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How to Register & License an LLC in Washington

Posted Friday, December 6, 2019 by Kim Sandher

This blog focuses on a new domestic LLC being set up, not a foreign one looking to do business in Washington.

STEP ONE: FILL OUT AND FILE THE CERTIFICATE OF FORMATION WITH THE SECRETARY OF STATE

You must register your limited liability company with the Washington Secretary of State. To do so, fill out a Certificate of Formation form online on the Secretary of State website or send in a paper copy. The link to both of these options is here: : https://www.sos.wa.gov/corps/limitedpartnershipslplllp.aspx

The fee to file online is $200.00; it takes about 2 business days to process. You will need to set up an account to use this method. The Secretary of State website has a lot of helpful videos you can watch to walk you through the process. This one is specific to creating an account with them: https://www.youtube.com/watch?v=fLBnyQcvQXg&feature=youtu.be.

The fee to mail in a paper copy is $180.00. It takes about 14 business days to process.

These are some questions the form will ask you: a. UBI (Unified Business Identifier) Number – this will be issued to you by the Secretary of State, but you may have gotten one from another state agency like the Department of Revenue, Department of Labor & Industries, or Employment Security Department. If you were using one for a sole proprietorship or another business entity type, do not use the same number b. Name – if you previously filed to reserve a name, you can fill out the details. If you’re using a name that might be taken, it’s a good idea to fill out a Name Reservation form before you complete the Certificate of Formation. c. Duration – the most common is “perpetual” because it does not have a set date your company will expire on d. Effective Date – this is when you want to get the company startede. Registered Agent – you must have one. This entity or individual is going to accept legal documents on behalf of your company and receive correspondence from the Secretary of State. It cannot be this company you are creating.f. Principal Office – this has to be a physical address where you are going to run your business from g. Executor Information – this is the person filling out the form, which is most likely you.

STEP TWO: FILL OUT AND FILE YOUR BUSINESS LICENSE APPLICATION WITH THE DEPARTMENT OF REVENUE

In order to be recognized as a Washington business, you must file a business license application. You must file with the Washington Secretary of State before completing this application.

To complete the application, you will need: a. UBI number b. Information about your business such as physical location, estimated gross revenue, and principal business activities, percentage of ownership, and whether you’ll be somehow affiliated with alcohol c. Employer ID Number (EIN) if you are going to have employees d. Employee information

You may file the application online here: http://www.bls.dor.wa.gov/file.aspx. This takes up to 10 business days to process.

You may also apply in person or by mail. This method takes up to 6 weeks. The processing fee is $19.00. Additional fees will depend on the type of your business. I recommend filing online over this method because you may miss forms you need to file. The forms can be found in the same link as above.

STEP THREE: MAKE SURE YOU MEET ALL OTHER FEDERAL, STATE, COUNTY, AND CITY REQUIREMENTS FOR YOUR BUSINESS

As the business owner, it’s your responsibility to ensure you meet all legal requirements to operate your business.

If you have employees, you’ll need to make sure you report them with the Department of Social and Health Services (DSHS), along with other agencies such as Department of Labor & Industries (L&I), Employment Security (ESD), and Internal Revenue Service (IRS).

Depending on the type of business, you may need permits, registration with specific government agencies, licenses, etc. that are industry specific. You may want to contact us to find out what specific requirements you have depending on your industry.

This website has information for all cities and towns in Washington compiled together in one place: http://mrsc.org/Home/Research-Tools/Washington-City-and-Town-Profiles.aspx.

It also has similar information for counties here: http://mrsc.org/Home/Research-Tools/Washington-County-Profiles.aspx.

If you have any questions about LLC formation in Washington, reach out to Attorney Kim Sandher at (206) 805-1490

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Seattle's Commuter Ordinance

Posted Friday, November 1, 2019 by Kim Sandher

Effective Date

January 1, 2020 but the Seattle Office of Labor Standards will not take enforcement action until January 1, 2021.

Who It Applies To

Businesses who employ at least 20 employees worldwide and employees who worked an average of ten hours or more per week in the previous calendar month. The number of employees is counted by the average number of paid employees who worked each week during the prior calendar year. It includes employees of all statuses including full-time, part-time, seasonal, temporary, etc. It does not apply to government entities and tax-exempt organizations.

What Do You Need To Do?

Chapter 14.30 of the Seattle Municipal Code (“Commuter Benefit Ordinance”) requires that starting January 1, 2020, an employer, with at least 20 employees worldwide, must allow an employee to make a pre-tax deduction to cover transit and vanpool expenses from their paycheck. This obligation can be met by:

  • Allowing employees to make a pre-tax deduction up to the full amount allowed by the Internal Revenue Service; or
  • Subsidizing all or part of the purchase price of a transit pass

The ordinance does not require the employee to make the deduction, only for the employer to offer it. The employee is free to choose not to take it. You must display the Office of Labor Standards poster giving notice of this.You should keep good records of having offered this deduction in writing and written documentation of the employee accepting or declining it.

How Much Is It?

The amount is set by the Internal Revenue Service. The 2019 limit is $265 per employee per month. The 2020 limit has not yet been released.

What About New Hires?

Employers must offer the pre-tax deduction with 60 days of the employee starting. Once the employee selects the pre-tax deduction, the business must provide the deduction within 30 calendar days.

What Is the Purpose Of This New Ordinance?

The Office of Labor Standards provides that the ordinance sets to encourage commuters to use transit options instead of their single occupancy vehicle. It hopes to reduce traffic congestion and carbon emissions. As a pre-tax deduction, the law’s goal is to lower the cost for both workers and businessesPlease be advised, this information may change as future rulemaking occurs.

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Minimum Wage Increase Reminder for Seattle Businesses

Posted Friday, November 1, 2019 by Kim Sandher

Effective January 1, 2020 the Seattle Minimum Wage Ordinance requires the following minimum wage be paid to all employees working in Seattle, regardless of the location of the employer:

Large Employers (501 or more employees): $16.39/hour

Small Employers (500 or less employees):

  • Where employer does not pay at least $2.25/hour towards medical benefits and/or employee does not earn at least $2.25/hour in tips: $15.75/hour
  • Where employer does pay at least $2.25/hour towards medical benefits and/or employee does earn at least $2.25/hour in tips: $13.50/hour

How Do You Calculate Employer Size?

To calculate the number of employees, you will need to count the total number you employ worldwide. If you own a franchise, you will need to count all of the employees in the franchise network.

Which Medical Benefits Payments Count Towards Small Employer’s Minimum Wage?

The employee must be enrolled in a silver-level or higher plan as defined by the Affordable Care Act. A small employer cannot pay the lower minimum wage if the employee declines medical benefits or is not eligible for medical benefits. This is subject to limited exceptions.

Updated 2020 Workplace Posters

If you have a Seattle business license, The Seattle Office of Labor Standards will mail you a revised workplace poster with this updated information. Copies of the poster will be made available on their website, their office, and at City of Seattle Customer Service Centers.

If you have questions regarding these minimum wage ordinances, contact Kim Sandher at (206)805-1490

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Case Law Update: “Insane Delusion” in the context of a Will Contest

Posted Wednesday, October 23, 2019 by Christopher L. Thayer

In Rai-Choudhury v. Inslee (78696-2-1, 10/21/19, Division I), the daughter of a decedent challenged her mother’s updated Last Will and Testament, contending her mother was suffering from an “insane delusion” which materially affected her mother’s disposition of her estate property in her Will. In the year prior to Margaret Rai-Choudhury’s death, she executed an updated Will, which excluded her daughter, Indira Rai-Choudhury as a beneficiary. Indira contended her mother was suffering from mental health problems after a fall and a head injury at the time her mother executed the updated Will and the Will should therefore be invalidated.

“Where a will, rational on its face, is shown to have been executed in legal form, the law presumes that the testator had testamentary capacity and that the will speaks [their] wishes.” In re Meagher’s Estate, 60 Wn.2d 691, 692, 375 P.2d 148 (1962). The party challenging the will bears the burden of establishing invalidity by clear, cogent, and convincing evidence. Meagher, 60 Wn.2d at 692. When determining whether a party meets this burden in the context of summary judgment, we “must determine whether, viewing the evidence in the light most favorable to the nonmoving party, a rational trier of fact could find that the nonmoving party supported [their] claim with clear, cogent, and convincing evidence.” Woody v. Stapp, 146 Wn. App. 16, 22, 189 P.3d 807 (2008). A party presents clear, cogent and convincing evidence when they show the ultimate fact in issue to be highly probable. In re Estate of Watlack, 88 Wn. App. 603,610, 945 P.2d 1154 (1997).

A court may invalidate a will if a party shows by clear, cogent, and convincing evidence that at the time the testator executed the will, they suffered under an insane delusion that materially affected the disposition of the will. Watlack, 88 Wn. App. at 609-10. Regarding what constitutes an insane delusion, Washington courts have stated as follows:

An “insane delusion” is not well defined by case law. It has beendefined as a false belief, which would be incredible in the samecircumstances to the victim if [they] were of sound mind, and fromwhich [they] cannot be dissuaded by any evidence or argument. Itwas later described as a condition of such “aberration as indicatesan unsound or deranged condition of the mental faculties …. A belief resulting from a process of reasoning from existing facts will not be an insane delusion, regardless of whether the reasoning is imperfect or the conclusion illogical.

Watlack, 88 Wn. App. at 610. Thus, “[a] prejudice or dislike that a testator might have for a relative is not ground for setting aside a will unless the prejudice and dislike cannot be explained on any other ground than that of an insane delusion.” In re Trust & Estate of Melter, 167 Wn. App. 285, 312 (2012).

Indira claimed her mother suffered from an insane delusion because Margaret (1) believed the CIA was tracking her, and (2) stopped talking to Indira in May 2015. It is noteworthy that Margaret’s estate presented declarations from Margaret’s long-time financial advisor and her lawyer who both attested that Margaret appeared to be of sound mind when she executed her Will – and that she had mentioned for some period of time that she was considering writing her daughter (Indira) out of her Will.

First, as to delusions about the CIA, Indira presented evidence of her mother having paranoia and beliefs regarding the CIA around May 2015. Margaret, however, did not execute her will until July and Indira did not submit any evidence to suggest that such delusions existed at the time Margaret executed her July 2015 Will. Indira also failed to explain how any delusions about the CIA would cause Margaret to disinherit her.

Second, as to Margaret not speaking to Indira, viewing the evidence in the light most favorable to Indira, she and her mother had a good relationship. They expressed love for each other on the phone and through emails and cards. Indeed, Margaret included Indira in the Will she executed in 1999. But in May 2015, Margaret stopped speaking to Indira. Though the evidence shows a deterioration of Indira’s relationship with her mother in May 2015, Indira failed to provide evidence an insane delusion affected the disposition in her Mother’s Will.

It appears the daughter likely lost this case due to lack of proof, which would satisfy the requirements for a Will Contest. It does appear her mother experienced some mental health issues, but the daughter was unable to provide proof such mental health issues correlated with the decision to write her daughter out of the Will. It may well be there is more to the story than we will ever know. This case should be used merely as a reference point as to how difficult it can be to invalidate a Will.

Should you have any questions about this case or you have questions about potentially seeking to invalidate a Will, please feel free to contact Chris Thayer at (206) 805-1494 or CThayer@PivotalLawGroup.com

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Five Key Terms for Private Construction Contracts

Posted Friday, August 9, 2019 by Kim Sandher

Although there are many pieces to the construction contract, contractors should pay attention to the below five provisions during the negotiation and drafting stages of the contract. Even if not in the negotiation phase, every contractor should have their construction project contract templates reviewed at least annually by an attorney to protect themselves in avoiding the risks of not being compensated or having to pay damages.

Delay

Construction projects often end up having delays caused by things like weather, permitting, or shortage of material supplies. For this reason, it is important your construction contract outline the types of delays that are and are not acceptable and which types of delays would require compensation and by whom.

To help manage the level of liability associated with delays, it is important to have damage provisions in the contract. To limit the amount of recovery an injured party may receive, it is common to have a liquidated damages clause that provides a reasonable estimate of damages in case something does go wrong.

Time of Performance

The contract should lay out when the work will begin, when the work should be completed, what circumstances will allow for an extension, and consequences of construction not being completed timely.

A crucial part of the contract is not only the completion date, but also scheduling other construction trades to work on the project. It is important to ensure these dates complement financing and lending requirements and take weather into consideration as the construction season in Seattle and the surrounding areas can be short.

It is also important to ensure various trades are scheduled in the correct order because many times some work may only begin when the other trade has completed its portion of the job. The general contractor will typically prepare and provide this schedule.

Modification of Terms

Changes to scope of work are common in construction, whether it is because of change of the owner’s desire or because of matters discovered during the construction process. Having a change order provision allows flexibility to make changes to the scope of work, without causing the contract to be invalid.

To avoid the risk of not being compensated for work that is outside the original scope, the contract should lay out the method to modify terms in the contract in case changes need to be made.

Use of Subcontractors and Suppliers

To eliminate ambiguity with respect to anticipated work and cost associated with using subcontractors, the contract should layout the power of the contractor to hire subcontractors to complete various portions of the project.

The project owner should consider whether, after the project has begun, it wants to give the contactor full authority to select subcontractors or whether the owner has to agree and authorize each subcontractor.

Indemnification and Insurance

Although the indemnity and insurance provisions of a construction contract are often given little to no attention during contract negotiation and drafting, these provisions place financial responsibility for inherent risks on contractors. When claims arise these are generally hotly contested and can have disastrous ramifications if not properly drafted or followed. Thus, it is necessary to pay attention to these in the early stages of the contract negotiation.

For questions or assistance with your legal commercial real estate and construction needs, please contact senior associate Kim Sandher at (206) 805-1490 or KSandher@PivotalLawGroup.com.

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DISCLAIMER: This blog is not legal advice. This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice under any circumstances, nor should it be construed as creating an attorney-client relationship. The information on this blog is a general statement of the law and may not be up to date, accurate or applicable to your specific circumstances. Prior success in litigation is not an indication of future results; each case is unique and past results cannot predict future outcomes.

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