Starting a Corporation in Washington | What You Need to Know

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Start a Corporation in Washington

In Washington, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in Washington, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in Washington.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

How to Start a Corporation in Washington

What is a Corporation in Washington?

A corporation in Washington is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in Washington are required to have at least One directors. One of the main advantages of a corporation in Washington is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in Washington is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in Washington if you would like to provide limited liability protection to your shareholders rather than Washington LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

– WEBINARCARE EDITORIAL TEAM

How to Start a Corporation in Washington

To start a corporation in Washington, you must follow the below steps that, include choosing a corporate name, hiring a Registered Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with Washington naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in Washington-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the Washington Secretary of State‘s business name database and Business Name Search in Washington. If the name is available, you may choose to reserve it for a specific period of 180 days by filing a name reservation application and paying the online name reservation fee of $30 and mail name reservation fee of $30. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by three methods, online, by mail, and in person filing., which costs around $24. In addition, the DBA’s validity in Washington is Indefinite, which you can file in Washington Secretary of State.

You can check out How to File a DBA in Washington for clearer understanding.

Step 2: Hire a Registered Agent

Hiring a Registered Agent is essential in starting a corporation. Registered Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are Washington Registered Agent Services to check in forming Washington Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in Washington are required to have at least One directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In Washington, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your Washington corporation, the next step is to write and file a Articles of Incorporation. In writing, the Washington Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Registered Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your Washington corporation, you must prepare and file Articles of Incorporation with the Washington Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the Washington Secretary of State’s office, along with the required filing fee. Fees vary by state, but in Washington, the Articles of Incorporation filing fee costs around $180 for online and by mail filing. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Get the eForm from the SOS site, login/subscribe to the site, fill up the form, submit online
  • Offline filing: Send the form by mail to Secretary of State, Corporations Division. P.O. Box 40234

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in Washington, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing Washington corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your Washington corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in Washington are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • Washington Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required Washington licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your Washington corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in Washington for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your Washington corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Washington can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or Washington State Department of Revenue for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your Washington corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the Washington Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in Washington

Even if you have established your corporation in Washington, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Washington has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Washington are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Washington

In forming a corporation in Washington, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in Washington, it costs $180 for online and by mail filing. The corporation in Washington also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is a corporation in Washington?
A corporation is a legal entity that is separate from its owners and liable for its own debts and taxes in the state of Washington.
What are the advantages of starting a corporation in Washington?
Washington offers many benefits to business owners, such as limited liability protection, the ability to raise capital through the sale of stock, and perpetual existence.
What are the requirements to start a corporation in Washington?
To start a corporation in Washington, you will need to file articles of incorporation with the Secretary of State, have a registered agent, and obtain a business license.
How much does it cost to start a corporation in Washington?
The cost of starting a corporation in Washington varies depending on factors such as the filing fees, legal fees, and the type of corporation being formed.
What are the different types of corporations that can be formed in Washington?
The types of corporations that can be formed in Washington include C corporations, S corporations, nonprofit corporations, and professional corporations.
What is the difference between a C corporation and an S corporation in Washington?
A C corporation is taxed separately from its shareholders, while an S corporation is taxed as a pass-through entity, meaning that the profits and losses are reported on the shareholders’ individual tax returns.
How long does it take to start a corporation in Washington?
It can take up to 10 business days to process a corporation formation documents in Washington.
Do I need a lawyer to start a corporation in Washington?
It is not required, but hiring a lawyer can be helpful in navigating the process, especially if you are unfamiliar with Washington’s state laws.
What is a registered agent in Washington?
A registered agent is a person or company who is designated to receive legal documents on behalf of a corporation, such as court summons and legal notices.
Can a corporation in Washington have just one owner?
Yes, a corporation in Washington can have a single shareholder.
What is the minimum number of directors required for a corporation in Washington?
In Washington, a corporation must have at least one director.
Is there a minimum capital requirement to start a corporation in Washington?
There is no minimum capital requirement to start a corporation in Washington.
Do I need a physical office in Washington to start a corporation?
No, you do not need to have a physical office in Washington to start a corporation, but you will need to have a registered agent with a physical address in Washington.
How do I get a business license in Washington for my corporation?
You can apply for a business license in Washington through the Washington State Department of Revenue website.
Can I keep my corporation’s information private in Washington?
No, the articles of incorporation and other documents filed with the Secretary of State are public records in Washington.
What is a corporate bylaw?
A corporate bylaw is a legal document that outlines the rules and procedures for the operation and governance of a corporation.
How often does a corporation in Washington need to hold meetings?
A corporation in Washington must hold at least one annual meeting each year.
Can a corporation in Washington own property?
Yes, a corporation in Washington can own real estate and other property.
What is the role of directors in a Washington corporation?
The role of directors in a Washington corporation is to oversee the management and operations of the corporation and to make strategic decisions for its benefit.
What is the role of officers in a Washington corporation?
The role of officers in a Washington corporation is to manage the day-to-day operations of the corporation.
What is the Articles of Incorporation and what information is it required to contain in Washington?
The Articles of Incorporation is a legal document that is filed with the Secretary of State and must contain the corporation’s name, purpose, registered agent, registered office, number of shares authorized, and number of board members.
Does a corporation need to have a bank account in Washington?
Yes, a corporation in Washington should have a separate bank account for business expenses and transactions.
Will my corporation be taxed in Washington?
Yes, your corporation will be subject to state taxes, including a business and occupation tax and a state income tax.
What is the initial report and when is it due for corporations in Washington?
The initial report is a document filed with the Secretary of State within 120 days of incorporating that confirms the corporation’s basic information.
How often do corporate reports need to be filed in Washington?
In Washington, corporations are required to file annual reports each year.
What are the penalties for late filing of corporate reports in Washington?
A penalty of $10 will be charged for every month that the report is late, up to a maximum of $200.
Can an out-of-state corporation do business in Washington?
Yes, an out-of-state corporation can do business in Washington, but it must register as a foreign corporation with the Secretary of State.
Does a nonprofit corporation in Washington have to pay taxes?
Nonprofit corporations in Washington are exempt from state taxes, but they may still be subject to federal taxes.
Can a professional corporation be formed in Washington?
Yes, professional corporations may be formed in Washington for licensed professionals, such as doctors and lawyers.
How do I start a corporation in Washington?
To start a corporation in Washington, you must file articles of incorporation with the Secretary of State.
What documents do I need to file?
You will need to file articles of incorporation with the Secretary of State.
Do I have to file a business license application?
Yes, you will need to file a business license application with the Washington State Department of Revenue.
Can I file online?
Yes, you can file online using the Washington State Department of Revenue’s online service.
What types of corporations can I form in Washington?
Washington allows the formation of domestic and foreign profit corporations, nonprofit corporations, and professional service corporations.
What are the filing fees for a corporation in Washington?
The filing fee for a corporation in Washington is $200.
Do I have to file an annual report in Washington?
Yes, you will need to file an annual report with the Secretary of State’s office.
What is the deadline for filing an annual report in Washington?
The deadline for filing an annual report in Washington is the last day of the month during which the corporation was formed.
What is the corporate tax rate in Washington?
Washington does not have a corporate income tax.
Are there any state-specific requirements for forming a corporation in Washington?
Yes, there are specific requirements that must be followed in Washington.
Can a corporation transact business before it is formally organized in Washington?
No, you cannot transact business before the organization of your corporation.
Do Washington corporations need to have incorporators?
Yes, Washington corporations need to have at least one incorporator.
Can an individual in Washington serve as a director and officer simultaneously?
Yes, an individual can serve as a director and officer in Washington.
When does a Washington corporation need bylaws?
A corporation needs bylaws at the same time it is being organized.
Can a corporation issued to with Stock in Washington?
Yes, Washington corporations can issue stock.
Are there any residency requirements for the directors or officers of a Washington corporation?
No, there are no residency requirements for directors or officers in Washington corporations.
What is the fiscal year-end deadline for a Washington corporation?
The fiscal year-end deadline for a Washington corporation is the last day of December.
Is an operating agreement a requirement for a Washington corporation?
No, an operating agreement is not a requirement for Washington corporations.
How frequently do shareholders’ meetings need to be held in Washington?
Shareholders’ meetings need to be held at least once a year in Washington.
Do Washington corporations need a registered agent?
Yes, every corporation in Washington is required to have a registered agent.
Can I be my own registered agent for my Washington corporation?
Yes, you can serve as your registered agent in Washington.
What does a registered agent do for a Washington corporation?
A registered agent receives official correspondence and legal notices on behalf of the corporation and forwards them to the appropriate parties.
Can I switch registered agents for my Washington corporation?
Yes, you can switch registered agents at any time.
Is Washington an ideal state for incorporating a small business?
Washington has advantages such as allowing great personal protection, but the specific requirements in the state may not be suitable for entrepreneurs.
Is forming a Washington corporation expensive?
No, forming a corporation in Washington is quite affordable costing only $200
How do I contact the Washington State Secretary of State Office?
You can contact the Washington Secretary of State through mail, phone, or email, visit their official website.
Do I need an attorney to form a Washington corporation?
No, you can handle a corporate establishment in Washington yourself using a reliable online formation service.

Also Read

How to Save Money While Forming Your Washington Corporation

First and foremost, it’s essential to do your research. Before you start any of the formation process, take the time to educate yourself on the requirements for forming a corporation in Washington. By understanding the necessary steps and paperwork involved, you can avoid costly mistakes and expedite the process. There are plenty of resources available online to help guide you through each stage, such as the Washington Secretary of State’s website and local business development centers.

Another way to save money is to consider the DIY approach. While hiring a lawyer or business consultant to help you form your corporation may seem like the best option, it can also be quite expensive. Fortunately, there are many online resources and templates available that can help guide you through the formation process. By taking the time to research and understand the legal requirements on your own, you can potentially save thousands of dollars in legal fees.

When it comes to choosing a business entity type, such as an LLC or S Corporation, it’s important to carefully consider your options. Each entity type has its own set of advantages and disadvantages, so it’s crucial to choose the one that best fits your business goals and financial situation. Consulting with a business advisor or accountant can help you make an informed decision that is both cost-effective and legally sound.

Additionally, it’s important to shop around for the best deals when it comes to business services and supplies. From bank accounts to office supplies, there are many ways to cut costs by comparing prices and negotiating with vendors. Many banks offer special promotions and incentives for new business customers, so take the time to research your options and find the best banking package for your needs.

When it comes to hiring employees, consider outsourcing certain tasks to freelancers or independent contractors instead of hiring full-time staff. By outsourcing tasks such as graphic design, marketing, or IT services, you can save money on employee benefits and payroll taxes while still receiving high-quality work. Websites like Upwork and Fiverr make it easy to connect with skilled professionals at affordable rates.

In conclusion, forming a corporation in Washington doesn’t have to break the bank. By doing your homework, taking the DIY approach, choosing the right business entity, shopping around for deals, and considering outsourcing, you can save money while still setting your business up for success. With careful planning and smart decision-making, you can form a corporation that is not only financially sustainable but also legally compliant and poised for growth.

Conclusion

Starting a corporation in Washington involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your Washington corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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