Updated November 19, 2020:

Learn how to form a single-member LLC, or limited liability company, in Washington State and what important documents you must file.

How to Form a Single-Member LLC

Before you form a single-member limited liability company (SMLLC), make sure that your business can become a limited liability company (LLC). To do so, you must file articles of organization with the proper state office, which usually involves the secretary of state. In addition, you need to choose a management structure and operating agreement for your SMLLC.

Single-Member LLC Eligibility

Despite the fact that LLCs are companies with multiple members, you can form an LLC with just one member. However, many states prevent certain professions, such as medicine or engineering, from forming one. In that instance, you must form a professional limited liability company (PLLC).

Getting an Employer Identification Number (EIN)

If you do business with other companies, they may require an EIN to process payments. Also, depending on how your SMLLC is taxed and if it has employees, you may need an EIN.

The IRS automatically treats SMLLCs as disregarded entities. The SMLLC is considered self-employed, so you must include income on your personal tax return. In this instance, use your Social Security number and not an EIN. But if the SMLCC is taxed as a corporation, the IRS considers it a separate entity, and you need to get an EIN. If you have one employee with your SMLLC, you need an EIN no matter how your SMLLC is taxed.

Banking Your New LLC

Once you get an EIN, a signed copy of your operating agreement, and an LLC certificate that the secretary of state's office sends after processing your documents, you can open a bank account. If your LLC operates in Washington state, you do not need a Washington State Master Business License to open an LLC bank account.

LLC Formation Filing Requirements

Before you can form your LLC business in Washington state, you must adhere to the Washington Limited Liability Company Act. You need to file a certificate of formation with the secretary of state's office. This document has information found in the Revised Code of Washington Code 25.15.071. Once the certificate is accepted, the LLC becomes a separate legal entity.

LLC Management and Operating Options

There are several management benefits when operating an LLC, and they include the following:

  • Flexible management structure. You can manage it equally or choose someone or several people to manage it. Corporations need both officers and directors for operation.
  • Flexibility on how it runs. An LLC doesn't require meetings or record keeping of minutes.
  • Allocation of profits and losses. Members can allocate these among each other, regardless of their contributions.

Washington State Business and Occupation Tax

Although Washington does not have an income tax, it does have a Business and Occupation (B&O) Tax that is a gross receipts tax. The rate depends on the LLC's business classification. The B&O Tax offers several credits, and they vary depending on the tax classification applicable. If you file the B&O Tax electronically, the department of revenue calculates the credit.

Washington Single Member LLC Operating Agreement

When forming an SMLLC, you need an operating agreement. This legal document helps you establish procedures and policies. It also protects your private finances and assets, separating you from the business. Once you complete the document, file it with the State of Washington.

To write an operating agreement, you must follow a few guidelines:

  • Submit the name of the company at the top of the form.
  • Include specific information, such as the date the owner enters into the agreement, the company's name, and the owner's name.
  • Describe the business's purpose.
  • Sign and notarize the document.

Required Documents for Single Member LLC in WA for Taxes

If you own the LLC, disregard the LLC for tax purposes. When you file taxes, use Schedule C on Form 1040 to report income and expenses. For income more than $400, file Schedule SE to pay self-employment taxes. For LLCs with more than one owner, file Form 1065 as a partnership. LLC net income for the partners should go on Schedule K-1, and each person reports partnership income on their own Form 1040s.

However, if you opt to have your LLC treated as a corporation for taxes, file 1120S for S corporations and 1120 for C corporations. Also, you will get a Schedule K-1 from the S corporation for your own taxes. C corporations will get dividend distributions, and you will receive a 1099-DIV.

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