Starting a small business is the American dream, with 17 million new businesses formed in 2022. For many entrepreneurs and business owners, a limited liability company (LLC) stands out as an attractive choice due to its flexibility in taxation, governance, and the protection it offers against personal liability. While these benefits make LLCs a popular option, it’s essential to understand the costs associated with setting up an LLC in Washington State.

Navigating the process of establishing a Washington LLC can be complex. It’s not uncommon for aspiring business owners to have questions about the various fees and expenses involved in the Washington LLC cost.

To ensure a smooth and successful setup, consider consulting with knowledgeable Seattle business law attorneys who can guide you through the intricacies of the process and help you make informed decisions.

Expected Expenses When Setting Up a Washington State LLC

When setting up an LLC in Washington, costs can vary depending on factors such as the complexity of your business structure, the industry you operate in, and the specific requirements of your local jurisdiction. To help you plan and budget effectively, we’ve compiled a list of common expenses associated with establishing a Washington LLC. In the following section, we’ll provide a detailed breakdown of each item, giving you a clear understanding of what to expect and how to navigate these costs.

From state filing fees and registered agent services to business licenses and permits, we’ll cover all the essential expenses you need to consider when forming your LLC. By familiarizing yourself with these costs upfront, you can make informed decisions and avoid surprises. Whether you’re a first-time entrepreneur or an experienced business owner, this section will serve as a valuable resource in your journey to establish a successful LLC in Washington State.

Certificate of Formation

First, consider the Washington LLC filing fee. The upfront cost of $180 covers registering and processing all paperwork with the Washington Secretary of State. The documents you will receive state:

• The business name
• Address of the business
• The agent’s name, address, and signature
• Duration of the LLC (limited or perpetual)
• The effective date (the filing date or later).

Your attorney reviews all the documents and guides you through this process. We analyze everything and discuss the options we can pursue to set up your LLC.

Name Reservation

You must reserve a specific company name before filing the necessary documents to form an LLC. This step will secure your desired name for a fee of $30 per entity.

Register Agent Services

All LLCs in Washington State must have a registered agent, an entity, or an individual who accepts the documents on the company’s behalf. Businesses can hire a registered agent service or designate an individual within the company. These costs will range from $100 to $300 yearly.

Operating Agreement

We recommend having an operating agreement in place for all LLCs. These outline the ownership structure, internal procedures, dispute resolution, and management responsibilities. The fees for preparing these agreements range from $500 to $2,000, depending on the complexities.

Business Permits and Business License

Additional permits or licenses could be necessary depending on the business and what is required to comply with local and state regulations. These costs will vary depending on the industry and community where you establish the business. We recommend speaking with a skilled attorney about the fees. Our team will guide you through setting up an LLC and review all the fees for establishing your business.

Professional Services

A skilled LLC attorney will guide you during the formation to ensure you comply with all local and state laws. These costs vary depending on the structure, complexity, and industry. We recommend speaking with our team of attorneys. We have over 100 years of combined experience working on LLCs.

Washington LLC Annual Report

You must file an annual report for your LLC with the state and obtain the City of Endorsement renewal. These costs start at $71 and go up depending on the city and the type of business you are starting.

Setting up an LLC in Washington is complex and requires the assistance of a skilled business attorney. The legal professionals at Dickson Frohlich Phillips Burgess will help you set up your LLC. We have worked on various businesses ranging from simple to complex entities. Our track record speaks for itself, and we give you practical legal advice you can use.

We recommend always using our LLC attorneys’ knowledge, skill, and experience to guide you. Your attorney will listen and review the options and costs to get everything set up.

WHAT ARE THE COSTS OF STARTING A BUSINESS IN WASHINGTON?

Setting up an LLC is just the beginning of establishing a Washington business. Most people creating an LLC are either switching an existing business from another entity or starting a new business. If you’re planning a new venture, the Small Business Administration (SBA) states that understanding your expenses will increase the chances that your business will launch successfully.

Calculating these costs will help you:

• Estimate your profit
• Calculate the income needed to break even
• Obtain loans
• Attract investors
• Determine your tax deductions.

Most businesses are brick-and-mortar locations, online, or provide a service. Increasingly these lines are blurring, so you may also be any combination of the three. Some costs apply to all three; others are unique to that type. Some expenses are well-defined and relatively fixed (permits and licenses), while others are less certain (salaries and utilities).

After identifying your business expenses, organize them into one-time and monthly expenses. One-time expenses are initial costs to start your business (they may be tax deductible). Monthly expenses are salaries, rent, insurance, marketing, and utility bills.

IS AN LLC RIGHT FOR YOU?

An LLC is a business structure with many of a corporation’s benefits and a partnership’s tax advantages and flexibility. Business entities have several options, each with its benefits and drawbacks.

LLC – One or more members may own the LLC. All or designated members can manage it. There’s no double taxation like a corporation. Members’ income is taxed based on their annual earnings from all income sources. They are not liable for business debts.

Corporation – Owned by one or more shareholders. It’s more complex than an LLC. For the simplest functions, you must have annual meetings and legal documentation (like corporate resolutions). The corporation is taxed at the corporate tax rate, and shareholders are taxed on the dividends received. Generally, this business entity is best if there are more than a hundred shareholders or you’re planning to raise a lot of investment capital.

Subchapter S Corporation – A type of corporation with a flow–through taxation mechanism like an LLC. The Internal Revenue Service restricts who’s eligible to be a Subchapter S Corporation. There are some tax benefits because it allows for specific savings for self-employment taxes.

Partnership – Has two or more owners. Each partner is liable for the other’s acts and decisions. Partners also face personal liability that a corporation or LLC may shield. There’s more freedom and less paperwork than in other business forms.

Sole Proprietor – You are the owner, and there’s no need to file reports, create an entity, or deal with corporate income taxes. It’s the least complicated way to do business, but you are potentially personally liable for your business’s debts and liabilities.

You’re investing too much money, energy, and time into your business to risk legal mistakes. Choose an experienced corporate law firm to help your business start and grow. For decades, we’ve provided legal services to companies of all sizes in Seattle and Tacoma.

What is a Washington LLC Operating Agreement and Do I Need One?

An LLC operating agreement is a legal document that outlines the ownership structure, management responsibilities, and operational procedures of an LLC. While not legally required in every state, an operating agreement is highly recommended for all LLCs, as it helps establish clear guidelines and expectations for the company’s members.

Key aspects typically covered in an LLC operating agreement include ownership structure, capital contributions, management and decision-making, profit and loss allocation, membership changes, and dissolution.

An operating agreement serves several important functions:

• It helps prevent misunderstandings and disputes among members by clearly defining roles, responsibilities, and expectations.
• It provides a framework for resolving conflicts and making decisions.
• It can help maintain the limited liability status of the LLC by demonstrating that the company operates as a separate legal entity from its members.

It’s advisable to consult with a business law attorney to draft an agreement tailored to your specific needs and circumstances.

STARTING A BUSINESS? DICKSON FROHLICH PHILLIPS BURGESS CAN HELP.

You are investing your hard-earned money, energy, and time into your business and need to avoid critical legal mistakes. Choose an experienced corporate law firm to help your business start and grow. For decades, we’ve provided legal services to companies of all sizes in Seattle and Tacoma.

We have reasonable rates and provide personalized service. If your business is in Seattle, Tacoma, Olympia, or Portland the experienced corporate attorneys at Dickson Frohlich Phillips Burgess can help get your LLC off the ground.

Contact us now at  206-429-4418 (Seattle), 253-358-8473 (Tacoma), 360-742-3500 (Olympia), 971-416-0881 (Portland) to schedule your consultation with a skilled attorney.