Think about your LLC a year from now: raking in profits and taking Washington by storm. You 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.
While you’re making plans and dreaming big, 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.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
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
- Required: Certificate of Formation Fee
- $200 for online filings and $180 for hard copies, with a $50 expedited processing option for hard copy filings.
- Optional: LLC Name Reservation Fee
- Required: Initial Report Fee
- $60 for online or hard copy filings
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.
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 one. 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 you’ve submitted it and paid the fee, you’ll be moving on and not looking back.
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.
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 (like ZenBusiness and Northwest) 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.
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 and on-time, 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.
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 $500-2000.
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, specialties and find the right fit for your LLC.
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 “Application for Registration.”
All foreign business entities are required to foreign qualify in Washington, or they could incur some pretty severe penalties. You can file the Application for Registration 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 Application for Registration.
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.
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 Application for Registration 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.