Setting Up an LLC in Washington State: Everything You Need to Know
Structuring business as an LLC, or limited liability company, protects you from being taxed twice and from being held personally liable for the company's loss.3 min read
2. Completing a Certificate of Formation
Setting up an LLC in Washington State can be a smart move for entrepreneurs. Structuring your business as an LLC, or limited liability company, protects you from being taxed twice and from being held personally liable for the company's potential financial loss. An LLC has similar features to both a partnership and a corporation.
When forming an LLC, you must follow certain rules, which vary depending on the state you are located in. Although the general LLC guidelines are the same throughout the United States, you should pay attention to your state's specific rules. For example, in Washington State, there are a few peculiar elements to the application process. Individuals in Washington are allowed to establish LLCs, which can be a great option for an entrepreneur wanting to start a small business. To create an LLC in Washington, you need to file a Certificate of Formation with the state Secretary of State.
hoosing a Name for Your LLC
Every state has specific naming requirements for LLCs, and Washington is no exception. In Washington, LLCs are required to have "Limited Liability Company," "Limited Liability Co.," "LLC," or "L.L.C." in the company name.
The name you choose for your company has to be different from other companies that are already on file in the state. That means your company's name can't be confused with any existing for-profit or non-profit organizations, corporations, partnerships, LLCs, or even fictitious companies. Before you file with your desired company name, perform a name search on the State of Washington website, which includes a database of all business names on file.
Washington also has a list of words, known as restricted designations, that are not allowed to be used in corporate names. These include the following:
- "Bank," "banker," or "banking"
- "Corporation," "incorporated," or "corp."
- Abbreviations like "ltd.," "inc.," "LP," or "LLP"
- "Industrial" and "loan" used together
- "Building," "savings," "loan," "home," "society," and "association" used together
The goal of prohibited words is to avoid consumers confusing your company's name with a state or federal agency, such as the Secret Service, Treasury, or FBI. If restricted words are in your LLC's name, you will be required to fill out extra paperwork and may need to have a licensed person, such as a doctor or lawyer, involved with your LLC.
Once you have a name selected that meets the criteria, you can file a Name Reservation or go through the Washington Secretary of State to reserve the name for 180 days. This process costs $30. You should also check to see if the web domain is available for your LLC's name. Purchase the domain name, even if you don't plan on making a website right away. You'll also want to secure a professional email address for your company. Google's G Suite offers professional email systems for small businesses.
Completing a Certificate of Formation
Washington State law requires that an LLC must choose a registered agent — a person who agrees to coordinate legal forms on behalf of the company, such as state filings or forms for legal action taken against your company. The registered agent should be a resident of Washington or an LLC or corporation licensed to operate in Washington. The registered agent also must have a physical address within the state. As the owner of the company, you can choose yourself to be the registered agent, or you can choose someone else you trust.
Another option is to use a registered agent service. This is a good option if you don't reside in Washington but still want to form an LLC there. A service will be able to provide advice on legal and financial issues that are specific to Washington and will be open during regular business hours.
Another step of creating an LLC is to draft an operating agreement, which is the legal framework of the company's ownership and operating procedures. LLC operating agreements aren't required in Washington, but they are still a recommended document to have.
To become an official LLC, you need to complete the Certificate of Formation, which is available on the Secretary of State's website.
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