Company formation laws in Washington

Table of contents

LLC Formation in Washington

In order to form an LLC in Washington, there are some certain steps that you need to take. Below is an outline of the steps:

1. Choosing a business name for your LLC: According to Washington law, an LLC name must contain the words 'Limited Liability Company' or the abbreviation 'L.L.C.' or 'LLC.'. Moreover, the name of your business must not be similar to another name on the file with the Secretary of State. Words or phrases like 'Bank,' 'banking,' 'banker,' 'trust,' 'cooperative,' 'partnership,' 'corporation,' 'incorporated,' or the abbreviations 'corp.,' 'ltd.,' or 'inc.,' or 'LP,' 'L.P.,' 'LLP,' 'L.L.P.,' should not be there.

Consult Access Washington to know how to check the availability of your desired business name in Washington.

2. File a certificate of formation with the Secretary of State: ecretary of State's Online Application Forms page. However, there is a $20 advance processing fee if you file online.

Usually, in Washington, all its members manage an LLC. If you wish your LLC to be managed by one or more managers, then you should mention that in your certificate of formation.

3. Negotiate and execute an operating agreement: Washington law does not ask for an operating agreement in order to form an LLC, but it is highly recommended to execute one. Although there are no specific criteria regarding the content of an operating system, you should include topics like how meetings will be conducted, how the company will be operated and managed, capital required from each member, and how profits and losses will be allocated.

4. File a Master Business Application with the Washington Department of Licensing: The state of Washington uses a Master Business Application form for many of the steps required to start a business. In order to apply, you can print out the form and mail it, or apply online, or visit the business licensing office personally. The filing fee is $20. When you submit the Master Business Application, you will receive a state business license and a Unified Business Identifier (UBI) number (if not received already).

5. File an Initial Annual Report with the Secretary of State: Within 120 days of filing the certificate of formation, you're required to file an Initial Annual Report. The fee for filing is $10.

6. Know what tax and other regulatory obligations an LLC has: Reach out the IRS and request an Employer Identification Number (EIN). If you have employees, you must set up a state employment account. Again, whenever you hire employee, you must inform both the IRS and the state of Washington. Apart from this, you also need to bear workers' compensation insurance.

7. Open a bank account for your business: It's always wise to keep your business' finances separate from your personal accounts. A good way to this is by opening a separate bank account for your business. However, to open one you need to show your Tax ID number (EIN), a copy of the certificate of formation, and a resolution stating the authorized signers whose names are not mentioned in the certificate.

8. Other significant requirements:You need to file an annual report and license renewal with the Washington Department of Licensing every year after the formation. The fee for filing is $59 and you can file the report and renewal online.

Nonprofit Corporation Formation in Washington

Below are the steps required for the formation of a nonprofit corporation in Washington. However, you should also get accustomed to Title 24 of the Revised Code of Washington and to the Washington Department of Revenue's guide.

1. Choose your business name and check for availability: Your nonprofit corporation’s name must not be similar to another corporate name on the file with the Secretary of State (though some exceptions are there). The corporation’s name must not contain terms like ‘incorporated’, ‘company’, ‘limited’, etc. To determine whether or not your desired name is available, use the Washington Secretary of State's Corporations search system.

2. Recruit and/or appoint directors: If you’re going to form a nonprofit corporation, you must have at least one director. However, directors, not necessarily required to reside within the state of Washington, nor do they need to be of a certain age.

3. Incorporate your Nonprofit Organization: Below is an outline to incorporate your nonprofit corporation:

  • Prepare and file articles of incorporation with the Secretary of State in order to qualify for 501(c)(3) tax-exempt status. In the state of Washington, you must be eighteen in order to be an incorporator. The filing fee is $30.
  • Create the bylaws for your nonprofit corporation, which is simply the creation of internal rules and procedures.
  • Hold an organizational meeting and create a record book. A record book is needed to store important documents regarding your corporation.

4. Get your Employer Identification Number (EIN): If you hire an employee for your nonprofit corporation, you must inform both the IRS and the State of Washington. First, you need to request an Employer Identification Number ("EIN") from the IRS. You can do this through an online application. Second, you must file a Master Business Application with the Department of Licensing. Once your corporation gets registered, you’ll receive a letter from the Department of Revenue, which will contain Unified Business Identifier ("UBI") and a Business Tax Guide.

5. Register with the Secretary of State's Charities Division: If you think of asking for donations from the public, then you must get your corporation registered with the Secretary of State's Charities Division. The initial registration fee is $20. However, if you solicit more than $25,000 a year, you have to renew this registration annually.

6. Apply for tax exemptions: Once you’ve incorporated your nonprofit corporation, you can apply for tax exemptions. Apply for tax exempt status under section 501(c)(3) of the tax code. Though nonprofit corporations are not liable for state income tax, they need to file for business and occupation taxes.

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