How to Form a Professional Corporation in Washington


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

All Posts by Steve Goldstein →
Business Formation Expert  |   Fact Checked by Editorial Staff
Last updated: 
LLCBuddy™ offers informative content for educational purposes only, not as a substitute for professional legal or tax advice. We may earn commissions if you use the services we recommend on this site.
At LLCBuddy, we don't just offer information; we provide a curated experience backed by extensive research and expertise. Led by Steve Goldstein, a seasoned expert in the LLC formation sector, our platform is built on years of hands-on experience and a deep understanding of the nuances involved in establishing and running an LLC. We've navigated the intricacies of the industry, sifted through the complexities, and packaged our knowledge into a comprehensive, user-friendly guide. Our commitment is to empower you with reliable, up-to-date, and actionable insights, ensuring you make informed decisions. With LLCBuddy, you're not just getting a tutorial; you're gaining a trustworthy partner for your entrepreneurial journey.
Form a Professional Corporation in Washington

Are you considering starting a professional corporation in Washington? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Washington can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Washington, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Washington!

What is a Professional Corporation in Washington?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Washington. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Washington.

– LLCBuddy Editorial Team

Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Washington if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Washington

To form a Professional Corporation for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Washington, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Washington

After you have decided on the idea to form a professional corporation in Washington, deciding the name for your corporation is significant. There is a complete guide on Washington LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license.

In Washington, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 180 days. To keep the name, you must file a name reservation application with Washington Secretary of State.

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Washington Registered Agent

The next step in forming a professional corporation is hiring the Washington Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Washington. Forming a professional corporation for your service will be easier if you have Registered Agent in Washington.

Alternatively, you can serve as your own Washington Registered Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Washington.

Step 4: File the Articles of Incorporation in Washington

After you hire a Washington Registered Agent to form a professional corporation, the next step is to file the Washington Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information should be written. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to.

Filing the Articles of Incorporation in Washington may be done with two methods, online and by mail. The Articles of Incorporation fee may vary from different states. However, in Washington, it costs $180 for online and by mail filing. Get the eForm from the SOS site, login/subscribe to the site, fill up the form, submit online. For offline filing, Send the form by mail to Secretary of State, Corporations Division. P.O. Box 40234.

Step 5: Write an Operating Agreement in Washington

An operating agreement is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Washington operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Washington

The next step is to appoint the initial board of directors in your PC in Washington. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Washington SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Washington

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional 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 the 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 4 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.

After you have your EIN number, you can benefit in a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Washington might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Washington

Before your professional corporation operates in Washington, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Washington, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed.

Step 12: File Your Taxes in Washington

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Washington classification of taxes for the taxes an LLC in Washington has to pay.

Important Information

Maintaining Professional and Business License in Washington

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant.

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Washington

In Washington, you will be required to submit a report each year. The owners’ and Registered Agent’s names and contact details are listed in the annual report. Also, it should include all of your yearly financial activity. You must submit one yearly in Washington, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Washington

A professional corporation takes a lot of time to process and pursue. However, with the help of the Washington Registered Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Washington.

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What is a Professional Corporation in Washington?
A professional corporation in Washington is a business entity that is owned and operated by licensed professionals such as lawyers, doctors, and other certified professionals. It is similar to a regular corporation, but it has additional restrictions and requirements that must be met by the owners.
What are the benefits of forming a Professional Corporation in Washington?
Forming a professional corporation in Washington allows licensed professionals to maintain control over the management of their practice, as well as ensuring that their professional license remains valid. Additionally, a professional corporation provides liability protection for the owners, and can reduce tax burdens for owners.
What are the steps for Forming a Professional Corporation in Washington?
The steps for forming a professional corporation in Washington include selecting a name for the corporation, filing the Articles of Incorporation with the Washington Secretary of State, appointing directors and officers, obtaining the necessary licenses and permits, and registering with the Employment Security Department.
What documents are needed to Form a Professional Corporation in Washington?
The documents needed to form a professional corporation in Washington include Articles of Incorporation, a Certificate of Organization, and a Corporate Bylaws document. Additional documents may be required, depending on the type of professional corporation.
Is there a fee to Form a Professional Corporation in Washington?
Yes, there is a filing fee required to form a professional corporation in Washington. The fee is determined by the type of corporation, and is payable to the Washington Secretary of State.
What are the steps to form a professional corporation in Washington?
The steps to form a professional corporation in Washington include
Is it necessary to register a professional corporation in Washington?
Yes, it is necessary to register a professional corporation in Washington. The Articles of Incorporation must be filed with the Washington Secretary of State in order for the professional corporation to be legally recognized in the state.
What information is needed to form a professional corporation in Washington?
The information needed to form a professional corporation in Washington includes the corporation’s name, the number of shares of stock to be issued, the purpose of the corporation, the name and address of the registered agent, the names and addresses of the incorporators, and a statement of corporate duration.
Does Washington require a professional corporation to have a registered agent?
Yes, Washington requires a professional corporation to have a registered agent in the state. The registered agent must be an individual or business entity located in the state.
What is the filing fee for forming a professional corporation in Washington?
The filing fee for forming a professional corporation in Washington is $180.
Does Washington require a professional corporation to hold an annual meeting?
Yes, Washington requires a professional corporation to hold an annual meeting of shareholders. The meeting must be held within the first 11 months of the fiscal year.
Is it necessary to obtain a federal Employer Identification Number for a professional corporation in Washington?
Yes, it is necessary to obtain a federal Employer Identification Number for a professional corporation in Washington. This number will be used to report income and expenses to the IRS.
Does Washington require a professional corporation to have a board of directors?
Yes, Washington requires a professional corporation to have a board of directors. The board of directors is responsible for making decisions regarding the corporation’s operations.
Does Washington require a professional corporation to file an annual report?
Yes, Washington requires a professional corporation to file an annual report with the Washington Secretary of State. The report must be filed by the last day of the month in which the corporation was originally incorporated.
What are the taxes for a professional corporation in Washington?
The taxes for a professional corporation in Washington include a business and occupation (B&O) tax, a corporate or personal income tax, and any applicable local taxes.
What is a professional corporation in Washington?
A professional corporation in Washington is a business entity formed for the purpose of providing professional services to the public and governed by the rules and regulations of the Washington State Department of Revenue.
How do I form a professional corporation in Washington?
To form a professional corporation in Washington, you must file a Certificate of Formation with the Washington Secretary of State and pay the applicable fee. Additionally, you must register with the Washington State Department of Revenue and obtain a business license.
What documents do I need to form a professional corporation in Washington?
To form a professional corporation in Washington, you must file a Certificate of Formation with the Washington Secretary of State. This document must include the name of the corporation, the address of the registered office, the names and addresses of the incorporators, the name of the registered agent, and a statement that the corporation is formed to engage in a professional service.
Is there an annual filing requirement for a professional corporation in Washington?
Yes, the professional corporation must file an annual report with the Washington Secretary of State. This report must include the name of the corporation, the address of the registered office, the names of the current directors, and the corporation’s federal employer identification number.
What are the tax implications of forming a professional corporation in Washington?
Professional corporations in Washington are subject to state and federal taxes. The corporation must pay corporate income taxes and any applicable franchise taxes. Additionally, the corporation must comply with all applicable state and federal laws.
What are the benefits of forming a professional corporation in Washington?
Professional corporations in Washington provide limited liability protection to the owners and shareholders of the corporation. Additionally, professional corporations may be eligible for certain tax benefits, including deductions for business expenses.
What is the cost of forming a professional corporation in Washington?
The cost of forming a professional corporation in Washington depends on the type of services provided and the complexity of the business. Generally, the cost of forming a professional corporation includes the filing fee for the Certificate of Formation, the cost of registering with the Washington State Department of Revenue, and the cost of obtaining a business license.
Are there any special requirements for forming a professional corporation in Washington?
Yes, when forming a professional corporation in Washington, you must include the words “Professional Corporation” or an abbreviation, such as “P.C.”, in the name of the corporation.
Do I need a Washington Registered Agent to form a professional corporation in Washington?
Yes, a Washington Registered Agent is required when forming a professional corporation in Washington.
What is the benefit of forming a professional corporation in Washington?
Forming a professional corporation in Washington provides limited liability protection for the owners of the corporation.
What are the filing fees for forming a professional corporation in Washington?
The filing fees for forming a professional corporation in Washington are $180.
How long does it take to form a professional corporation in Washington?
It typically takes five to seven business days to form a professional corporation in Washington.
Is there a deadline for filing documents with the Washington Secretary of State to form a professional corporation?
Yes, documents must be filed with the Washington Secretary of State within 60 days of the filing date to form a professional corporation.
What are the annual filing requirements for a professional corporation in Washington?
Professional corporations in Washington must file an Annual Report and pay their Annual Report fees to the Secretary of State by the anniversary date of the corporation’s formation.
Can I form a professional corporation in Washington without hiring a lawyer?
Yes, you can form a professional corporation in Washington without hiring a lawyer, although it is always advisable to seek legal advice.

Also Read

Why Washington Professional Corporation is So Important

One of the key reasons why Washington Professional Corporation is so important is that it provides liability protection to its owners. Professionals such as doctors, lawyers, accountants, and architects are often exposed to significant risks in their line of work. In the event of a lawsuit or other legal issues, having a professional corporation can shield the personal assets of the owners from being at risk. This separation between the professional’s personal assets and those of the corporation is crucial in minimizing financial risk and ensuring peace of mind.

Furthermore, Washington Professional Corporation allows professionals to take advantage of certain tax benefits that are not available to other types of business structures. By structuring their business as a professional corporation, professionals can potentially save on taxes and maximize their tax efficiency. This can results in significant savings that can be reinvested back into the business or used for personal financial goals.

In addition to liability protection and tax benefits, Washington Professional Corporation also offers credibility and professionalism to professionals in their respective fields. By incorporating as a professional corporation, professionals signal to clients and colleagues that they take their business seriously and adhere to high ethical standards. This can help build trust and confidence in the services that professionals provide, leading to increased opportunities for business growth and success.

Another important aspect of Washington Professional Corporation is that it offers flexibility and autonomy to professionals in managing their businesses. Professionals have the ability to structure the corporation in a way that best suits their individual needs and goals. Whether it is making decisions about business operations, shareholders, or succession planning, professionals have the freedom to customize their professional corporation to align with their vision for their business.

Moreover, Washington Professional Corporation allows professionals to benefit from strategic partnerships and collaborations with other professionals. By forming a professional corporation, professionals can work together with like-minded individuals to maximize their collective resources and expertise. This collaborative approach can result in greater efficiencies, increased innovation, and access to new opportunities for growth and expansion.

Overall, Washington Professional Corporation offers a myriad of benefits to professionals looking to establish a solid foundation for their business. From liability protection and tax advantages to credibility and autonomy, professional corporations are an essential tool for professionals seeking to succeed in today’s competitive business environment. By taking advantage of the opportunities and protections offered by Washington Professional Corporation, professionals can position themselves for long-term success and sustainability.

Conclusion

In forming a professional corporation in Washington, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.

Leave a Comment