FAQ - How to Start Business

 

Please follow each step below, in order, to confirm you have reviewed all steps before registering with our office.

 

STEP ONE: Determine if you are required to register with our office

Our office cannot evaluate whether a business qualifies as "doing business" in our State. We can only encourage you to seek legal advice to answer this question because it involves several topics, such as business liability, personal liability, business licensing, taxation, insurance, and others.

The law does specify activities not constituting doing business in RCW 23.95.520

The Employee Security Department does have requirements and information for businesses that have employees in Washington on their website.

Find advisors for legal, tax, and business. Our office is aware of a mentorship program called SCORE. They host workshops and have resources. Visit their website for more information.





 

STEP TWO: Determine your Business Structure

Our office cannot assist customers in determining what business structure to register as. A business is a legal entity. It can own property, hold bank accounts, and is required to pay taxes.

There are different types of business entities, each with unique benefits and limitations. The "right" choice for you depends on your interests and needs. You will need sound counsel to understand your obligations regarding your business. Review the business structure options below and discuss them with your advisors to determine which will be optimal for you.

Find advisors for legal, tax, and business. Our office is aware of a mentorship program called SCORE. They host workshops and have resources. Visit their website for more information.

Businesses in Washington State can operate under various business structure types. Each structure has advantages and disadvantages that should be considered.

Good decisions are based on the following:

- The number of owners now and planned for the future.
- The types of owners - are they all individuals, or are they entities (such as corporations, trusts, etc.)?
- Liability concerns.
- Federal tax implications
- Internal Revenue Service (IRS). Registration and tax filing requirements and costs.
- Paperwork and entity management consideration

 

The descriptions of several business structure types below are provided to assist applicants and are not intended to be legal definitions with the force of law.
 

A Sole Proprietorship: are a business with a sole owner (single or married couple) in which the owner(s) may be personally liable for business debts, claims against the business, and federal taxes.

 

A Limited Liability Company (LLCs), RCW 25.15: are the most common business structure amongst small businesses. LLCs have fewer governance requirements than corporations but similar to corporations have limited legal liability. Creating an LLC requires filing with the Washington Secretary of State. In addition, LLCs must create an Operating Agreement, which is a governance document establishing the rules and operations of the LLC. For federal taxes, LLCs are typically treated like sole proprietorships if there is one owner, or like partnerships if there is more than one owner. However, by filing an entity classification election form with the IRS, LLCs can be treated like corporations for federal tax purposes. NOTE: this document is not recorded by the Secretary of State. See the US Small Business Administration for an overview of what is included in an Operating Agreement. You can also contact your local library to provide some examples of a blank operating agreement at no cost.
 

A General Partnership: are like sole proprietorships with more than one owner. Partners share managerial duties, profits and losses, and each is personally responsible (liable) for all business debt. For federal tax purposes, the business is required to file a partnership return, with the income or loss going to each partner based on how much of the business each owns.

 

A Corporation, RCW 23B: is a business entity that also has limited liability like LLCs but have additional requirements when registering as well as for their internal governance. As with LLCs, corporations have limited legal liability. To form a corporation, you must file with the Washington Secretary of State and create a governance document known as "bylaws". This internal governance document defines how key business decisions are made and designates duties, powers, and responsibilities of officers and shareholders (aka owners or stockholders). Even if your state does not mandate a set of bylaws, it is highly recommended that you create one to protect yourself and your business. Additional requirements and responsibilities for Corporations are issuing stock certificates, holding annual meetings which have documentation requirements, electing directors, etc. Working owners of corporations are employees and must have federal payroll taxes withheld and reported the same as other employees. Corporations file federal corporate tax returns with the IRS. If qualified and applied for on a timely basis, corporations may choose pass-through taxation (“S-Corporation”).
 

A Limited Partnership (LPs), RCW 25.10: are composed of one or more general partners and one or more limited partners. Creating an LP requires filing with the Washington Secretary of State (similar to LLCs and corporations). The general partners manage the entity and share fully in its profits and losses. To protect themselves from liability, general partners are often corporations or LLCs rather than individuals. Limited partners share in the profits of the business, but their losses are limited to the extent of their investment. Limited partners are usually not involved in the day-to-day operations of the entity. Obtain legal advice before choosing an LP structure for your business.

A Nonprofit Corporation, RCW 24.03A: is a type of corporation that is created to accomplish a public benefit. A nonprofit does not have owners other than the community at large and has no shareholders. The organization cannot be set up for the purpose of generating an income or profit for the organizers. If your nonprofit organization is currently or plans to fundraise from the public, it may also be required to register with the OSOS Charities Program.
 

A Nonprofit Miscellaneous & Mutual Corporation, RCW 24.06: is a nonprofit organization that serves the mutual benefit of its members and is established under the Nonprofit Miscellaneous and Mutual Corporation Act. This structure differs from public-benefit and religious corporations as it is not formed to benefit the general public. It includes organizations such as homeowners' associations, condominium associations, cooperative organizations, labor unions, banks and insurance organizations, social clubs, and service organizations.

 

Another great resource to help you make this determination is found on business.wa.gov. Here is a link to the Small Business Guide.

 

 

STEP THREE: Register your Business

If you have completed the steps above and are ready to register, complete the steps below.

Please review the definitions below before selecting the applicable button.

 

A Domestic Business means your business will be a Washington Business and has filed origination documents with Washington State Office of the Secretary of State.

Steps to Register a "domestic" business

 

A Foreign Business means your business is governed by the law of a jurisdiction other than the state of Washington, and is registered in a different state, territory or country.

Steps to Register a "foreign" business

 

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Domestic Business Registration Steps

 

Step One:
Submit the origination documents required through the following ways:

• Online through our filing system Corporations and Charities Filing System “CCFS”.
           Corporations & Charities Filing System (CCFS)
  • Generally processed within 5 business days upon submission.
     
• Mail in documents, either using a form provided by our office OR the drafted document that have been prepared by you for the business.
  • Standard processing: generally, within 10 business days upon receipt.
  • Expedited processing: generally, within 3 business days upon receipt.
     
• In-person services by coming to our office. The same day service fee applies and is in addition to the required filing fees.
  • You will leave our office with your documents filed and the UBI issued to the business.
     

Step Two:
Once your formation or incorporation has been filed and the UBI has been issued your next step is to complete a Business License Application with the Department of Revenue

 
 

Step Three:
Apply for an Employer Identification Number “EIN”. The IRS requires business entities to receive an “EIN”. See the IRS website for additional details on how to apply for an EIN through their online portal at https://www.irs.gov

 

 

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Foreign Business Registration Steps

 

Has the business previously been registered with the Office of the Secretary of State?

· Yes: See our Administratively Dissolved/Terminated page here.

· No: Continue to the steps below.

Has the business been issued a UBI through the Department of Revenue?

· Yes: Provide the UBI when submitting the required document to register with our office.

· No: A new UBI will be issued by our office upon completion of the registration. The UBI issued will then be used when the business registers with the Department of Revenue.

 

Step One:
Obtain a Certificate of Existence/Good Standing from the business entity’s home jurisdiction. This is a document issued from the office that registered your business and will reflect that the business is in good standing. You may review where to receive the document depending on your home jurisdiction here.

 

Step Two:
Once the Certificate of Existence/Good Standing is received the business entity will need to submit a Foreign Registration Statement and select the correct business entity type. There are three separate forms: one for for-profit business entity types, one for nonprofit corporations, and one for banks/credit unions. You can submit the Foreign Registration Statement through the following ways:

• Online through our filing system Corporations and Charities Filing System “CCFS”.
            Corporations & Charities Filing System (CCFS)
  • Generally processed within 5 business days upon submission.

*Currently online submission can only be completed by for-profit business entity types.

• Mail in the Foreign Registration Statement document and the Certificate of Existence/Good Standing.
  • Standard processing: generally, within 10 business days upon receipt.
  • Expedited processing: generally, within 3 business days upon receipt.
     
• In-person services by coming to our office. The same day service fee applies and is in addition to the required filing fees.
  • You will leave our office with your documents filed and the UBI issued to the business.

 

Step Three:
Once your Foreign Registration Statement has been filed and the UBI has been issued your next step is to go to the Department of Revenue and apply for the business license.