If you’re looking for a reliable DIY guide for starting an LLC in Washington, look no further. Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.
That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire an affordable LLC service – they’ll take care of the paperwork so you can spend more time growing your business.
Recommended: Compare the Top LLC Services
If you’re new to the process of starting an LLC, you might also be unfamiliar with the LLC formation services that are reliable and offer great value – like ZenBusiness. As a reference point we compared them to the two most well known LLC formation services, IncFile and LegalZoom. See our comparison guides for more information:
Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your Washington LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain state requirements that it must follow.
First off, your name must identify the business as an LLC, so it must include some form of “limited liability company,” including “limited liability co.,” “L.L.C.” or “LLC.” And it shouldn’t contain a designator for any other business type, like “cooperative,” “partnership,” “corporation,” “incorporated,” or any abbreviation thereof.
Finally, your LLC name must be unique, distinguishable from every other name on record with the Secretary of State. How so? If you’re attempting to make changes to distinguish your name, know that altering the following elements won’t be enough:
- Business type designators like LLC or Ltd. (New Company LLC and New Company Ltd. are considered the same)
- Articles (“a,” “an,” and “the”)
- Conjunctions (like “and,” “but,” and “or”)
- Special Characters
- Singular vs. plural forms of the same word
- Abbreviated versions of the same word
Instead, you’ll need to make more significant changes to the name’s keywords. This way, you will end up with a properly distinguishable name in the Secretary of State’s records.
Consider this: your friend Fanny wants to open a flower shop in Seattle, Washington. The name she is considering, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of State’s records.
Determine the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Certificate of Formation without first confirming it’s available. Use the Secretary of State’s Corporations Search to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in Washington for a total of 180 days.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold by sending a Name Reservation Form and a $30 payment to:
Secretary of State
801 Capitol Way S
P.O. Box 40234
Olympia WA 98504-0234
You can either mail your form to the P.O. box or hand-deliver it to the street address; there’s no option for online filing. Want to grab that name ASAP? Expedite the process by submitting an additional $50 payment and checking the appropriate box on the Name Reservation form.
Step 2: Choose a Registered Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in Washington, she’ll need a go-between for state and legal communications. This is called the registered agent.
A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. But maintaining an agent isn’t just a convenience, it’s required. The Washington Secretary of State puts it this way: “All Corporations, LLC’s, and Limited Partnerships doing business in Washington must have a Registered Agent with a physical Washington State address. The Registered Agent receives annual reports, notices, and service of process on behalf of the organization they represent.”
Taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Washington.
Now for the practical application, the “how-to.” Once you’ve scoped out and spoken with a good registered agent, include their name and address on page two of your Certificate of Formation. The agent will also need to give their official consent by signing the form.
You have two options for who can serve as a registered agent: an individual or a company.
Individual as Registered Agent
You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are a resident of Washington and have a physical address in the state (P.O. boxes are not allowed). Third parties like attorneys or accountants are usually good options, but you can also appoint friends or family members. You can even serve as your own LLC’s agent, provided you meet these requirements.
Registered Agent Service
It can be a lot easier, though, to use an LLC formation service like IncFile or Northwest Registered Agent, so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your Washington LLC on your own, you can use a national registered agent service to cover your agent duties.
During the life of your LLC you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the State
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Certificate of Formation. This filing creates a record for Fanny’s Florals and Design, LLC with the Washington Secretary of State, giving it authorization to commence business in the state.
The Secretary of State offers both online and hard copy filing options for the Certificate of Formation, so choose the one that works best for you.
Completing your application online is the quickest way to file. Just head over to the Washington Corporations Filing System and create an account, then proceed to the digital form. At $200, filing online is slightly more expensive than using a hard copy, but the expediency and ease are worth it.
Hard Copy Filing
Download, complete, and print the application. Write out a check or money order for the $180 fee, then mail or hand-deliver it to:
Secretary of State
801 Capitol Way S
PO Box 40234
Olympia WA 98504-0234
Processing hard copies can take up to two weeks, but if you’re in a hurry, you can request expedited processing by including an additional $50 fee writing “expedite” on the envelope. Expedited processing takes two days for mailed forms and one day for hand-delivered ones.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
You aren’t technically required to adopt an operating agreement in Washington before doing business there, but it’s in your LLC’s best interest to do so anyway. Creating an operating agreement will establish procedures that help your business run smoothly and serve as a safety net for your personal assets in legal disputes.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to the tax structure.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend getting one through ZenBusiness, which includes a free LLC operating agreement with every package. This will save you a lot of time and money.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Certificate of Formation, designated a registered agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a Washington LLC running smoothly and in good standing with the state.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
LLCs don’t have to pay taxes directly to the government, but there must be state income taxes, right? Nope! The state of Washington doesn’t impose a personal or corporate income tax. It does, however, require LLCs to pay a business and occupations tax (B&O tax), otherwise known as a gross receipts tax. The B&O rate varies depending on the type of business you run.
On top of that, your LLC may be subject to other circumstantial business taxes. So if your business sells merchandise, you’ll owe a Sales Tax and Use Tax. And if you maintain employees, the LLC must pay an Unemployment Tax. Register for these taxes by filing a business license application online or by mail. Both methods require a $19 fee; for the latter, you can send your document and payment to:
State of Washington
Business Licensing Service
PO Box 9034
Olympia, WA 98507-9034
If you check the box indicating that your LLC hires or plans to hire employees, check the corresponding boxes on the application. This will notify the Employment Security Department, who will follow up with instructions for paying the necessary tax.
Plus, depending on your LLC’s location, it may owe a local tax to the city, municipality, or county where it resides. Consult your local government’s website to find out.
The Certificate of Formation may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.
For example, accountants must get a license from the state’s Board of Accounting and if Fanny wanted to start serving sandwiches in her flower shop, she would need a Food Worker Card from the Department of Health. Check out this comprehensive license list on the Washington Department of Licensing website to determine which one(s) your LLC might need.
Certain cities and counties require their own specific licenses on top of any state ones, so you should also check with your local government.
There’s one more item you should add to your list of LLC maintenance to-dos: the Annual Report.
After you officially start your LLC, you must file an Initial Report within 120 days. After that, your Annual Report will be due every year by the end of your LLC’s anniversary month. The Initial Report costs $10, but each Annual Report costs $60. Late filings will incur a delinquency fine of $25.
The Secretary of State accepts Annual Reports online, by mail, an in person. If you’re submitting a hard copy, mail or hand-deliver the document and your fee payment to the address listed in the Certificate of Formation section.
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Washington LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC formation service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a registered agent.
Sound good? Whether you know that you’ll need an LLC service or you’re just exploring your options, take a look at IncFile and Northwest Registered Agent. These are two of the top services available. And you can take our word for it because we’ve done a whole lot of research on the topic.