For more details on the steps necessary to form a corporation, please refer to the links below:
You could be sued if you use a business name that is too similar to the name or trademark of another business. Below is a partial list of resources to help you search for a business name and to avoid names currently being used:
You may also check:
LLC Name Requirements:
The State of Washington has a number of requirements for the name of your LLC:
If you choose to do business under a name different from your registered LLC name, (i.e., through the use of a “trade name,” you must register any trade names by filing a Master Business Application. You should utilize the resources above to check if the trade name is already in use.
As shown in RCW 25.15.070, the Certificate of Formation must set forth:
The certificate of formation must be filed with the Secretary of State along with the applicable filing fees. Unless a delayed effective date is specified, a limited liability company is formed when its certificate of formation is filed by the Secretary of State. A delayed effective date for a certificate of formation may be no later than 90 days after the date it is filed.
While many states do not legally require your LLC to have an operating agreement, it is foolish to run an LLC without one, even if you are the sole owner of your company.
An operating agreement will help you guard your limited liability status, head off financial and management misunderstandings, and make sure your business is governed by your own rules - not the default rules found in the State of Washington statutes (RCW 25.15).
The main reason to create an operating agreement is to help ensure that courts will respect your limited personal liability. This is particularly important in a single-member LLC where, without the formality of an agreement, the LLC may appear to be a sole proprietorship. Having a formal written operating agreement will lend credibility to your LLC's separate existence.
An LLC needs to document the profit-sharing and decision-making protocols as well as their procedures for handling the departure and addition of members. Without an operating agreement, you and your co-owners will be ill-equipped to settle misunderstandings over finances and management. What's more, your LLC will be subject to the default operating rules created by state law.
Each state has laws that set out basic operating rules for LLCs, some of which will govern your business unless your operating agreement says otherwise.
By creating an operating agreement, you choose the rules that govern your LLC's inner workings, rather than having to follow default rules that may or may not be right for your situation.
There are many issues you must cover in your LLC operating agreement, some of which will depend on your business's particular situation and needs. Most operating agreements include the following:
While these items seem fairly straightforward, each requires you to make some important decisions, which you should spell out in your operating agreement.
The owners of an LLC usually make financial contributions of cash, property, or services to the business to get it started. In return, each LLC member gets a percentage of ownership in the assets of the LLC. Members usually receive ownership percentages in proportion to their contributions of capital, but LLC members are free to divide up ownership in any way they wish. These contributions and percentage interests are an important part of your operating agreement.
In addition to receiving ownership interests in exchange for their contributions of capital, LLC owners also receive shares of the LLC's profits and losses.
Usually, operating agreements provide that each owner's share corresponds to his or her percentage of ownership in the LLC. If your LLC wants to assign shares that aren't in proportion to the owners' percentage interests in the LLC, you will have to follow rules for "special allocations."
In addition to defining each owner's share, your operating agreement should answer these questions:
Because you and your co-owners may have different financial needs and marginal tax rates, the allocation of profits and losses is an area to which you should pay particular attention. You may want to run the allocation part of your operating agreement by a tax professional, to make sure it achieves the overall results you had in mind.
Most LLC management decisions are made informally, but sometimes a decision is so important or controversial that a formal vote is necessary. There are two ways to split voting power among LLC members:
Most LLCs measure out votes in proportion to the members' ownership interests. Whichever method you choose, make sure your operating agreement specifies how much voting power each member has, as well as whether a majority of the votes or a unanimous decision will be required to resolve an issue.
Many business owners neglect to think about what will happen if one owner retires, dies, or decides to sell the owner's interest in the company. Operating agreements should always include a buyout plan - rules for what will happen when a member leaves the LLC for any reason.
You can get additional information on Federal Employee Identification Numbers from the following IRS publication: Understanding Your EIN.
An LLC business entity is not recognized for federal tax purposes, but is treated as a sole proprietorship, a partnership, or a corporation.
A single-member LLC can choose to be taxed as a corporation or disregarded as an entity separate from its owner, essentially treated as a sole proprietorship (a husband and wife, who are owners of an LLC and share in the profits, can file as a single member if they reside in a Community Property State such as Washington).
An LLC with at least two members can choose to be taxed as either a corporation or a partnership.
By default a single-member LLC is treated as a sole proprietorship, and an LLC with at least two members is treated as a partnership.
To choose corporate entity classification for tax purposes the LLC must submit IRS Form 8832.
Master Business Application
The Master Business Application is a simplified form used to apply for many state licenses, registrations, and permits, as well as some city licenses.
You must file a Master Business Application when you first start your business, or when you change or update your business. You will need to file (or re-file) if you want to:
You may file for a Master Business Application online, by mail, or in person at a business licensing office location.
Washington State Licenses
Depending on the type of business conducted, you may be required to have additional licenses. The list of businesses can be found at State of Washington List of Licenses.
City and County Licenses and Permits
Many cities and counties in Washington also require business licenses. Information can be found at the following locations:
The text, graphics, arrangement and presentation of materials contained on this Web site are copyrighted by The Law Office of Gary E. Gill, P.S. All rights reserved. You may download and print materials from this Web site solely for the purpose of reading the materials and retaining them for reference purposes. Any other use of the materials, including copying, distribution, retransmission or modification, without express prior written permission, is prohibited.
Your use of this Web site does not create an attorney-client relationship between you and The Law Office of Gary E. Gill, P.S. The materials set forth herein are provided for informational purposes only and do not constitute legal advice. Similarly, email messages sent to The Law Office of Gary E. Gill, P.S., or any of its employees do not create an attorney-client relationship.
The materials presented on this website are intended solely for informational purposes. Links to other websites are provided for the user’s convenience. They do not constitute endorsements of the linked websites. The information provided does not constitute the legal opinion or legal advice of the Law Office of Gary E. Gill.