Starting a Business in Washington State: Everything You Need to Know
Starting a business in Washington State is a great idea for a number of reasons. 3 min read
Starting a Business in Washington
Starting a business in Washington State is a great idea for a number of reasons. For starters, Washington state does not require the filing of a personal income tax return. In addition, the first $43,000 of revenue earned by small businesses is not taxed.
If you want to take advantage of these benefits, you will need to make your way through the process of forming a business in Washington, which can be very difficult.
Name Your LLC
Naming your company is the first step to forming your LLC in Washington State. You will need to do enough research to ensure that the name you've have chosen can be quickly found by your clients and that it speaks to the nature of your business.
The following are the guidelines in Washington for naming an LLC:
- The name of your company must include Limited Liability Company, LLC, or L.L.C.
- If you want to use a restricted word such as University, there will be additional paperwork that must be filed with the state, and you may be required to prove that one of the owners of your LLC is a licensed professional.
- LLC names cannot contain prohibited words such as FBI that would imply your company is a government entity.
You will need to search the State of Washington website to determine if your desired name for your LLC has already been taken by another business.
Finding out if the name of your LLC is available is important because it will let you reserve a domain name. Even businesses without an online component should reserve a domain name to prevent it from being purchased by a competitor.
A professional email address with Google apps is a must for LLCs in Washington. In addition to lending credibility to your business, you will be able to use valuable business tools such as security features and cloud storage.
Deciding on Your Business Structure
Several types of business structures are recognized in Washington, including LLCs. Every business structure has its strengths and weakness, making it important to research which option is right for you so that you can move forward with registration.
A sole proprietorship is a business that is owned by a married couple or an individual. These entities are very easy to form and run. Sole proprietorships can also be managed flexibly, have a lower tax burden, and are subject to fewer regulations. The drawback is that the owner of the business will be fully responsible for all business debts.
A general partnership is a business entity where two people, or more, contribute capital and labor to a company. Contributing partners are entitled to an equal share of profits, as well as losses, and will be responsible for managing the business and covering debts. The fine details of a general partnership will be outlined in a partnership agreement.
Limited partnerships include both general and limited partners. General partners are responsible for running the business and will take their share of profits and losses. Limited partners also share in profits, but will have limited losses based on their initial investment. This means that limited partners will not usually be affected by the debts of the business. A partnership agreement will be used to define the terms of the agreement.
Corporations have a much more complex business structure than other business entities. A corporation is made up of shareholders who own some amount of stock in the company. The stock entitles the shareholders to elect directors who will be charged with overseeing the corporation. Typically, directors will designate officers to handle the everyday operations of the company. Individuals have the ability to form a corporation. There are several benefits to forming a corporation, including shielding shareholders and directors from debt.
An LLC is a business structure where a company is owned by members. The members themselves can manage the LLC, or the members can appoint a manager to run the business. Forming an LLC protects the members from the debts of the company, making it very similar to a corporation. An operating agreement will outline the terms of the LLC.
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