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Washington LLC CostYou have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.

And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in Washington.

Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Washington startup fees here.

Bare Minimum Cost to Start an LLC in Washington

Optional: LLC Name Reservation Fee

    • $30 for paper filings with an optional $50 for expedited processing

Optional: LLC Formation Service

    • $39 for an LLC service like ZenBusiness and $79 for LegalZoom

Required: Certificate of Formation Fee

    • $200 for online filings and $180 for hard copies, with a $50 expedited processing option for hard copy filings.

Required: Initial Report Fee

    • $30 for online filings and $10 for hard copies

Overall Washington LLC Formation Costs

LLC Name Reservation Fee

Reserving a business name is an optional first step in the LLC formation process. If you have a great name in mind but aren’t ready to start your business, you should consider reserving it. A name reservation costs $30 and gives you 180 days of exclusive rights to your name. On the flip side, the Certificate of Formation automatically registers your name, so if you’re ready to start your LLC, skip the reservation and go straight to that document instead.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

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Certificate of Formation Fee

This is the big one, the most important (and most expensive) form that you’ll file to start your Washington LLC. While it’s pricey, the Certificate of Formation makes your LLC official in the eyes of the state, so it’s well worth the cost. It’s $200 for an online filing and $180 for a hard copy. Online is slightly more expensive because it’s automatically treated as an expedited document, and you can expedite a hard copy filing for an additional $50 fee. The good news is that the Certificate of Formation is a one-time filing, so once you’ve submitted it and paid the fee, you’ll be moving on and not looking back.

The information required to file your Certificate of Formation includes your Unified Business Identifier (UBI) number (if you have one — if you don’t, the state will provide one when you file this form), your LLC’s official business name, your name reservation number (if applicable), the duration of your LLC, the effective date of your LLC formation, the name of your commercial registered agent or the name, address, phone number, and email address of your non-commercial registered agent, your registered agent’s name and signature, your LLC’s principal office address, the date, and the name, address, and signature of your LLC executor.

If you would rather get some help for this step, you’re in luck! There are plenty of reputable LLC formation services that will prepare and file your Certificate of Formation on your behalf. You have plenty of options for this service, but we prefer ZenBusiness. They offer great low rates and well-rounded services, and with our exclusive discount code, you can get 20% off!

Business and Professional Licenses

Even after the state has processed your Certificate of Formation, you may still need to obtain licensure from certain state or local agencies before doing business. The licenses your LLC needs — and how much they cost — depend on the type and location of your business. For example, home inspectors must apply for a license through the Home Inspectors Board, and scrap metal processors through the Business Licensing Service. Additionally, cities and/or counties may have their own specific licensing requirements. Check with the Department of Licensing and your local government to see which ones your LLC may need.

What are some of the most commonly required business licenses for Washington LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

LLC Formation Service

Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.

Most of these services (which are often frequently used LegalZoom LLC alternatives) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.

There are many different companies offering LLC formation services these days, and it can be tricky to tell which one is the right choice for your needs. We think ZenBusiness and IncFile are the two best LLC formation companies, and we wouldn’t hesitate to recommend either of them to our families and friends.

Registered Agent Service

Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Washington business law. In short, you need an agent you can trust.

While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.

Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.

Attorney Fees

If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.

Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.

Cost variations depend on the experience and location of the lawyer. A quick Google search will reveal a multitude of qualified lawyers, so choosing one can be a daunting task. Doing research using a website like Avvo can help. It provides access to a large database of Washington business attorneys so you can compare rates, locations, and specialties and find the right fit for your LLC.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Washington. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

Foreign Qualification Fee

This only applies if your LLC was formed in another state and is now expanding into Washington. Does this describe your business? If so, don’t worry about filing the Certificate of Formation. Instead, you’ll file the “Foreign Registration Statement.”

All foreign business entities are required to foreign qualify in Washington, or they could incur some pretty severe penalties. You can file the Foreign Registration Statement online for $200 or by mail for $180. The online form’s higher cost is because it’s automatically expedited. Expediting a paper form will cost an additional $50. Like the Certificate of Formation, this is a one-time filing so, as long as it’s accepted, you won’t need to pay it again.

LLC Annual Fees

Beyond all the startup costs listed above, your LLC will have annual maintenance fees as well. In order to keep its records current and accurate, the Secretary of State requires all LLCs to file an annual report by the end of their anniversary months. The reports are available online or as a hard copy for a fee of $60, so write this into your budget each year.

Additionally, every LLC must file an initial report within 120 days of filing the Certificate of Formation or Foreign Registration Statement.

The information required to file your annual report includes your LLC’s official business name, your Unified Business Identifier (UBI) number, the name and address of your registered agent, your LLC’s principal office address, your business phone number and email address, the name of at least one governor of your LLC, a description of the nature of your business, an indication that your LLC does or does not own real property in Washington, an indication that your LLC has or has not transferred at least 16.7% interest, an indication that your LLC has or has not transferred controlling interest (at least 50%), an indication that your LLC has or has not executed an option agreement for its future purchase or acquisition, the date, and your name, title, and signature.

For more info on annual reports for Washington LLCs, check out our full article on this topic!

Taxes

Your LLC won’t be required to pay a federal income tax because LLCs are classified as “pass-through” entities, whose individual members report income and losses on their personal returns. In addition, Washington has no state-level income taxes for either individuals or businesses.

But at the state level, Washington imposes a Business & Occupation Tax on its LLCs, which varies based on your company’s gross income and business activities. It also requires a Sales Tax and a Use Tax from any business that sells merchandise, and an Unemployment Tax from any business that has employees. To register for these taxes, complete a business license application with the Department of Revenue.

What if I Don’t Pay?

Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.

If you fail to submit any of the required filings or fees, you’ll run into penalties. Skip the Certificate of Formation or Foreign Registration Statement and you won’t be able to do business in the state. Then, once your LLC is up and running, late annual reports will incur a $25 fee and cause your business to lose its good standing with the state. Businesses without good standing cannot foreign qualify in most other states, renew some professional licenses, apply for business loans, and more. Plus, if you remain out of good standing, your LLC can be administratively dissolved.

And taxes have their own set of late penalties. Late tax payments are assessed a fine amounting to 9% of the tax due. If it’s more than a month late, the fine increases to 19%, and if it’s more than two months late, it increases again to 29%. Visit the Department of Revenue website for more information.

Planning Your Expenses

By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Washington.

Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees — like annual reports and business-related taxes — so your business doesn’t fall out of good standing.

Key Steps for Starting a Washington LLC

  • The first step to forming a Washington LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
  • Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Washington, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
  • The third step involves the preparation and filing of your Certificate of Formation. You’ll need to fill out the paperwork and pay a $180 fee. Once the state processes this document, your LLC will be officially open for business!
  • That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Washington LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
  • You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
  • Next, you’ll need to register for any relevant taxes with the Washington Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Washington!

Key Steps for Maintaining a Washington LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.

The Top 3 Washington LLC Services

If you want to hire a reputable LLC formation service to handle the heavy lifting on your behalf, these are the three companies we trust and rely on the most.

  • ZenBusiness ($39) – ZenBusiness offers a well-rounded LLC formation package at a great low rate. Their standard LLC package includes a full year of registered agent service, an accounting assessment, and a customizable operating agreement. ZenBusiness also receives stellar customer feedback.
  • IncFile (FREE) – That’s not a typo! IncFile really does form LLCs for free. Even better, they include 12 months of registered agent service in their free package. IncFile has a ton of experience and more than 500,000 satisfied customers, so they’re always a reliable choice.
  • Northwest Registered Agent ($225) – Northwest offers a bit more of a premium service, but if you have the money, we think it’s worth it. Like ZenBusiness and IncFile, Northwest also includes a year of registered agent service with the purchase of any LLC formation package. They also offer the best customer support in this industry, with knowledgeable representatives who are familiar with the details of business formation processes in every state.

Frequently Asked Questions

Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Washington.

What are the state business tax rates in Washington?

As we mentioned earlier, there are no state-level personal or corporate income taxes in Washington. That said, all business entities operating in this state are subject to business and occupation (B&O) taxes. These rates vary, but most businesses end up paying 4.71% on retail sales.

How quickly does Washington process LLC formations?

The Secretary of State should be able to process your LLC’s formation within two business days. Online orders are automatically expedited, and you can expedite a paper filing for an additional $50.

How many small businesses are there in Washington today?

The state of Washington is home to more than 630,000 small businesses. Entrepreneurs of all backgrounds and business types find that Washington is a great place to own and operate a small business.

What are the top small business resources and websites in Washington?

The Washington chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Washington LLCs. The U.S. Small Business Administration’s Washington District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.

Should I form my LLC in Washington, or choose a state like Delaware or Wyoming?

Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.

However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.