Legally forming a limited liability company (LLC) in Washington state is a great and exciting choice for entrepreneurs.
More than half of the private sector workforce in this state work for small businesses. Washington also has several advantageous tax benefits for companies and individuals and a burgeoning startup scene featuring a mix of large tech companies and innovative SMEs.
If you’re ready to form an LLC in Washington, you need to file a Certificate of Formation with the Washington Secretary of State and prepare other paperwork.
Here’s a step-by-step overview to help get you started in your business formation in WA.
Steps to Start an LLC in Washington State
- Step 1: Choose a business name for your Washington LLC
- Step 2: Designate a Washington registered agent
- Step 3: File the Washington LLC articles of organization
- Step 4: Obtain an EIN (Employer Identification Number) from the IRS
- Step 5: Register with the Washington Department of Revenue
- Step 6: Prepare an LLC operating agreement
- Step 7: Open a Washington business bank account
Step 1: Choose a business name for your Washington LLC
As a business owner, you want your LLC’s name to reflect the products and services while promoting a strong brand image. But you need to understand the state naming rules.
When choosing a business name for your Washington LLC, here are some requirements to remember.
First, check if your business name is available using the Washington Department of Revenue’s business name search tool.
Remember: your LLC name must be distinguishable from the names of other business entities registered in the state of Washington, including any business name that’s reserved with the state.
The legal name must include words or an abbreviation indicating that your business is an LLC. These include “limited liability company,” “L.L.C.,” or “professional limited liability company (PLLC).”
A business name reservation is useful for holding a selected business name while preparing your formation documents.
You can reserve an available business name for 180 days by filing a name reservation form with the SOS (plus a $30 filing fee). Expedited service costs another $50.
When you plan to conduct business under a name other than the legal business name, your LLC must register a trade name or a “doing business as” (DBA) name.
You can register your trade name when filing for a business license application with Washington’s Department of Revenue (DOR). There’s a $5 fee per trade name.
If you want exclusive rights over the use of a mark on the goods your LLC sells, your LLC may wish to register for a trademark instead. If you only do business in the state of Washington, then you can register with the Washington Secretary of State’s Office.
But if your LLC will also do business outside of Washington, then you should register for a trademark with the U.S. Patent and Trademark Office (USPTO).
Step 2: Designate a Washington registered agent
All Washington businesses must have a registered agent.
A registered agent receives service of process of legal documents during regular business hours on behalf of your LLC. They must have a physical street address located in the state of Washington. P.O. boxes are not accepted as registered company addresses.
The registered agent must also provide consent to the WA Secretary of State at the time of appointment.
You can serve as your LLC’s registered agent if you satisfy the above requirements.
Registered agent service
Some LLCs choose to hire a professional registered agent service instead.
It’s a good option if your company doesn’t have a physical street address in the state. Also, the physical address for the registered agent is publicly listed. If this is your home address, using a commercial registered agent service affords more privacy.
Hiring a registered agent service runs from around $100-$300 per year. For many small businesses, it’s more practical to serve as your own registered agent. But consider all factors.
Step 3: File the articles of organization
The key document for forming a Washington LLC is filing a certificate of formation with the Washington Secretary of State. In most other states, this form is called “articles of organization.”
The form can be filed:
- Online: filing fee is $200. Processing time is about 2 business days.
- By mail: filing fee is $180. Paper filings are processed in the order they’re received.
For expedited service, there’s an additional $50 fee.
The certificate of formation must include specific information:
- Unified Business Identifier (UBI)
- Entity name (or name reservation number)
- Period of duration
- Effective date
- Registered agent and all required information
- Principal office address
- Return address
- Executor information
Foreign LLCs need to include additional information:
- Requalification (if previously registered with the Washington Secretary of State office)
- Home jurisdiction
- Nature of business
- Date of formation
- Date the business began doing business
- Certificate of good standing from home jurisdiction that’s no older than 60 days
Once your forms are approved, you’re officially incorporated!
Step 4: Obtain an EIN (Employer Identification Number) from the IRS
Some LLCs need to apply for a federal Employer Identification Number (EIN) from the U.S. Internal Revenue Service (IRS). It’s used on tax returns as an identifying number for your LLC and may be required for state tax filings.
You can apply for an EIN for free on the IRS website. The process is fast and simple. Once the application is complete, you receive your EIN immediately.
Step 5: Register with the Washington Department of Revenue
All business entities doing business in Washington must register with the Washington Department of Revenue (DOR).
WA DOR issues the required general business license for all local companies.
You can file a WA business license application online, by mail, or in person. Registrations are quick, especially if done online. The processing time is usually 2 business days if filed online or 14 days if done by mail or in person.
Upon registration, your LLC will receive its general business license and will be set up to pay sales tax and other local taxes (if applicable).
Step 6: Prepare an LLC operating agreement
Even though Washington doesn’t require LLCs to have an operating agreement, it’s a good idea to have one.
An operating agreement lays out the roles and responsibilities of the LLC members and the internal operational aspects of running a business. It’s an excellent idea for multi-member LLCs to have all provisions documented in one place so that all expectations are spelled out upfront.
If your LLC chooses not to have an operating agreement, then disputes will be resolved in accordance with applicable state laws.
You can prepare an operating agreement yourself, use a customizable template, an online contract builder tool, or hire a business attorney.
Step 7: Open a Washington business bank account
Business owners have to open a separate business bank account. Commingling personal and business finances is a huge no-no. Doing so can result in the loss of LLC protections for personal assets and personal liability.
Apart from helping you stay compliant, business bank accounts come with handy accounting features for preparing financial statements, determining profit distributions, and understanding the expenses the LLC is incurring.
Also, business bank accounts sometimes offer additional services tailored to business entities. For example, Seattle Credit Union offers interest on your balance, a mobile app to transfer money and pay bills, minimal requirements to open up the bank account, and a high number of credits and deposits before incurring a fee.
They offer two options — one with no monthly fee for smaller businesses with minimal monthly transactions and one with a $15/month fee (that’s waived if the minimum daily balance requirement is met).
This is only one example. Check around to find one that works for you.
LLC taxes, costs, and fees in Washington State
Apart from LLC formation costs, you’ll have to account for ongoing ones. These include:
Annual report cost
Every Washington Limited Liability Company (LLC) must file an annual report to stay in good standing with the state. It’s due every year by the end of the month of your LLC’s registration anniversary and comes with a state fee of $60. It can be filed online or by mail.
The initial report should be filed with the certificate of formation. However, if it’s not submitted with this form, it must be submitted within 120 days following the formation of your LLC, along with a $10 fee.
State LLC taxes
In WA, LLCs don’t have to pay any minimal annual franchise taxes for operating in the state.
But you may need to collect and pay sales taxes on goods sold. Retail sales taxes are collected from consumers and remitted to the WA Department of Revenue.
There’s also a business and occupation (B&O) tax, which can apply to you. The WA DOR provides a rundown of what this business tax entails.
Finally, if you have employees, you’ll need to withhold and pay applicable employment taxes.
Washington business permits and licenses
Almost every type of WA business entity needs to obtain a general business license from the Washington Department of Revenue.
You need a general business license if your venture:
- Requires city or state permits
- Operates under a name different from your full legal name
- Grosses over $12,000 per year
- Plans to hire employees within the next 90 days
- Has to collect and remit sales taxes or other state taxes
- Deals with specialty wood products
Business License Application
In WA, a business license application (BLA) allows you to do several things at once:
- Obtain state, city, or country permits, endorsements, and registrations
- Get optional insurance coverage of LLC members
- Apply for a Washington State Unified Business Identifier (UBI) number (also known as a tax registration number)
A UBI number is needed to do business in the state of Washington. It’s a nine-digit number that will register your LLC with several state agencies to be used for filings and completing fulfilling other LLC requirements.
WA business license application can be done online. The annual license cost is $90.
Don’t forget that you’ll need to renew your business license as well, and any required permits and licenses.
Apart from a general business license, your LLC may also need extra licenses specific to your profession. Visit the Washington State Department of Licensing’s website for business and professional license requirements.
Need more information?
- Check the WA’s Department of Licensing complete List of Licenses.
- Get a customized Business Licensing Guide from WA’s Department of Revenue.
Pros and cons of forming an LLC in Washington
Starting a business in Washington grants you access to a talented workforce, tax advantages, and a pro-business climate. However, there are some cons that business owners should consider too.
- Easy online options for filing formation documentation and straightforward filing requirements.
- No personal income tax for LLC members living in the state. No corporate income taxes are due either.
- The fast turn-around time to form your LLC and affordable maintenance costs.
- Extensive resources and guides are provided by Washington state agency websites.
- WA is a popular location for high-profile technology companies, such as Amazon, Microsoft, and Google, which is enhancing the state’s revenues and opportunities for entrepreneurs.
- Mandatory business license required + annual renewals.
- Annual report requirement, plus a filing fee of $60.
- City license endorsements may be required, along with initial and renewal fees, which means looking at each city and state requirement for where your LLC operates.
- State endorsement requirements for LLCs conducting certain business activities. State fees may apply.
Commonly Asked Questions:
Below are some of the most frequently asked questions (FAQs) about forming an LLC in Washington.