How to Start an LLC in Washington (Step-by-Step Guide)

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FAQs

Can I form an LLC on my own, or do I need legal assistance in Washington?

Whether you can form an LLC on your own or require legal assistance in Washington depends on your familiarity with the process and the complexity of your business structure. While it’s possible to file the necessary paperwork yourself, seeking legal assistance can ensure compliance with all regulations and minimize potential errors.

What is the main difference between an LLC and a corporation in Washington?

The main difference between an LLC and a corporation lies in their management structures and tax treatments. LLCs offer more flexibility in management and taxation, while corporations have a more rigid hierarchy and are subject to double taxation. Additionally, LLCs provide limited liability protection to their members, but corporations are legally entirely separate entities.

Can I use a P.O. Box as the address for my LLC in Washington?

In Washington, you can use a P.O. Box as the address for your LLC, but it’s generally advisable to use a physical street address for official correspondence and legal documents. While using a P.O. Box may offer some privacy benefits, it may also limit your LLC’s credibility and accessibility.

Can I serve as the Registered Agent for my own LLC in Washington?

Yes, you can serve as the Registered Agent for your own LLC in Washington, but it’s not always recommended. As the Registered Agent, you’re responsible for receiving legal notices and official correspondence on behalf of your LLC, which may require being available during regular business hours and maintaining a physical address in the state.

Can I form a professional LLC (PLLC) in Washington for licensed professions?

Yes, you can form a professional LLC (PLLC) in Washington for licensed professionals, such as doctors, lawyers, architects, and accountants. A PLLC offers limited liability protection to its members while allowing them to provide professional services within their respective fields. However, members of a PLLC may still be personally liable for their own professional negligence or misconduct.

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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

Starting an LLC in Washington State follows an uncomplicated process that is similar to those found in most other U.S. states. However, the state does impose some unique tax requirements on businesses.

Starting an LLC in Washington step-by-step

1. Select a name for your Washington LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the State of Washington:

1. An LLC’s name must be distinguishable from the names of existing business entities on file with the Washington Secretary of State.
2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”, or  “L.L.C.”

Need help coming up with a business name? Check out our free business name generator.

Check name availability

After picking a name that follows naming rules, check that your LLC name is available in Washington by performing a search using the Washington Secretary of State Business Search.

Reserve your LLC name with the Secretary of State

Reserving your chosen LLC name with the Secretary of State prevents another business from using it before you can file your Certificate of Formation and legally form your LLC.

File a Name Reservation with the Washington Secretary of State by mail (no online filing option) to reserve a name for up to 180 days. The filing fee is $30 (with the option of paying $50 for expedited service).

2. Designate a registered agent

As in every U.S. state, forming an LLC in Washington requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf. The registered agent must either be a state resident or business entity with a street address in Washington OR if the individual or business is based out-of-state, they must have a business office in Washington.

3. File a Certificate of Formation

An LLC is formed in Washington State through the filing of a Certificate of Formation of a Limited Liability Company with the Washington Secretary of State.

The Certificate of Formation must provide the following information:

• LLC’s name and principal office address
• The effective date of LLC formation (if later than filing)
• Duration of LLC (if not perpetual)
• Registered agent name, mailing address, and signature
• The signatures of the LLC executor

You can file the certificate online or by postal mail. The filing fee is $200 for online filings or $180 for mail filings.

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Washington, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN) 

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your  legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.

File Annual Reports

All LLCs active in Washington must file an annual report every year with the Washington Secretary of State. The initial report is due within 120 days of an LLC’s formation or authorization to do business in the state (foreign LLCs). The following reports are due each year at a date decided by the Secretary of State.

You can file the initial report and subsequent annual reports online or by mail. The filing fee for all reports is $60.

Obtain business licenses

In Washington state, LLCs are required to obtain a business license to operate legally, but the specific type of license depends on a few factors.

• State business license: If your LLC has employees, you’ll need a state business license. It costs $19 for a business license application and $90 for the initial issuance, and you’ll need to renew it annually for $10.
• Sales Tax Permit: Regardless of whether you have employees, you will most likely also need to apply for a Washington Sales Tax Permit, which lets you collect and pay sales tax in the state.
• Occupational licenses: Other licensing requirements will depend on the specifics of your business. Occupational and professional licenses are another state-wide consideration, and if you are in a regulated industry, you’ll need to adhere to these regulations. Sectors like alcohol and food sales, cosmetology, and other professional services typically have their own board or agency that licenses businesses.
• Local licenses: Additionally, local governments within Washington can have their own requirements for licenses and permits. Cities and counties can both require their own general licensing, professional licensing, and things like zoning and use permits.

Find out the exact requirements for your LLC using the Washington Business Licensing Wizard. Check with any municipality where you operate an LLC to be sure you are in compliance with local law.

Understand state taxes

Washington’s tax system for businesses, particularly LLCs, stands out compared to many other states. One significant aspect is the absence of a state-level income tax. As a single-member or multi-member entity, you won’t need to file a separate state income tax return.

Like other states, Washington LLCs typically operate as pass-through entities for federal tax purposes. This setup means that the LLC itself doesn’t pay federal income tax; instead, any profits or losses are passed through to the members or owners, who then report them on their individual tax returns.

Self-employment taxes: However, members or owners of Washington LLCs, single-member and multi-member, are accountable for paying self-employment tax on their respective share of the LLC’s profits. This self-employment tax is 15.3%, consisting of 12.4% for Social Security and 2.9% for Medicare.

B&O tax: Washington does impose a business and occupation (B&O) tax. This tax is levied on the gross revenue of most businesses operating within the state, including LLCs. The exact rate and filing requirements for the B&O tax vary based on factors such as the industry in which your LLC operates, its location, and its annual gross revenue.

Register with the Washington Department of Revenue: Many LLCs doing business in Washington, including those that collect sales tax and those that generate $12,000 or more in annual revenue, must register with the Washington Department of Revenue.

Understand BOI reporting

The new Beneficial Ownership Information (BOI) reporting rules, established by the Corporate Transparency Act (CTA), seek to enhance transparency in company ownership by mandating certain entities to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

Who has to file: Entities required to report include corporations, limited liability companies (LLCs), and similar entities operating in the United States, with some.

Beneficial owner defined: Beneficial owners, defined as individuals possessing or controlling at least 25% of the company’s voting rights or equity interests, must be disclosed.

Filing deadlines:

• Existing entities formed before January 1, 2024, have until January 1, 2025, to submit their initial report.
• New entities formed on or after January 1, 2024, must file within specific timeframes based on their date of formation or registration, ranging from 30 to 90 days after receiving notice.

Learn more about BOI Reporting.

Post LLC tasks

Set up business bank accounts

One of the primary benefits of an LLC is the personal liability protection it offers, keeping owners’ assets safe if the business owes money or has legal trouble. However, this protection is based on the owner treating the business finances separately from their own.

While this doesn’t legally require a business bank account, having one is the best way to prove you are operating in compliance with LLC and state law and avoid the loss of this protection. A business bank account also makes it simpler to operate in compliance, as you can track business costs and income separately, and easily manage cash flow. This is usually a great help at tax time as well.

Bank options: For your business bank account, you can choose major banking institutions but will often find more favorable terms with small and online offerings, like Found, Relay, and Mercury.

Obtain a Certificate of Existence

The Certificate of Existence in Washington indicates that your business is active and has fulfilled its annual reporting obligations to the state. This document provides assurance to stakeholders, partners, and authorities that your business is operating legally and compliantly within the state.

How to get it: It can be obtained through the Washington Secretary of State via online request, by mail, or in person. The fee is $20.

Build a website

Whether you plan to offer products and services online or not, a website is a must-have for any small business. While every LLC owner knows a website is necessary, you might not know where to start. Follow these steps to get started:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Costs to set up an LLC in Washington

Average costs to set up a Washington: $260-$460

While LLCs are a less expensive business structure compared with corporations, you can still expect to pay for formation and maintenance. Here’s a closer look at setup costs:

• Incorporation fees: The initial step in forming an LLC involves filing a Certificate of Formation, which costs $180 if submitted by mail or $200 if completed online. Additionally, there is an option for expedited processing of the LLC Certificate of Formation, which incurs an additional fee of $50 for faster handling.
• Annual Report filing fees: LLCs must file an Annual Report with the state. This Initial Report is due 120 days after registration and costs $60. After filing the first report, you’ll file one annually and pay the same filing fee.
• Registered agent service fees: While you do not need to engage professional services, many LLC owners choose to use at least some so that their business starts off smoothly. This could include a registered agent service, who acts on your behalf to be available during required business hours and can range from $50 to $300 per year.

Foreign LLC registration

An LLC formed in a state other than Washington that plans to do business in the state must register with the Washington Secretary of State.

Complete these steps to do business in Washington as a foreign LLC:

1. Comply with Washington LLC naming guidelines and confirm that the LLC’s name is available using the Secretary of State Business Search.
2. Appoint a Washington registered agent.
3. File a Foreign Limited Liability Company Registration with the Washington Secretary of State online or by mail. The filing fee is $200 for online filings or $180 for mail filings. Your LLC must include a Certificate of Good Standing or Certificate of Existence from its state of origin that is no more than 60 days old.