How to Start an S-Corp in Washington


Steve Bennett
Steve Bennett
Business Formation Expert
Steve 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.

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Start an S-corporation in Washington

Washington, popularly known as The Evergreen State, offers a bunch of benefits for business owners, especially the state capital Olympia has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Washington, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Washington. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Washington, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in Washington. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Washington.

What is an S-Corp in Washington?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Washington. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

–LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Washington

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Washington.

How to Start an S-Corporation in Washington?

To create S-Corp in Washington, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement in Washington, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in Washington

After you have decided on the idea to start an S-Corp in Washington, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on Washington LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Washington.
  • Limit of restricted words that need a license in Washington, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Washington Registered Agent

The next step in starting an S-corp in Washington is hiring a 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 (such as subpoenas), all notices of lawsuits, and other official government correspondence in Washington. Forming an LLC and an S-corp will be easier if you have Registered Agent in Washington.

Step 3: File Your Washington Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Washington Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In Washington, the filing fee is $200 (online and $180 by mail).

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Washington

After you have filed your Articles of Organization in Washington, the next step is to create an LLC operating agreement in Washington. The Washington LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for 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 general partnership. 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- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • 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.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Washington

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Washington, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

Advantages of Starting an S-Corporation in Washington

Filing an S-Corp in Washington has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Washington apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What is an S-Corp in Washington?
An S-Corp in Washington is a business entity that is taxed as a corporation but is treated for legal and tax purposes as a pass-through entity. It is a popular form of business structure in the state of Washington as it offers limited liability to its owners.
How can I form an S-Corp in Washington?
To form an S-Corp in Washington, you must first file an Articles of Incorporation with the Washington Secretary of State. You must then draft and file an S-Corp election form with the IRS and obtain an EIN for your business. Once these steps are completed, you may begin operating your S-Corp in Washington.
What are the benefits of forming an S-Corp in Washington?
The most significant benefit of forming an S-Corp in Washington is the limited liability protection it provides to its owners. Additionally, owners of S-Corps may be able to save on taxes by having their profits and losses pass through to their individual tax returns.
What are the steps to registering an S-Corp in Washington?
To register an S-Corp in Washington, you must first file Articles of Incorporation with the Washington Secretary of State. You must then file an S-Corp election form with the IRS and obtain an EIN for your business. Once these steps are completed, you may begin operating your S-Corp in Washington.
Do I need to register my S-Corp in Washington?
Yes, you must register your S-Corp in Washington by filing Articles of Incorporation with the Washington Secretary of State. Additionally, you must file an S-Corp election form with the IRS and obtain an EIN for your business.
Are there any other requirements to form an S-Corp in Washington?
Yes, you must also draft and file an S-Corp election form with the IRS and obtain an EIN for your business in order to form an S-Corp in Washington.
How much does it cost to form an S-Corp in Washington?
The cost to form an S-Corp in Washington is typically between $100-$200, depending on the filing fees charged by the Washington Secretary of State and the IRS.
What documents do I need to form an S-Corp in Washington?
To form an S-Corp in Washington, you must file Articles of Incorporation with the Washington Secretary of State, draft and file an S-Corp election form with the IRS, and obtain an EIN for your business.
Can I form an S-Corp in Washington online?
Yes, you can form an S-Corp in Washington online through the Washington Secretary of State’s website. However, you will still need to file an S-Corp election form with the IRS and obtain an EIN for your business.
What type of paperwork do I need to file to form an S-Corp in Washington?
To form an S-Corp in Washington, you must file Articles of Incorporation with the Washington Secretary of State, draft and file an S-Corp election form with the IRS, and obtain an EIN for your business.
How long does it take to form an S-Corp in Washington?
It typically takes between 3-5 business days to form an S-Corp in Washington, once all of the necessary documents have been filed.
What are the requirements to form an S-Corp in Washington?
The requirements to form an S-Corp in Washington include filing Articles of Incorporation with the Washington Secretary of State, drafting and filing an S-Corp election form with the IRS, and obtaining an EIN for your business.
What is the difference between an LLC and an S-Corp in Washington?
The primary difference between an LLC and an S-Corp in Washington is the way in which they are taxed. An LLC is taxed as a pass-through entity, meaning that all profits and losses pass through to the owners’ individual tax returns, while an S-Corp is taxed as a corporation, meaning that profits and losses are taxed at the entity level.
Can I have an S-Corp in multiple states?
No, an S-Corp is only allowed to operate in one state. However, you may be able to qualify for a foreign qualification in another state, which would allow you to do business in that state as well.
What is a foreign qualification in Washington?
A foreign qualification in Washington is a process by which a business entity that is formed in another state files paperwork with the Washington Secretary of State in order to do business in Washington.
Is there a fee to file a foreign qualification in Washington?
Yes, there is a fee to file a foreign qualification in Washington. The amount of the fee varies depending on the type of entity that is seeking the foreign qualification.
What forms do I need to file for a foreign qualification in Washington?
To file for a foreign qualification in Washington, you must file the Application for Registration of Foreign Corporation with the Washington Secretary of State. You must also include a copy of the Articles of Incorporation from the state in which the business was formed.
How long does it take to obtain a foreign qualification in Washington?
It typically takes between 1-2 weeks to obtain a foreign qualification in Washington, once all of the necessary paperwork has been filed.
What are the requirements to maintain an S-Corp in Washington?
The requirements to maintain an S-Corp in Washington include filing an annual report with the Washington Secretary of State, filing an annual tax return with the IRS, and paying any applicable taxes.
Do I need to file an annual report for my S-Corp in Washington?
Yes, you must file an annual report for your S-Corp in Washington with the Washington Secretary of State. The annual report must be filed by the last day of the anniversary month of the filing of the Articles of Incorporation.
Do I need to file taxes for my S-Corp in Washington?
Yes, you must file taxes for your S-Corp in Washington with the IRS. The taxes must be filed by the 15th day of the 4th month following the end of the tax year.
What are the penalties for not filing taxes for an S-Corp in Washington?
The penalties for not filing taxes for an S-Corp in Washington can include fines, interest, and/or criminal prosecution by the IRS.
Are there any other requirements to maintain an S-Corp in Washington?
Yes, you must also hold annual meetings for shareholders and keep detailed records of all of the company’s financial transactions and activities.
What is the process to dissolve an S-Corp in Washington?
To dissolve an S-Corp in Washington, you must file Articles of Dissolution with the Washington Secretary of State and file a final tax return with the IRS. Once these steps are completed, the S-Corp will be officially dissolved.
Do I need to file a final tax return for my S-Corp in Washington?
Yes, you must file a final tax return for your S-Corp in Washington with the IRS. The final tax return must be filed within 90 days of the dissolution of the S-Corp.
What forms do I need to file for an S-Corp in Washington?
To form an S-Corp in Washington, you must file Articles of Incorporation with the Washington Secretary of State, draft and file an S-Corp election form with the IRS, and obtain an EIN for your business.
What is the difference between an S-Corp and a C-Corp in Washington?
The primary difference between an S-Corp and a C-Corp in Washington is the way in which they are taxed. An S-Corp is taxed as a pass-through entity, meaning that all profits and losses pass through to the owners’ individual tax returns, while a C-Corp is taxed as a corporation, meaning that profits and losses are taxed at the entity level.
What is required to start an S-Corp in Washington?
To start an S-Corp in Washington, you must file a Certificate of Formation with the Washington Secretary of State and pay a filing fee. You must also prepare and file Articles of Incorporation, which must be approved by the Secretary of State. Additionally, you’ll need to prepare corporate bylaws, obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), and obtain any necessary local or state business licenses or permits.
Are there any special laws or regulations for S-Corps in Washington?
Yes, S-Corps in Washington are subject to the Washington Business Corporation Act and other applicable local and state laws and regulations.
How much does it cost to start an S-Corp in Washington?
The filing fee for the Certificate of Formation is $180. Additional costs may include attorney’s fees for drafting the necessary documents and filing applicable business licenses and permits.
How long does it take to start an S-Corp in Washington?
The filing process typically takes a few days, but it may take longer if any additional documents are required or if the business needs to obtain any local or state business licenses or permits.
Who can form an S-Corp in Washington?
Any individual or business entity can form an S-Corp in Washington.
What are the tax benefits of starting an S-Corp in Washington?
S-Corps in Washington are subject to the same state and federal tax regulations as other S-Corps. This may include pass-through taxation on profits, as well as certain tax deductions.
How do I make sure I’m in compliance with all Washington state laws and regulations?
It is important to consult with an attorney or accountant familiar with Washington state laws and regulations to ensure compliance. Additionally, you may need to register with the Washington State Department of Revenue to comply with state tax laws.

Also Read

Why Washington S Corporation is So Important

One of the key reasons why Washington S corporations are so important is the liability protection they offer to their owners. By forming an S corporation, business owners can shield their personal assets from the debts and legal liabilities of the company. This means that if the business faces financial difficulties or legal disputes, the owners’ personal assets such as homes, cars, and savings are not at risk of being used to settle the company’s obligations. This protection gives business owners peace of mind and allows them to focus on growing their businesses without the constant fear of losing everything they have worked so hard to achieve.

Another significant advantage of the Washington S corporation is its tax benefits. Unlike traditional C corporations, S corporations pass through their income and losses to their shareholders, who then report these amounts on their personal tax returns. This avoids the issue of double taxation that often plagues C corporations, where profits are taxed at both the corporate and individual levels. Additionally, Washington S corporations may be eligible for deductions and credits that can lower their tax burden even further, allowing them to reinvest more of their earnings back into the business. This tax efficiency can be a game-changer for small businesses with limited resources, as it enables them to retain more of their profits and fuel future growth.

In addition to liability protection and tax advantages, Washington S corporations also offer greater flexibility in terms of ownership and management structure. Unlike traditional corporations, which have stringent rules regarding ownership and decision-making, S corporations allow for a more diverse ownership base and allow shareholders to take an active role in running the business. This can be especially beneficial for partnerships and family-owned businesses, where multiple stakeholders may have varying levels of involvement and investment in the company. By structuring the business as an S corporation, owners can tailor their governance structure to suit their specific needs and goals, creating a more democratic and inclusive environment for decision-making.

Overall, the importance of Washington S corporations cannot be understated in today’s dynamic business environment. These entities provide a winning combination of liability protection, tax advantages, and flexibility that make them a popular choice among small business owners and entrepreneurs. By choosing to form an S corporation, individuals can safeguard their personal assets, minimize their tax liability, and create a more adaptable and collaborative business model. Ultimately, Washington S corporations are a vital engine of economic growth and innovation in the state, driving job creation, prosperity, and entrepreneurial spirit for years to come.

Conclusion

In conclusion, starting an S-corp in Washington is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Washington.

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