LLC Washington State: Everything You Need to Know
Being able to follow the Washington identification rules will get your business on the road.5 min read
LLC Washington State: Everything You Need to Know
An LLC Washington State is a Limited Liability Company that is formed in the State of Washington. The state has certain requirements and steps that you must take when establishing and setting up your LLC.
STEP 1: Name your LLC
This part is the initial and most vital step in forming your LLC. Do some investigation to ensure the name you pick is well-matched to your company project and is searchable by prospective clients. You’ll need to follow the laws of the State of Washington when coming up with an LLC name. This includes the following:
- Most importantly, your name must be available for use. Make sure that the name isn’t already being used by another LLC.
- Your LLC name must identify the words Limited Liability Corporation or the acronym LLC or L.L.C.
- You cannot use certain terms, including University, Bank, Insurance, College, etc. There should be a full list of restricted words on the Secretary of State’s website.
- Additional terms like “Lawyer” and “Doctor” cannot be used unless you are in fact a lawyer or doctor. Same goes with other occupational terms.
- You may want to choose a name that also has an available domain address. Therefore, if you want to utilize the same website address as your name, make sure this is available in the public domain and not being used already.
STEP 2: Choose a Registered Agent
In the State of Washington, you must choose a registered agent. This person will be the point person who receives service of process in the event that a legal suit is brought against you. Similarly, this person will act as your point person if you choose to bring a legal suit against someone else or another business. The agent will need to be a resident within the State or manager some sort of business within the State. Therefore, he or she must have ties to the State.
STEP 3: File a Certificate of Formation
To form your LLC, you will have to fill out the Certificate of Formation. It has to be done with the State of Washington’s Secretary of State’s office. You can also file it in-person, via mail, fax, or online for your convenience. If you choose to mail in your certificate, there is a $180 fee. If you choose to file online, a $230 fee is charged for expedited services.
STEP 4: Create an Operating Agreement
While the State of Washington does not require that you draft an operating agreement, it is a good idea to do so. This document will specify the daily operations of your business, and detail the overall goals and plans of your LLC going forward.
STEP 5: Obtain an EIN
A Federal Tax Identification Number, also referred to as the Employer Identification Number (EIN), is required for all businesses and recognizes your business as a unique entity. This is also required to set up a bank account for your business. You can obtain an EIN for free from the IRS – you can apply online or via mail.
Separate Personal Assets from the LLC
You want to ensure that you personal assets are kept separate from your LLC. While the LLC automatically ensures that you are not held personally liable for the debts and obligations of your LLC, if you are found to be comingling assets, then you may in fact be held liable for those obligations or losses to the business. That is why it is important to immediately open a business bank account after you’ve obtained your EIN. You should also open a business credit card and utilize only that card (not personal credit cards) to purchase inventory and any other items for your LLC.
Even though you haven’t formally opened for business, it’s important to organize your books and records. You will need a good accounting system to help get you started. You can also hire an accountant to help you. Either way, you will want to ensure that all items, including expenses, bills, revenue, etc. is kept in your accounting system.
Obtain Business Licenses & Permits
Depending on your type of business, you may need to obtain additional permits and business licenses at the state, federal, and local level. You can utilize the U.S. Small Business Administration website to find out what permits and licenses you will need. You could always reach out to the Secretary of State’s office within Washington State to obtain that information. For example, if you plan on hiring employees, you will need to obtain unemployment insurance as well as workers compensation insurance. Generally, businesses in the State of Washington also need to pay occupation and business tax. If you plan on selling certain products or running a food establishment, you will need certain licensing (potential liquor license and other restaurant licenses) in order to operate.
To maintain a Washington LLC, it is necessary to make periodic filings with the State. For example, the State requires that LLCs draft an annual report with the Washington Licensing and Business Service. These reports are due by or before the 120 mark after establishing your LLC. It costs $300 to file the report online; $250 to file it via hard copy, and a $25 late fee penalty if you fail to file on time. You could always appoint an agent to do this for you; similarly, you could also appoint a manager (director) who can assist you in the process.
Obtain a Certificate of Good Standing
A Certificate of Good Standing confirms that your LLC was lawfully formed and has been correctly preserved. This certificate comes in handy if you need to seek funding from banks or other lenders. The fee is $20.
How to Dissolve a Washington LLC
If you are not interested in conducting business anymore, you must dissolve your LLC. You can’t simply stop doing business, because the State will treat your LLC as an activity entity. You also don’t want to stop paying the required annual fees or taxes as you may incur tax penalties and other liabilities that you could in fact be personally liable for; rather you’ll want to actually dissolve the company. It is simple to do. You’ll just need to close your business accounts and draft an Articles of Dissolution. You can find a template online anywhere, and it is simple and straightforward to fill out. Alternatively, if you wish to change your LLC to a foreign LLC, you can do that too. Simply visit the State’s website and change your in-state LLC to a foreign LLC. But keep in mind that there are different requirements for running a foreign LLC. The fee to apply online is $200, or $180 if you choose to mail it or drop it off in persons. The key advantage of turning into a foreign establishment is that it permits your company to function as one unit in countless jurisdictions. For instance, if you initially establish your LLC in the State of Delaware, you can file your current domestic LLC as a foreign business in other states.
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