Form an LLC in Washington.

Articles of Organization

Getting your Washington State LLC up and running means that you must file a certificate of formation with the Washington Secretary of State, along with a $175 filing fee. You can get expedited processing for an additional $20 fee. The organizers of the LLC must also file a Master Business Application and get a Unified Business Identifier (UBI) number. The fee for these is $15.

The certificate of formation for the new LLC must be signed by at least one person. The document must include the LLC’s name, the address of its registered office and the name of its registered agent there, the address of the LLC’s principal place of business, a brief description of what the LLC’s business is, the LLC’s duration (either perpetual or for a specified period of time), a statement as to whether the LLC will be member-managed or manager-managed, and the name and address of everyone who signs the certificate of formation.

The certificate can also contain other items that the members desire to include (presuming they don’t conflict with state law), even if they are also included in the operating agreement.

Your LLC has achieved officially “organized” status once an original and one copy of the certificate of formation are received by the Washington Secretary of State’s office with the filing fee. The certificate of formation is effective as of the date and time filed, unless some other effective date is specified.

Registered Agent and Office

Washington LLCs are required to have a registered in-state agent who is designated to receive official administrative and legal correspondence from the state. The registered agent can be an individual Washington resident whose business office is the same as the registered office, or it can be a corporation or LLC that is authorized to do business in the state. The registered office may be (but doesn’t have to be) the LLC’s place of business; however, it cannot be just a post office box-there has to be an actual street address listed.

Operating Agreement

Almost as critical for the organization as the certificate of formation is the operating agreement. This can be amended in a way that’s specified by the agreement itself, or in a manner permitted by state law. The state doesn’t officially require your LC to have this-but it’s a critical internal document that officially documents how your LLC will operate on both a day-to-day and a strategic basis. The operating agreement should name the members, specify how much each member has invested, explain how profits will be divided, and state how much proportional “weight” each member has when issues are voted upon.

The operating agreement may also set forth meeting requirements such as the amount of required notice, what constitutes a quorum, voting rules, and so on, but it doesn’t have to. Normally, however, the operating agreement does list requirements for the LLC that are already listed in state law and regulations. It can also include such items as restrictions or constraints on the power of the members to adopt, amend, or repeal the operating agreement. If there is more than one member, the operating agreement must initially be approved unanimously in writing by the members.

Membership in the LLC

An LLC is required to have one or more members; each member must be either a natural person or a business entity recognized by the state. Members may become a member of or acquire an interest in the LLC when it is first started (using the method set forth in the operating agreement), or when the new member’s admission is recorded in the LLC’s records.

To join the LLC, the prospective member usually needs to make a contribution of some kind-for instance, pay cash or transfer property to the LLC-or take a binding obligation to do so. However, a member may be admitted to the LLC without acquiring a membership interest if the rules in the certificate of formation and operating agreement permit it, or if the members vote to do so and the admission is documented in the LLC’s records.

An LLC member can only resign in accordance with applicable provisions in the certificate of formation or the operating agreement. One or both of these documents will also usually state the minimum amount of time a member can maintain membership before being allowed to resign. LLCs can pursue remedies for damages suffered by the organization that result from a member’s resignation.

Ongoing Requirements

Each Washington State LLC must file a report annually with the Secretary of State that updates its certificate of formation. Additionally, each LLC must keep these kinds of records available at its office for review or inspection:

• Current and past members and managers and with the mailing address for each
• Certificate of formation and any amendments
• Operating agreement with any amendments and/or prior versions
• Federal, state, and local LLC income tax returns for the last three years
• Financial statements for the LLC for the last three years
• Amount of cash and the value and description of any other property or services contributed or agreed to be contributed by each member
• Times or events that will trigger any additional contributions agreed to be made by each member
• Any member’s right to receive distributions that include a return of any part of the member’s contribution

Also, it’s a very good idea to keep on file and available the minutes of the meeting of the board and any committees of the owners or members.

Dissolution

An LLC is dissolved when any one of the following events occurs:

• Event(s) that are specified in the certificate of formation or operating agreement
• The required number or percentage of members specified in the operating agreement agree to dissolve the LLC
• Event that makes it illegal for the LLC to continue
• The last member leaves the LLC, unless the assignees vote within 90 days to admit one or more members
• A Court order ordering dissolution

Taxes

An LLC by its nature offers some tax advantages over a corporation’s structure, including the availability of more deductions. The biggest advantage is that an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a “pass-through entity” for tax purposes, so that the LLC owners report business losses or profits on their personal tax returns, in the same way that a partnership does.

Washington State does not have an income tax for individuals or corporations as such. The state does, however, apply a business and occupation tax (B&O) based on the LLC’s gross revenue.