Start An LLC In Washington
An LLC, meaning Limited Liability Company, is a form of a legal corporation where the proprietors or the partners in the company have lesser liability in terms of debts, assets, or lawsuits.
In this article, we will let you know about what to keep in mind before setting up an LLC, the costs and the formalities involved, the taxes, marketing, and much more.
Read on further to learn all about how to start an LLC in Washington in detail.
First, let’s look at how Washington compares to other states as a place to start an LLC.
| State | Washington | Idaho | Oregon | Montana | US Average |
|---|---|---|---|---|---|
| Population | 7,738,692 | 1,839,106 | 4,237,256 | 1,084,225 | 6,619,825 |
| LLC Filing Fee | $200 | $100 | $100 | $70 | $130.38 |
| LLC Annual/Biennial Fee | $60 (every year) | $0 (however, an information report must be filed every year) | $100 (every year) | $20 (every year) | $89.34 (every year) |
| Corporate Tax Rate | 0%* | 6.50% | 6.6-7.6% | 6.75% | 5.60% |
| Nominal GDP per capita | $86,265 | $49,616 | $62,867 | $53,703 | $64, 773.08 |
Before You Set Up An LLC In Washington
Setting up an LLC requires you to prepare a few steps in advance. Before beginning the process of forming an LLC in Washington, you will need to:
- Pick the right and unique name for the organization.
- Get an agent.
- File for Certificate of Formation.
- Get other documents like an Operating Agreement.
- Take care of tax requirements.
- Get an EIN number.
We will be discussing all these points in detail in this article.
How Much Does It Cost To Start An LLC In Washington?
Forming an LLC in Washington is not cheap. Creating an LLC in Washington involves a lot of expenses, both major and minor. We will be presenting you with a cost analysis to help you get a little financial clarity.
- Cost of applying for the Certificate of Organization with the Washington Secretary of State – $180 by mail and $200 online
- Reserving a name – $30- $50
- Annual License Renewal fee – $60
- Registered Agent Fees – $100- $300
- Cost of the lawyer for filing – Indefinite (probably ranging from $50 to hundreds of dollars)
- Minimum Annual LLC Taxes – $100- $400
- Annual Report Fees – $20- $100
While most of these costs are bound to be incurred, you can avoid a few of them, for instance, the lawyer fee. But it is advisable to hire one in case you need a professional to create the right paperwork without any flaws. Most of these costs, though, are unavoidable.
| ZenBusiness – $49 + state fees to register your LLC (read review) |
| Incfile – $0 + $50 state fees to register your LLC (read review) |
Steps To Start An LLC In Washington
Starting an LLC in Washington might seem intimidating at first, but it really is not. We have listed out the steps for you in detail to understand what you need to prepare for.
- Name the LLC – First and foremost, you need to think of a unique name for your corporation. You may check the availability of the name on the Washington Secretary of State website. The name can be reserved for 180 days.
- Find an Agent – One major requirement before setting up your LLC is appointing a registered agent. The agent will receive legal papers in the case of lawsuits. Before picking the agent, you will need to check if the agent is a resident of Washington or conducts business in Washington with an existing physical address in Washington.
- Certificate of Formation – After making the above two decisions, You will need to file the Certificate of Formation with the Washington Secretary of State. The fee for this is $50. You can file for certification here.
- Operating Agreement – An operating agreement specifies how your corporation is envisioned to be run, including authorities, responsibilities, and strategies. This document isn’t mandatory. You can find templates online.
- Get an EIN – EIN stands for IRS Employer Identification Number. Irrespective of the number of employees or members, it is advisable to get an EIN. You can apply for the EIN online here.
The Forms You Need To Register An LLC In Washington
Below are the links to the websites where you can find the required forms needed to form an LLC in Washington.
Did You Know?
In 1991, the LLC form of business corporation entered the Washington business scene, providing companies with liability protections. The formation process of the corporations also became easy with flexible taxes. These corporations could also establish management policies that suited the businesses.
LLC Taxes In Washington
Depending on the nature of your business, you may be required to register for one or more forms of state tax.
Sales Tax
In case your business is dealing in a physical product, you will need a seller’s permit from the website of the Washington Department of Revenue, allowing you to collect tax on sales levied by states and municipalities on transactions.
Employer Taxes
Another tax you must register for is the Unemployment Insurance Tax from the Washington State Department of Revenue.
Business & Occupation Tax
Most businesses in Washington must pay a Business and Occupation Tax through the Washington State Department of Revenue.
Federal Tax
Almost all the LLCs are required to report their income to the Internal Revenue Service
(IRS) every year. This is a mandatory requirement. For this purpose, you will need forms like-
- For multi-member LLCs- Form 1065 Partnership Return
- In the case of single-member LLCs- Form 1040 Schedule C
Is Washington A Good Place To Start An LLC?
Washington can be a great place to start an LLC. The process isn’t tedious. These steps are easy, and the market is also great. Washington is ranked as the 15th best state according to Business Tax Climate Index from Tax Foundation.
How Long To Form An LLC In Washington?
It isn’t a very long process to form an LLC in Washington. The filing process in itself takes around two weeks, and you might have to wait for a little over a month to get all the processes completed and begin your company.
How Much Does It Cost To Run An LLC In Washington?
This is a relatively common question among people who are looking to start an LLC in Washington. How much to start an LLC in Washington depends on various factors like the commodity you will be dealing in (as it determines the taxes), or if you will be hiring a lawyer (as it will escalate the costs).
There are also companies that you can hire that take up all of your work. They’ll take care of all of your processes, formalities, and expenses. You can keep a budget of $2000 for your first year but bring it down to $1000 for consecutive years.
What To Do After Formation?
After getting your LLC registered, you will need to take care of a lot of other steps like separating business and personal assets, getting business insurance, creating a website for your business, and more. We will discuss these requirements in detail here.
- Create a Logo – Once you have registered your business, you will need to create an identity for it. This involves creating a logo for the business. The logo should be simple, catchy, and overall, catch the essence of your company.
- Build a Website/ E-Commerce Store – A website is a mandate for businesses today. It is a door to your company for a customer. The website should list all about your company, what you stand for, what you offer, your product specifications, your members, and different ways to contact you.
- Bank Account – Your company needs an official bank account in where all the proceeds from the sale will be put into.
- Business Insurance – You can take care of all the risks involved through insurance. You can get General Liability Insurance against lawsuits. Another option is the Professional Liability Insurance to cover claims by entities attached to the business like consultants, accountants, etc. You can also get a Workers’ Compensation Insurance for the employees covering illnesses, deaths, etc.
It is very important to make sure that all the requirements of the business are taken care of. Apart from making the sales thrive, you will also need to employ all the above-mentioned points to make it a success. If you do, you’ll be well on your way to creating a thriving LLC
Resources To Start A Successful LLC In Washington
You will need all sorts of forms as a resource to kick-start the process of establishing your organization. It might be a hassle to look for them all over the web. We have put together a list for your ease.
- Certificate of Formation
- Washington Secretary of State
- Washington State Department of Revenue
- EIN
- For multi-member LLCs – Form 1065 Partnership Return
- In the case of single-member LLCs – Form 1040 Schedule C
Start Marketing Your LLC In Washington
One of the major requirements to make your business stand out is adequate marketing. It is one of the major requirements to grow your business. You need to put in place an outreach program that gets you more customers.
The members can employ various marketing tools like social media, press releases, emails, and paid advertising. There are so many different social media channels that you can tap into these days to get customers.
How To Dissolve An LLC In Washington?
Dissolving a website also involves a cost. You will hold a certain liability and will also have to pay the government fees.
If you are a more than one member company, you will first and foremost have to vote to wind up the company. You will then need to file for the correct dissolution forms (Certificate of Dissolution).
All the registrations you had done till now will have to be canceled, and all the qualifications/ accreditations received till now will also have to be forfeited.
You might also have to get a tax clearance. The owners will also have to take care of all the inventory, machinery, and any sort of other equipment through resale, etc.
Once you have taken care of all these steps, your business will finally be dissolved.
Conclusion
From setting up a Limited Liability Company in Washington to dissolving it, we have provided you with all the information you may need relating to an LLC.
Whether it’s deciding on the name of an LLC, costs involved, how to start an LLC in Washington for free, or how to market your business, we have covered almost every question you might have.
Now, setting up an LLC might seem daunting at first, but it is really one of the best experiences to create a business from scratch and run it successfully.