LLC in Washington State: Everything You Need to Know
An LLC in Washington state is easy to create for aspiring small business owners and all individuals are allowed to register their LLC.3 min read
An LLC in Washington state is easy to create for aspiring small business owners. Washington allows all individuals to register LLCs. An LLC stands for Limited Liability Company and gives individuals certain liability protections and tax advantages. For instance, LLCs do not pay business income taxes in the same manner as corporations. Rather, profits and losses flow from the LLC to individual members, where they file such information on individual tax returns, otherwise known as pass-through taxation.
On the other hand, C corporations must pay business income taxes, and shareholders must pay separate taxes on the dividends they receive, also called double taxation. LLCs were created to help small business owners get around double taxation while affording them the same liability protections of a corporation. Before you create your LLC, you must first conduct some research to ensure that an LLC structure is the right fit for your business.
Naming Your LLC
When it comes to name registration, Washington law mandates that LLCs contain such designators as “LLC” or “Limited Liability Company.” In addition, certain words come with restrictions:
The aforementioned words come with additional licensure and certification. Also, the following words are outright prohibited:
- Secret Service
You may reserve a name for 180 days using a name reservation application. The name reservation process comes with a $30 fee. Lastly, you should also reserve a domain name, even if you have no intention of creating a website. Domain reservation prevents individuals and businesses from using your LLC name online.
You must create your LLC in Washington via a Certificate of Formation and file it with secretary of state in Washington. The formation certificate must contain the following:
- LLC address and name
- Your signature
- Name and address of registered agent
- Creation date
- LLC term (whether it is limited or perpetual)
- Whether LLC is manager-managed or member-managed
You may file the certificate via mail or online, and the fee amounts to $180 via mail and $200 for the online process. The online option takes two to three business days to process, and you can pay additional fees for expedited processing.
Washington requires a registered agent for your business. A registered agent can be an entity or individual who accepts legal paperwork on your LLC’s behalf in the event of a legal proceeding. A registered agent can be the following:
- Washington resident
- LLC permitted to conduct business in Washington
If you are not a Washington resident, or if you don’t want your address and name on public record, you can hire a registered agent service to act as the agent for your LLC. You may also choose yourself or any person in the business.
An operating agreement is not mandatory in Washington, but you should draft one to establish a sound management structure within your LLC. An operating agreement establishes such factors as:
- Roles and responsibilities
- Compensation plans
- Membership shares
- Emergency provisions
Also, you do not need to file an operating agreement with state authorities. Instead, you should keep the agreement in a visible place for all parties to see, and you should ensure that members, managers, and employees know the terms and conditions of the agreement.
Employer Identification Number
An employer identification number (EIN) is what the IRS uses to designate and tax your LLC. You will need an EIN if you intend to hire employees or open a business bank account. You will also need one if you intend to get a business loan from an investor or bank. You may get an EIN from the IRS for free, and the process only takes minutes.
Licenses and Permits
The type of permits you need depends on your profession. Most likely, you will need a license in every place where you intend to conduct business. You should check with the Washington Business Licensing Guide for specific mandates on what type of licenses and/or permits you’ll need. You may also contact town or city officials on the necessary paperwork and licensure.
If you have more questions on an LLC in Washington state, submit your legal inquiry to our UpCounsel marketplace. UpCounsel’s lawyers have graduated from some of the best law schools in the nation and will help you through the LLC registration process in Washington. Also, they will help you determine if an LLC is the right legal entity for your business goals.