Setting Up A Washington LLC
Setting up an LLC, or limited liability company, in Washington state is extremely easy.
The Steps to Set Up a Washington LLC
You simply fill out the one-page "articles of formation form," which is available from the Washington State Secretary of State web site:
NOTE: If you have trouble filling out the form—and some of its boxes are confusing to new business owners—an affiliated entity, Stephen L. Nelson, Inc, sells a $37.95 downloadable do-it-yourself kit that walks you through the process of setting up a Washington limited liability company. The kit (really an ebook) provides examples of completed forms and sample limited liability company operating agreements. Click the "Buy Now" button shown below to purchase a kit. Note, too, that the kit of course comes with a money-back guarantee. (For more information about this limited liability company kit, you can click do-it-yourself Washington state limited liability company kit.)Purchase and Download
After you file the articles of limited liability company formation with the state and pay the appropriate fee (roughly $200), the Secretary of State processes your application and a week or so later your LLC comes to life.
As a practical matter, you need an operating agreement to document a bunch of stuff about how the LLC is managed, who owns the LLC, how the tax accounting for the LLC should work, and what needs to happen if the ownership of the LLC changes.
If you need an operating agreement, you should consider having a smart attorney to draft the document for you. Spending a few hundred bucks up front on expert legal help can save you thousands of dollars of hassle and headache later on. (If I'm helping you with the LLC tax treatment, I can recommend a good attorney.) You can also get a boilerplate operating agreement from the paralegal service you use to file the articles of formation with the state or from my do-it-yourself limited liability company kit.
Deciding on Your LLC's Tax Treatment
After you set up your LLC, you need decide what tax form your LLC should use. Single-member (single-owner) LLCs can be treated as sole proprietorships, C corporations, or S corporations. Multiple-member (multiple-owner) LLCs can be treated as partnerships, C corporations, or S corporations.
By default, single-member LLCs are treated as sole proprietorships and multiple-member LLCs are treated as partnerships. However, owners can often realize huge tax savings—thousands and thousands of dollars each year—by electing to be treated as a C corporation or an S corporation.
How to Get Choice of Entity Benefits
For help assessing whether you should operate your business as a sole proprietorship, partnership, C corporation or S corporation, please email me at firstname.lastname@example.org or telephone me at 425-885-9499. You and I can arrange either an in-person or telephone meeting where we together estimate the benefits you'll receive from the different entity forms. If you're well-organized and have even a rough business plan, this meeting should take less than a couple of hours.
If we conclude that it makes sense to convert your existing LLC or C corporation to an S corporation (assuming you decide that C or S corporation status makes sense), you'll need to supply me with your previous year's tax return if you're operating an existing business, or your SS-4 if you're operating a new business (the SS-4 is the form you used to get an employer identification number). If your situation is straightforward, my work to elect C or S corporation status is very modest. For a new business, it typically takes an hour or two of my time to help you correctly elect or double elect. For an existing business, slightly more effort and risk assessment is required.
Tip: Your tax savings from the optimal entity classification don't start until you make the correct entity classification elections. Each month of delay may cost you and your partners (if you have them) hundreds or even thousand of dollars in extra taxes.
A Special Offer to New Entrepreneurs
If you want help getting started in a new venture, let me mention that I will provide hourly consulting services for new business owners and entrepreneurs. If I'm already preparing your tax return, I charge $235 an hour. If I'm not already preparing your tax return, I charge $300 an hour.
Typically, new or prospective business owners find that meeting for, say, an hour in my offices to go over basic entity setup questions (such as "should you use an LLC?"), explain how you get your accounting system up and running, and identify some of your most important tax planning opportunities (such as whether or not you should elect "S" status) delivers outstanding value.
To set up an appointment for this sort of one-on-one consulting, email me at email@example.com. But a tip: Make sure you have your list of questions in hand before we meet... (We'll use that list of questions as our agenda.)
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- Estate Tax Basics
- Federal Income Tax Preparation
- How S Corporations are Taxed
- How to Save Taxes with a Health Savings Account
- How to Save Taxes with an S Corporation
- Important Tax Due Dates
- Last-minute 2008 Checklist of Business Tax Reduction Techniques
- Real Estate Profits: Capital Gain or Not?
- Real Estate Tax Traps
- Rental Property Tax Benefits
- State Income Taxes
- Tax Forms
- Tax Tips, Help and Advice
- Wages for S Corporation Shareholder Employees
- Washington State Sales Tax Income Tax Deduction