Guide to Forming an LLC in Washington
Follow our free guide to form an LLC in Washington:
- Pros and Cons of Forming an LLC in Washington
- Starting Your Washington LLC
- Maintaining Your Washington LLC
- Additional Washington Resources
Should you form your LLC in Washington? We’ve collected the relevant information that will help you make this decision.
Pros and Cons of Forming an LLC in Washington
No State Income Tax
Washington is one of seven states that does not have a state income tax. After paying the state’s gross receipts tax, LLC members are only required to pay federal income taxes on their earnings.
Innovative and Quality Workforce
According to the Washington Student achievement council, there is a high correlation between Washington employment demand and workers with postsecondary education. Based on this data, jobs are competitive and require more qualified employees. Home to one of the top 10 metropolitan areas in the country, Washington also encompasses innovation and technological advances. When forming your LLC in Washington, take advantage of the workforce and environment that the state has to offer.
Privacy for Owners
Washington does not require full disclosure of an LLC’s members in the incorporation paperwork. An executor/authorized party may sign and submit the official documents to the state in place of the actual owners.
Manager Listed in Periodic Report
Washington requires at least one governor (member/manager) to be listed in the initial report and the ongoing annual reports.
High cost of living
As the 13th most populous state in the nation, Washington is one of 15 states that reach a higher-than-average cost of living for housing, transportation, and groceries. In Seattle alone, the median price for a home is well over $500,000.
Because Washington provides an innovative and ideal place to start a establish a workforce (as stated above), the state is home to the largest number of STEM (science, technology, engineering, and math) professionals in the U.S. This leads to an increasingly competitive market for businesses who wish to file within a similar industry.
Cost of Doing Business
- $200 filing fee / $60 fee for annual report
- 0.471% gross receipts tax
Phase One: Starting Your Washington LLC
Filing your LLC in Washington is a simple process with a few key points to keep in mind. In order to stay compliant with the state, here are the steps to follow when starting your LLC in Washington:
- Step 1: Name Your Washington LLC
- Step 2: Establish Ownership
- Step 3: Find a Registered Agent in Washington
- Step 4: File the Certificate of Formation
- Step 5: Create an LLC Operating Agreement
- Step 6: Obtain an EIN
Step 1: Name Your Washington LLC
The first step in forming your Washington LLC is to name your business. Be aware — state and federal government regulations and restrictions exist concerning the use of certain words in business names.
Tip: Use a free business name search tool to ensure your company’s desired name is available.
Business Name Guidelines
- The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
- Your business name cannot be intentionally misleading to consumers
- The name of your new LLC must not be similar to another organization’s name/trademark
- “Lottery” and “Bank” are ineligible for use (any state)
- Terms that represent educational or Veterans’ organizations are restricted
- Terms related to the Armed Forces or civil servants (police, EMT, fire)
LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.
In addition to choosing a name for your LLC, creating an online presence is equally important in the current culture. You can easily check domain name availability at a number of online web services sites.
Step 2: Establish Ownership
The owners of an LLC are known as members and/or managers, depending on the management structure of your business. All LLCs have members, not only some have managers.
LLC Management Structures:
- Member-managed: The members share in the operating and decision-making roles of the LLC
- Manager-managed: An appointed manager oversees the daily operations of the LLC while the members are less actively involved.
Washington LLC Member Guidelines
Required Number of Members
There must be at least one member or manager to form an LLC in Washington.
Member Disclosure Requirements
An organizer/authorized representative may sign and file the Certificate of Formation in place of the LLC members.
LLC members in Washington may be of any age.
There are no residency restrictions imposed on LLC members in Washington.
Step 3: Find a Registered Agent in Washington
The registered agent is necessary for all businesses formed in Washington. Your LLC cannot be official unless you have a registered agent.
What is a registered agent?
A registered agent is a person or business who is authorized to accept official government mail and service of process notices for the LLC.
Why do you need a registered agent?
Washington law requires you to appoint a registered agent so that the state government has a consistent contact person for your LLC.
What are the main requirements for a registered agent?
- The registered agent must have a physical address — not a P.O. Box
- The registered agent must be available during business hours
Who can be a registered agent in Washington?
- A state resident with a physical address in Washington
- An LLC or corporation that is licensed to conduct business in Washington
Can I be my own registered agent for my business?
You are legally allowed to be your own registered agent as long as you have a physical address in Washington.
Is being my own registered agent discouraged?
Since the registered agent’s name and address are publicly listed, LLC business owners who choose to be their own registered agent risk compromising their personal information.
Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in Washington. Find more information here.
Step 4: File the Certificate of Formation
The most important step in creating your Washington LLC is filing the Certificate of Formation with the Secretary of State.
What is the Certificate of Formation?
The Certificate of Formation is a legally binding document that is filed with the Secretary of State to officially and legally form your LLC.
Why do I need the Certificate of Formation?
Your Washington LLC will not be legally recognized by the Secretary of State without filing this document. Consider the Certificate of Formation as part of your LLC’s foundation.
What information is included in the Certificate of Formation?
- The name and address of the LLC
- The name and location of the registered agent
- The name of the executor filing the paperwork
- The duration of the LLC (perpetual or not)
- The chosen LLC management structure
- The effective date of the document
Please note: The registered agent must sign the Certificate of Formation.
Additional Washington Filing Requirements — Professional Service Businesses
Washington permits professional service businesses to form a Professional Limited Liability Company (PLLC).
The following professions generally form PLLCs:
- Physicians and Medical Professionals
- Professional Counselors and Psychologists
- Architects and Engineers
- Social Workers
A few points to consider:
- “PLLC” must be included in the name of the business
- All members of the PLLC must be licensed in the profession of the business.
- The PLLC is only allowed to provide services for which the business was formed.
- The members are still subject to whichever licensing boards govern the PLLC’s profession.
Step 5: Create an LLC Operating Agreement
Although not required by the state government, the LLC Operating Agreement is still necessary for the successful function of your Washington LLC.
What is an LLC Operating Agreement?
The LLC Operating Agreement is a legal document that identifies operating procedures and defines the rights and responsibilities of each LLC member/manager.
Why do I need an LLC Operating Agreement?
Because the LLC Operating Agreement clarifies the roles of the business’s members and provides direction for daily operations, the document ensures stability and structure to the LLC and reduces future disputes.
Do I need to file the LLC Operating Agreement?
You do not need to file the Operating Agreement with the state; it is for the benefit of your LLC and remains in-house.
What goes into an LLC Operating Agreement?
The majority of Operating Agreements include the following information:
- List of the members/managers and their roles
- Designation of authority in the LLC
- Initial capital contributions of the members
- Voting designations and percentages of the members
- Member transfer/addition rules and restrictions
- Distribution of profits
- Meeting schedule
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
Step 6: Obtain an EIN
The majority of LLCs and corporations formed in Washington must register for an EIN. Your Washington LLC may not be able to legally conduct business without this ID.
What is an EIN?
The EIN (Employer Identification Number) is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS). The EIN distinguishes your business with the government much like a personal Social Security number.
Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:
- Any business with employees (even if owned by one person)
- Any business with more than one member
- A partnership (LLC or C-corp)
Please Note: Though still recommended, a sole proprietorship is not required to have an EIN.
Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:
- To hire employees
- To open a bank account in the U.S.
- To file your company’s taxes
- To pay independent contractors
In short, if you make money through your business and it has employees, you must have an EIN.
Is the EIN publicly listed?
The EIN for your LLC will be part of public record.
Can I use my Social Security Number as the EIN?
If you are a sole proprietorship who wants an EIN for your business, you can elect to use your social security number; however, your EIN is part of public record.
Swyft Filings offers EIN services for small businesses in Washington. Find more information here.
Phase Two: Maintaining Your Washington LLC
After initially filing an LLC in Washington, you must keep your LLC compliant with a few simple steps. If you do not maintain your LLC, you are at risk of fines and dissolution.
- Step 1: Register for Washington State Taxes
- Step 2: Obtain Business Licenses and Permits
- Step 3: File an Initial Report/Annual Report
- Step 4: Obtain a Certificate of Existence
Step 1: Register for Washington State Taxes
All businesses, including LLCs and corporations, formed in Washington are responsible for paying the Business and Occupation (B&O) Tax.
B&O Tax Facts
- It is a gross receipts tax
- The tax rate varies by industry
- The tax rate for most business is .471%
- Some tax credits are available
State Income Taxes
Washington does not have a state income tax.
Additional Tax Information
Other taxes your LLC may need to pay:
- Sales and Use Tax at 6.5%
- Employee Withholding Tax
- Unemployment Tax
State taxes that are required include B&O (Business and Occupation) tax, sales tax, use taxes, real and personal property taxes, and other industry-specific taxes.
Step 2: Obtain Business Licenses and Permits
In order to do business in Washington, you must apply for a UBI (Unified Business Identifier) number, which is also known as a tax registration number. You also need a business license if you meet any of the following criteria:
- Your business grosses $12,000 or more per year.
- Your business operates under a name other than your full legal name.
- You are hiring employees within the next 90 days.
- You sell a taxable product or service.
- Your business has specialty licenses available through the Business Licensing Service.
There are over 100 state licenses that your business might require in Washington, varying wildly depending on the county or municipality where your new LLC is located. If your business falls under any of this criteria and you are unsure about the licenses your business requires, review Swyft Filings's business licenses and permits services.
Step 3: File an Annual Report
All businesses formed in Washington are required to file an annual report with the Secretary of State. Some states, like Washington, also request an early annual report known as an initial report.
Initial Report Fees and Due Date
Due Date: Within 120 days of LLC formation
Please Note: Filing the initial report does not change the due date of the annual report
What is an annual report?
An annual report, which is also called a periodic report, is a legal form that is filed with the Secretary of State on a periodic basis that is designed to keep your business’s information current with the state.
What kind of information is in the annual report?
The information requested in the annual report is similar to what was listed in the Certificate of Formation:
- The name and address of the business
- The name and address of the registered agent
- The names of the members
- The business’s EIN
Is the annual report part of public record?
The annual report filed on behalf of your LLC is a matter of public record.
Annual Report Fees and Due Date
Due Date: Anniversary month of LLC formation
Implications of Late Filings: $25 late fee/LLC dissolution after 90 days
Swyft Filings helps you stay compliant by providing stress-free solutions. File your annual report with us today.
Step 4: Obtain a Certificate of Existence
Once you are current on state fee payments, annual report, and franchise taxes, you receive a state-issued Certificate of Existence. You may order this certificate online, by fax, by mail, or in person.
What is a Certificate of Existence?
The Certificate of Existence is an official notification that confirms your business is properly formed and is in compliance with all state regulations. This document is also known as a Certificate of Good Standing.
Who issues the Certificate of Existence?
The Certificate of Existence is generally issued by the Secretary of State.
When can I request a Certificate of Existence for my business?
You will be able to request a Certificate of Existence after your LLC is officially formed through the Secretary of State.
Why do I need a Certificate of Existence?
Many businesses and financial institutions want proof that your LLC is in good standing with the state government. Some companies may not even agree to conduct business if your LLC does not have this certification.
Additionally, some states require a Certificate of Existence before a business can apply for Foreign Qualification.
Does the Certificate of Existence have an expiration date?
The Certificate of Existence does not expire/does not need to be renewed.
Swyft Filings can create a Certificate of Existence for your Washington LLC. Click here for more information.