Starting LLC in Washington: Peculiarities & Detailed Manual
Want to start an LLC in Washington? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Washington, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Washington LLC: The Notion & Essence
Many Washington business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Washington puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Washington’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Washington obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Washington’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Washington and will help you to start an LLC. The agent can be an Washington resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Washington notifies:
Every entity, local or foreign, must maintain a registered agent. The agent in question must uphold a physical address in Washington, which will be used for mailed-in correspondence, such as lawsuits or demands.
The entity may provide an alternative address; however, it still must be located in Washington. Generally, the Secretary of State’s Office sends every claim to the registered agent unless the entity has arranged otherwise.
A registered agent guarantees an excellent reputation for your Washington LLC. Also, if your business gets worse, Washington can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Washington, you must file the Articles of Association with the Washington State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
You are free to submit the form per Internet here. If you prefer sending correspondence per post, you can print the pdf and mail papers.
The fee to launch an LLC: Washington levies a $180 fee to ground an LLC.
Processing Time: If you’ve mailed your papers, the state municipality will handle and send documents back within 1-4 weeks. If you’ve submitted them per Internet, the papers will be processed in 2-7 business days. If you need to accelerate things, you can cover the expediting fee and drop them at the local office yourself. In that case, you’ll have your papers back the same day. The state’s expediting fee amounts to $50 for mailed documents and $20 for online forms.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Washington, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
In Washington, the state-level taxes are determined by the type of business entity. Contrary to most of the states, Washington levies no income taxes on the state level. In Washington, you only cover federal income taxes. Nevertheless, every business entity has to cover the Business and Occupation. A comprehensive guide on classifications and obligations is available here.
LLCs operating in retail sales must make payments for the state’s sales tax. It currently amounts to 6.5%. You’ll access a detailed guide on the tax here.
LLCs with staff must also cover taxes dedicated to the labor force. For instance, entrepreneurs in Washington are obliged to fund the state’s unemployment insurance. It’s not a tax per se, yet you are to make payments regularly. You’ll access more data on the fund with the FAQ offered by the state’s Employment Security Department.
Besides payments that apply to most LLC, Washington levies industry-specific taxes. For instance, it charges extra fees from LLCs operating in real estate, tobacco, petroleum, and more. You’ll access detailed insights on the business taxes in Washington and submission forms here.
Local Tax Business Demands
The exact location of your entity in Washington also determines whether you’ll have to deal with local fees. For instance, counties have permission to charge extra taxes, which will be used for road maintenance, etc.
Eventually, the total sum of taxes may reach 10.5%. To calculate all local charges, turn to the Tax Rate Lookup tool. We advise you to pay a visit to a local municipality to get a hold of all local obligations.
Stage №6: Getting Business Licenses & Permits
Washington obliges all LLCs to obtain a statewide general business license. Most entities need the document to officially run a business. You’ll access a comprehensive list of obligations within the state’s Business Licensing Service, where you can also submit the form online.
The state also obliges LLCs to acquire permits demanded by the federal government. These are required for certain branches only, like television, wildlife, agriculture, and others. All federally-regulated industries demanding permits are on the list offered by the Small Business Association.
Naturally, as Washington levies specific taxes, it demands industry-specific licensure. The state provides a huge variety of those permits, so you’ll quickly find the one relevant to your LLC. We advise you to check the database of licensure offered by the state here. Keep in mind that local municipalities may uphold specific permits as well.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
Business Insurance
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Washington Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting
Generally, LLCs must submit income reports, a form representing the profit they’ve made. The form is used to calculate income taxes, so it has to be filed regardless, even if a company bears losses. In Washington, you are spared of that responsibility since the state levies no income taxes. The additional information on business taxation in Washington is available here.
Referring to the services of a qualified accountant
Washington obliges every LLC to present an annual report. You can submit the form online or print off the pdf version and mail it per post. The submission fee amounts to $60. The annual report is a means to keep the state updated on any vital information relevant to your LLC and the changes the company has undergone.