flourishing in Washington, but there are only a few which are contributing hugely to the GDP of the state. Here is the list of those top businesses.
Aerospace and Its Construction
There are many aerospace companies established in the state, out of which the top ones are Airbus, Blue origin, and Embraer. The aerospace business is generating around $66 billion every year in which the activities included are:-
- Airline companies
- Machine dealing
- Aerospace training brands
Information technology businesses
When it comes to Washington various software development firms are rising in the state since the year 1980. Headquarters of more than 500 companies in the state, out of which Facebook and Google are the master players along with Amazon. These three companies alone are giving employment to 8000 people in the state.
The contribution that is made by the IT businesses in the state is around $37 billion, with 230,000 people working with them. If we look at the latest trends, then the gaming industry is also booming.
The trading businesses have helped in generating employment for around 33,000 people in the state. The contribution of the trade business is around 13.8% to the state GDP in which there are exporting of electronics, machinery, and food studs. There are some licensed trade-ins also, which include motor vehicles, snowmobiles, boats, etc. If you look at the number of companies established, then there are around 12,000 currently active companies in the state.
Some of the top small investment businesses that are working well in the state are:-
- Laundry and dry cleaning
- Daycare services
- Business consultancy
Washington LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming an LLC in Washington. Click on the steps in this list to read the full detail.
- Name your Washington LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
In Washington, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
If you are a resident of Washington, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $200 (domestic LLC) and $200 (foreign LLC), LLC costs in Washington include $60 for Annual Reports every year. LLCs are liable to pay sales tax of 6.5% every year
It takes no time (immediately) to get a Washington State LLC if you file it online. For the mail filing, it takes 5 to 7 business days to get an LLC.
Every year all the LLC have to submit an Annual Report and pay $60 to the Washington Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Washington at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.