Step-by-Step Guide to Opening an LLC in Washington State
Posted Monday, July 31, 2023 by Kim Sandher
Starting a new business is exciting. One of the most crucial decisions you'll make is choosing the right business structure. An LLC offers a perfect balance between flexibility and limited liability protection for business owners. If you're planning to start a limited liability company (LLC) in Washington State, this blog provides a very simplified guide to walk you through it. As you go through it, keep in mind that this is for informational purposes only and not legal advice. Everyone's situation is unique and requires analysis by an attorney to ensure you are complying with all legal requirements.
Step 1: Choose a Name for Your LLC
Select a unique and distinguishable name for your company. It's always a good idea to have three in mind in case you don't get your first choice. Your chosen name should comply with the state's naming requirements, including adding "Limited Liability Company," "LLC," or similar abbreviations at the end of the name.
Step 2: Appoint a Registered Agent
Every Washington LLC must have a registered agent, which is a person or entity responsible for accepting legal documents and important notices on behalf of the company. The registered agent must have a physical address in Washington State. You can act as your LLC's registered agent, or you can hire a professional registered agent service, but your LLC cannot be its own registered agent.
Step 3: File a Certificate of Formation
To officially form your LLC, you need to file a Certificate of Formation with the Washington Secretary of State. This document includes essential information about your LLC, such as its name, registered agent's details, and the business purpose. You can file online through the Secretary of State's Corporations and Charities Filing System (CCFS)for $200 and it is usually processed within 2 business days.
Step 4: Create an Operating Agreement
Although not required by the state, creating an operating agreement is highly recommended for LLCs in Washington, especially if you are married or your LLC will have more than one member. An operating agreement outlines the ownership structure, management responsibilities, and other important operational details of your LLC. This agreement can help prevent potential conflicts among members in the future. For example, if you go into business with a married friend, what happens when they get divorced or something happens to them? Do you want to be in business with their spouse?
Step 5: Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a unique identifier assigned by the IRS to your LLC for tax purposes, often relating to employees. However, even if your LLC has no employees, obtaining an EIN may be necessary for opening a business bank account, filing taxes, and other financial matters. You can apply for an EIN through the IRS website. You should consult with your CPA or a tax attorney to be sure you are doing it correctly.
Step 6: Register for State Taxes
Depending on the nature of your business, you may need to register for certain state taxes. Common taxes include the Washington Business and Occupation (B&O) Tax and sales tax. Visit the Washington State Department of Revenue website to understand the tax obligations and talk to your CPA or tax attorney to make sure you register correctly.
Step 7: Obtain Necessary Licenses and Permits
Depending on your business activities, you may need specific licenses or permits to operate legally in Washington State. You can look to the Washington State Department of Licensing as a start to determine the required licenses and permits based on your business type.
Starting an LLC in Washington State can be a rewarding endeavor, providing you with the flexibility and liability protection you need. Remember, the steps mentioned above are meant only as a guide and are overly simplified. It is always advisable to consult with a qualified attorney to ensure compliance with all legal requirements.
Disclaimer: This blog is intended for informational purposes only and should not be considered legal advice. The process of forming an LLC may change over time, and the information provided here may become outdated. Please consult a qualified legal professional or business advisor for personalized guidance on your specific situation. Kim Sandher can be reached at 206-340-2008 if you have questions.