Starting a Washington LLC
A Washington Limited Liability Company (LLC for short) is a hybrid business entity that offers you personal liability protection in case of a lawsuit. In the event your LLC is sued, your personal assets (like your home, vehicles, and personal bank accounts) remain safe from creditors.
You can use your Washington LLC to run a business or you can use your LLC to purchase assets, such as real estate, vehicles, boats, and aircraft.
1. Washington LLC Name
Before filing a Washington LLC with the Secretary of State, you must search the state’s database to make sure your desired LLC name is available for use.
Your Washington LLC name must be unique and distinguishable when compared to all the existing businesses registered in the state.
Washington LLC Name Search:
You can search your desired Washington LLC name via the ” target=”_blank” rel=”noopener”>Washington Advanced Business Search page.
- Limited Liability Co.
- Limited Liability Company
Tip: If you’re not sure which designator to use, “LLC” is the most common.
Your Washington LLC name cannot include a designator that makes it sounds like a different type of legal entity, such as “Inc.” or “Corp.”
Many filers rush forming their LLC and then later want to change their Washington LLC name. While an LLC name change can be done, there are multiple steps involved such as filing an amendment with the Secretary of State and updating the IRS, the bank, and the Department of Revenue. It’s a lot easier to think of a solid LLC name from the start and not have to change it later. We recommend reading how to come up with a good business name for some LLC naming tips.
2. Washington LLC Registered Agent
The Washington Secretary of State requires you to list a Registered Agent in your LLC’s Certificate of Formation.
A Washington Registered Agent is a person or company designated to receive your LLC’s notices from the Secretary of State and any legal mail (called Service of Process) in case of lawsuits.
Your Washington Registered Agent should have a physical address within the state (PO Boxes are not allowed) where Service of Process and other documents can be received.
Who can be your LLC’s Registered Agent in Washington?
You have 3 options on who can be your LLC’s Registered Agent in Washington. You can be your own Registered Agent, you can ask a friend or family member to be your LLC’s Registered Agent, or you can hire a Commercial Registered Agent.
Commercial Registered Agent: If you want to hire a Commercial Registered Agent in Washington State, we recommend Northwest Registered Agent ($125 per year).
Northwest has been in the Commercial Registered Agent business for over 20 years and they have great customer support. Any mail that is sent to your LLC will be scanned by them and uploaded to your online account. They’ll also let you use their office address throughout your LLC filing in order to keep your address off of public records.
Special offer: If you hire Northwest to form your LLC ($39 + state fee), they’ll include their Registered Agent service free for the 1st year.
3. Washington Certificate of Formation & Initial Report
The Washington Certificate of Formation & Initial Report are the documents you file to create a Washington LLC.
Washington LLC filing fee: $200 (one-time fee)
(Learn more about all the Washington LLC Costs)
Method of filing: You can form an LLC in Washington State by mail or online; however, it’s much better to file online. The online LLC filing has a faster approval time and it includes your required Initial Report (at no additional charge). If instead you were to file by mail, you’d have to separately file your Initial Report and pay an additional filing fee. The state prefers online filings and it’s also what we recommend.
File LLC online: You must create an account with the Corporations & Charities Filing System (CCFS) in order to file your LLC online.
Approval times: Your Washington LLC will be approved in 2-3 business days when you file online.
Note: Filing times may take longer due to the current global situation and government delays. Please see how long does it take to get an LLC in Washington.
Washington LLC approval: The Secretary of State will send you 3 LLC approval documents. They will be emailed to you and a duplicate copy will also be mailed to your LLC’s Registered Agent.
You’ll receive back:
- Congratulation Letter
- Certificate of Formation
- and a “Certificate of Formation with Initial Report – Fulfilled”
4. Washington LLC Operating Agreement
A Washington LLC Operating Agreement is a written agreement among the LLC Members that spells out who owns the LLC and how much of the LLC they own. Our Operating Agreement template is free to download and customize.
An Operating Agreement should be put in place for both Single-Member LLCs and Multi-Member LLCs.
The LLC’s Operating Agreement will also include information about how profits are split, how taxes are paid, and how the LLC is managed.
Having an Operating Agreement for your Washington LLC also helps prove that the company is a separate legal entity from you as an individual. This helps maintain the personal asset protection provided by your LLC.
“Internal Document”: Your Washington LLC’s Operating Agreement is an “internal document”, meaning you only need to keep a copy with your business records and give a copy to other LLC Members (if applicable). You don’t have to send your LLC’s Operating Agreement to the Secretary of State, Department of Revenue, IRS, or any other government agency.
5. Apply for an EIN for your Washington LLC
A Washington EIN Number for an LLC is obtained from the IRS after your Washington LLC is approved by the state.
An EIN is also called an Employer Identification Number, FEIN (Federal Employer Identification Number) or a Federal Tax ID Number.
You can think of your Washington LLC’s EIN as its “social security number”. It helps identify your LLC to the IRS for tax and filing purposes.
Your Washington LLC’s EIN will also be used when you open an LLC bank account, file taxes, apply for a business license, and to process employee payroll (if applicable).
How is a Washington LLC taxed: The IRS doesn’t have a specific tax classification for LLCs and instead a Washington LLC can be taxed 4 different ways with the IRS; 2 of which occur by default (they occur simply by obtaining your LLC’s EIN), and 2 require a special election be made (a form must be filed after you obtain your LLC’s EIN). We recommend reading how are LLCs taxed before applying for your EIN.
Wait for LLC approval: Don’t apply for an EIN until your Washington LLC is approved by the Secretary of State.
An EIN is free: The IRS issues EINs to LLCs at no cost. Applying for an EIN with the IRS costs $0.
Husband and wife LLC: If you are forming a 2-Member LLC in Washington you can elect a special type of taxation called a Qualified Joint Venture. This allows a 2-Member LLC to be treated as a Sole Proprietorship instead of a Partnership for tax purposes.
EIN Responsible Party: This will be the IRS’s “contact person” when you apply for your LLC’s EIN. If you have a Single-Member LLC, you will be the Responsible Party. If you have a Multi-Member LLC, any LLC Member can be the Responsible Party. For more information, please see here: EIN Responsible Party for LLC.
How to apply for an EIN: There are 3 ways to apply for an EIN for your Washington LLC:
- If you have an SSN or ITIN, you can apply for an EIN online
- If you apply for an EIN online and get an error message, you’ll need to apply for EIN with Form SS-4 instead
- If you don’t have an SSN or ITIN, you can still get an EIN for your LLC by following these instructions: how to get an EIN without an SSN or ITIN
6. Washington LLC Annual Report
After you form an LLC in Washington State, you must file a Washington LLC Annual Report every year. This must be filed by all LLCs in Washington regardless of income or business activity levels.
The Annual Report get filed with the Washington Secretary of State.
Washington LLC Annual Report fee: $60 per year.
Due date: The first year an Annual Report for a Washington LLC is due is the year after the LLC was formed. They are due by the last day of the LLC’s anniversary month. For example, if your LLC was formed on March 5th 2022, your first Annual Report will be due by March 31st 2023. Then it’s due March 31st every year going forward.
How to file an Annual Report: The best way to file your LLC’s Annual Report is online (instead of by mail). This is the state’s preferred method and it’s also what we recommend. You can file online via the Corporations & Charities Filing System (CCFS). Click “Business Maintenance Filings” on the left and then click “Annual Report”.
Avoid having your LLC shut down: The most common reason that the Secretary of State dissolves (shuts down) LLCs is for failure to file their required Annual Report. We strongly recommend putting a repeating reminder on your calendar and also writing a note for a visual reminder as well.
Annual Report approval: After you file your Washington LLC’s Annual Report online, it’ll be approved instantly and it’ll be available for download inside your CCFS dashboard.
7. Washington State Business License
All LLCs in Washington must get a Washington State Business License. The term “business license” can be confusing, because in addition to being a business license, it’s also a “bulk registration”. Don’t worry, our Business License lesson walks you through the process step-by-step.
Meaning, by completing the Business License Application, the following things will happen:
- your LLC gets a State Business License
- your LLC gets a City Business License (depending on the city)
- your LLC gets a Specialty Business License (depending on the industry)
- your LLC can get a Trade Name (optional; most people don’t need)
- your LLC gets registered for taxes with the Department of Revenue
- your LLC gets registered with the Department of Labor & Industries (if you’ll have employees)
- your LLC gets registered with the Employment Security Department (if you’ll have employees)
Washington Business License Fee: The fee is $90 (one-time fee). The fee used to be $19, however, that was changed to $90 in July 2020.
How to apply: You can apply for a Washington LLC Business License by mail or online, however, we recommend the online filing method. It’s much easier to complete and has a faster processing time.
8. Washington State Taxes
Every LLC has a unique Washington LLC Taxes situation, but we can provide an overview.
Income tax: Typically, income taxes are paid on 3 levels:
(Unlike most states, Washington doesn’t have a personal or corporate state income tax)
Federal income taxes: A Washington LLC is a pass-through entity which means the profits and losses of the LLC flow through and will be listed on your personal federal income tax return.
- If you have a Single-Member LLC taxed as a Sole Proprietorship, you’ll likely list your business income on a Schedule C as a part of your personal 1040 return.
- If you have a Multi-Member LLC taxed as a Partnership, you’ll need to file a 1065 Partnership Return, issue K-1s to each of the LLC Members, and then the LLC Members will include the K-1 income on their personal 1040 return.
The IRS doesn’t have a specific tax classification for LLCs, therefore, LLCs are taxed based on the number of Members they have. For more information, please read how LLCs are taxed. Additionally, an LLC can elect to be taxed as an S-Corporation to save money on self-employment taxes.
Although the state of Washington doesn’t have income tax, there are other taxes you are likely responsible for:
Sales tax: If you sell retail goods or offer certain services, you need to collect and remit sales tax to the state. Details on Washington sales tax rates can be found here: Washington sales tax rates.
Tip: If you need help automating your sales tax filings, we recommend setting up an account with TaxJar.
Recommendation: You’ll need to speak with an accountant to determine all of your tax reporting and filing requirements. Figuring out all of your tax filing requirements can be very complicated and if filed improperly, it can lead to penalties, fines, and interest.
9. Washington LLC Bank Account
Once the IRS has issued your Washington LLC’s EIN Number, you can then open a business checking account.
It’s best practice to have a business checking account for your Washington LLC in order to maintain your personal liability protection. Using a personal bank account for your LLC is called “commingling assets” and this can lead to personal liability issues if you end up in court.
Having a separate business bank account for your LLC also makes recordkeeping easier for accounting and tax purposes.
Generally, business banking is very similar among banks, however, each bank has their own rules and regulations, so we recommend calling around to determine the following:
- minimum initial deposit
- minimum balance requirements
- monthly maintenance fees (if any)
For more tips on how to find the best business bank account for your LLC, and what you’ll need to bring with you to open one, please see here: business bank accounts for LLCs.
Credit card: You can also get a business credit card to earn points, miles, and other rewards.
10. Business Phone Number
Instead of giving out your actual cell phone number (or home telephone number), it might be a good idea to get a “virtual business number” for your Washington LLC. You’ll be able to customize the number so it forwards to your cell phone.
Our favorite company is Phone.com. They have the cheapest plans and the best customer support.
You can get a local Washington telephone number or you can get a 1-800 number for your business. Phone.com lets you easily setup call forwarding to any number you like, create pre-recorded messages, and you can get your voicemails sent right to your email.
Getting a separate phone number for your Washington LLC is a good idea if you’d like to keep your actual phone number off of those annoying “public record” websites (and stop the spam phone calls).