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Starting a Limited Liability Company (LLC) in Washington State is an exciting process, but preparing for the costs is essential. The initial paperwork is only the first step, so don’t let the possible expenses discourage you.
This guide will explain the cost of forming an LLC in Washington and help you manage the financial aspects of launching your business. We’ll also introduce you to helpful LLC services, such as Tailor Brands, that assist in making wise financial choices during the formation process.
Prepare to start your business journey efficiently without spending too much.
What Is the Cost of Forming an LLC in Washington?
The main LLC registration cost comes from the $200 fee to file your LLC’s Certificate of Formation on the Washington Secretary of State’s online portal.
Washington Foreign LLC Formation Costs
If your LLC is already registered in another state and you want to grow your business in Washington, you must register it as a foreign LLC in Washington.
Registering a Washington foreign LLC costs $200 online or $180 by mail. You file a Foreign Registration Statement in Washington, which you can also submit by mail.
Annual Cost for LLCs in Washington
Keeping a Washington LLC in good standing requires knowing and meeting several continuous responsibilities and costs linked to compliance and legal status. An essential requirement is the annual report, which informs the state about important LLC details like ownership and management, with a filing fee of $60.
Also, you must appoint a registered agent, which doesn’t come with a state-required fee. However, you may choose a professional service that generally charges an annual fee between $100 and $300.
Meeting these ongoing obligations and following the applicable regulations helps protect your Washington LLC’s legal and financial standing.
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How Much Does It Cost to Start an LLC in Washington With the Best LLC Service?
Tailor Brands LLC Formation Cost
The initial cost to file for an LLC in Washington is $200 and may increase with additional services. The usual processing time is 2 to 3 weeks. For faster service, expedited processing is available for an extra $50, taking 4 to 6 days, and rush processing costs an additional $100, completing in 1 to 2 days.
The Tailor Brands Lite LLC plan offers LLC formation and standard processing times and is the most affordable option, costing only the state filing fee. The Essential LLC plan, priced at $199 plus state fees, includes LLC formation with expedited processing, annual compliance services, and an operating agreement.
Tailor Brands charges $199 yearly to maintain these services. The Elite LLC plan, the highest tier, costs $249 plus state filing fees. It includes everything from the Elite plan, along with extra business tools and services like a free business domain for the first year, a DIY website builder tool, an online store, eight free logos, a digital business card, a business cards tool, and a social media post maker. Customers must pay an annual fee of $249 to continue receiving these services.
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Additional Costs When Starting an LLC in Washington
Washington LLC Name Costs
Naming your Washington LLC is free of charge ($0). You don’t need to file a Name Reservation; simply enter your chosen Washington LLC name on the Certificate of Formation. Once the state approves your filing, your LLC name is officially established.
If you want to secure your chosen name ahead of time, you can file a name reservation form and pay $30. This allows you to reserve the name for up to 180 days before you start the LLC formation process.
Washington Registered Agent Costs
In Washington, you must appoint a Registered Agent when you set up your LLC. Depending on your choice, this can cost between $0 and $125 per year. No additional fee exists for listing a Registered Agent on your Certificate of Formation.
A Washington Registered Agent receives legal documents and official state notices for your LLC. They must have a physical address in the state and be available during business hours.
You can appoint yourself or someone you know as your LLC’s Registered Agent at no extra cost.
Alternatively, you might choose a Registered Agent service, which generally costs between $100 and $300 per year. These services offer various business benefits and can protect your privacy.
It’s wise to select a Registered Agent service if:
- Washington state law requires Registered Agents to have a physical address in the state if they don’t have one
- If you prefer to keep your address private, some companies may let you use their address instead
Washington Operating Agreement Costs
The Washington LLC Operating Agreement is a written agreement among the LLC Members that’s available for free ($0). This agreement includes detailed information about LLC ownership, management protocols, and profit distribution.
It’s recommended that both single-member LLCs and multi-member LLCs have an operating agreement, keep it with their business records, and give each member a copy.
Note that many online platforms usually charge between $50 and $200 for LLC Operating Agreements.
Washington EIN Cost
An EIN Number, also known as an Employer Identification Number (EIN), Federal Tax ID Number, or Federal Employer Identification Number (FEIN), is used for several purposes, including income tax filing, opening an LLC bank account, and hiring employees if needed. Although many websites charge a fee to obtain an EIN for your LLC, it’s actually available for free.
You can get an EIN for your Limited Liability Company at no cost directly from the Internal Revenue Service (IRS) website. The online application process is quick and can be finished in just a few minutes.
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Washington LLC Taxes
Regarding Washington LLC taxes, business owners should consider several important factors:
Federal Income Taxes
For your LLC’s federal income taxes, the Internal Revenue Service (IRS) provides different treatment options. Your Washington LLC Operating Agreement should state how your LLC will be taxed.
Single-Member LLCs are treated as Disregarded Entities by the IRS, which means they do not file separate federal income tax returns. Instead, the LLC owner is responsible for filing and paying federal income taxes.
How the LLC owner is taxed depends on their status: if the owner is an individual, the taxation is similar to a Sole Proprietorship, and if the owner is another company, the taxation is as a branch or division of the parent company.
Multi-Member LLC Taxes
For LLCs with two or more owners, they’re automatically treated as a Partnership for tax purposes. These LLCs need to file a 1065 Partnership Return and give a Schedule K-1 to each owner, which reports their share of the profits. The income on the K-1 “flows through” to the owners, who then report and pay taxes on it individually on Form 1040.
Husband and Wife LLC Taxes
In community property states such as Washington, a husband and wife who own an LLC can file taxes as a Single-Member LLC, also referred to as a Qualified Joint Venture, instead of a Multi-Member LLC. They can choose either on their EIN Application or by sending a letter to the IRS. If they do not make this choice, their LLC will automatically be taxed as a Partnership.
Electing Corporate Taxation
An LLC can be taxed as a Corporation instead of the default taxation methods. There are two corporate tax options: S-Corporation and C-Corporation.
Choosing S-Corporation status may help established businesses save on self-employment taxes, but this decision requires careful consideration. Choosing C-Corporation status is less common and offers advantages to large employers regarding healthcare fringe benefits. It’s important to consult an accountant before making these tax elections.
Washington State Income Tax for Washington LLCs
Washington does not charge state-level income tax on Single-Member or Multi-Member LLCs. Yet, certain industries and types of businesses might have to pay other Washington business taxes, like the Business & Occupation (B&O) Tax. The B&O Tax is a gross receipts tax calculated on your LLC’s total income without any deductions.
The tax rate varies depending on your LLC’s business classification and must be reported on the Business Excise Tax Return.
Local Income Tax for Washington LLCs
You might have to file and pay income taxes with your local municipality, such as your town, city, or county. It’s wise to consult an accountant to help prepare and file local income taxes. Reach out to your municipality to learn about their specific tax regulations.
Washington Sales Tax
If your LLC sells products to consumers in Washington, you may need to collect sales tax and get a Seller’s Permit. The Washington Department of Revenue issues this permit, which allows you to collect sales tax on retail sales. Terms like resale license, wholesale license, or sales tax permit all refer to the same permit.
To ensure compliance, refer to the Washington Department of Revenue resources and consider getting professional help for tax-related issues.
Washington LLC Payroll Taxes
When your Washington LLC has employees, you need to manage payroll taxes. These taxes include federal income tax withholding, Social Security tax, Medicare tax, federal and state unemployment taxes, and local or county deductions. Handling payroll taxes can be complicated, and mistakes could result in penalties.
Many businesses use payroll companies or accountants to ensure they manage payroll taxes correctly and comply with the law.
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Washington LLC Cost – FAQs
Conclusion
Forming an LLC in Washington involves more than the initial filing fee. It includes financial considerations such as getting the required documents, hiring registered agents, handling essential items like operating agreements, and securing an EIN. Managing finances effectively in these areas is vital, and LLC service providers like Tailor Brands are beneficial.
With a comprehensive grasp of these complex costs and support from Tailor Brands, aspiring entrepreneurs can confidently start their Washington LLC journey.
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