[Video & Enhanced Transcript]:
Hi, and welcome to another edition of Genesis Law Firm Teaches. Today’s topic: How to Start a Business in Washington State. This video is an overview of the subject. We will produce–or perhaps have already produced–other videos on related subtopics. So look for our other videos if you want more details. And I should mention that this video series only addresses the legal aspects of starting a business. We will not address, for example, drafting your business plan. That would be a non-legal topic.
Step One: Form Entity
The 1st step in starting a business would be forming your business entity. You should almost always run your business through an entity structure. That’s usually going to be an LLC–the most popular choice right now. There are many other business entity types out there. For example you could form a corporation (a C corporation or S corporation), limited liability partnership, or limited partnership. All the above-mentioned business entity structures have pros and cons, and we can help you figure out which entity structure might be best for you. Or you can look at our other videos and articles and reach your own conclusion.
Before you get into the process of actually forming that entity, you should make sure the business name is available . You want to check whether other businesses are using that name. We can help. Or you can review our other videos and learn how.
You also want to make sure your name is not trademarked. We can of course help you figure that out as well, and we provide a how-to explanation in our video on LLCs.
And you want to make sure your web domain or website is available. It is usually seen as more professional if your business name and your website match each other.
Once you’ve selected an available name for your business entity, consider drafting an operating agreement . If you form an LLC (limited liability company), then the operating agreement is called an LLC agreement. You might not need an operating agreement if, for example, if there will never be multiple owners of the business, and you never intend to buy real estate. In that situation, you might be perfectly fine operating your business without an operating agreement. But usually you will want an operating agreement.
After drafting and signing your operating agreement, you can officially form your business entity by filing with the Washington Secretary of State. Usually you file online, but you can do it through the mail with a paper submission if you prefer.
Step Two: Obtain EIN
Step 2 in the process of forming your business would be to get an EIN (employer identification number) from the federal government. An EIN is a business’s federal tax identification number, and you’ve got have one to operate a business in the United States. Usually an owner of the business must have some sort of tax identification number as well. If you are a citizen, that would simply be your social security number. If you are not a citizen but you have status in the United States, then you may have been issued a different type of tax identification number. You can still form a business even if no owner has a tax identification number as an individual, but the business can only function as a place holder–it cannot do much. An exception is when an owner intends to obtain a tax identification number in the near future. In that situation, the business can operate normally, but only for about six to twelve months while the owner obtains his individual tax identification number.
Step Three: Master Business License
Step 3 in the process of forming a business in WA would be to get a master business license. A master business license is a Washington State business license, and you get it from Washington’s Department of Licensing. It is a fairly simple process. You just go online, check some boxes, and pay a fee.
Step Four: Local Licenses
Step 4 in the process of forming a business in WA would be to get your local business licenses. For example if you have locations in Seattle, Everett, and Bellevue, you would need business licenses from each of those cities. Usually you will get local businesses licenses directly through the city; but in some situations, you can obtain them online during the master business license application process. Some cities cooperate with the state to simplify the process.
Step Five: Specialty Licenses
Step 5 in forming a business in Washington: researching and obtaining specialty business licenses. There are a host of these specialty licenses that apply to a vast number of businesses. Unless you have experience running a business of the type you’re contemplating, you should research specialty licensing carefully. The State of Washington produced an eight-page list of specialty licenses, and with each line containing a difference specialty license. For example a restaurant might need food handler’s permits, liquor licenses, and the like.
Step Six: Bank Account
The sixth step: opening a businesses bank account. Interestingly enough, you can’t get your business bank account prior to completing most of the other steps listed above, because the bank with request your business’s identifying numbers, such as your EIN and UBI.
There may be other, miscellaneous steps to complete. I call them miscellaneous steps because they might or they might not apply to you. Some examples:
- Financing. If you are trying to raising financing for your business, there are a number of regulations. You typically cannot raise money by selling ownership interests to the average person.
- Zoning and Local Codes. You should pay special attention to zoning and local codes if you intend to run your business from a location that did not contain a similar business before you.
- Hiring Employees. You can view a video on hiring employees by clicking here.
For more information on this and related topics, we encourage you to review the resources section of our firm’s website.