Starting a Business in Bellevue, Washington: A Legal Guide for Startups

This post is written for founders interested in opening a new business in Bellevue, WA. I am hoping to write a follow up post to this one covering the best service providers in the area (e.g., lawyers and accountants), so if you are a service provider in Bellevue send me an email with your information so I can see about adding you to the list.

Choose a Legal Structure

One of the first decisions you'll encounter is choosing the right business structure. Each structure, be it a sole proprietorship, partnership, limited liability company (LLC), or corporation, carries its unique tax implications, liability protection, and operational flexibility.

Sole proprietorships and partnerships are the default options if you do not make a choice for another entity. Because these structures do not offer limited liability protection, they are typically not the right fit new ventures.

Corporations offer enormous risk mitigation and ownership flexibility, but this flexibility can come with complexity (and expense).

So although there is no one-size-fits-all solution, many small businesses can be supported with an LLC. An LLC provides both liability protection and operational flexibility, making it a popular choice for small business owners. Typically, an LLC provides pass-through taxation for each of its "members" (owners). To learn more about the differences for each of these legal structures, check out Section 3 "Choose a business structure" https://www.business.wa.gov/site/alias__business/876/small-business-guide--start.aspx ↗

In particular, take a look at the summary table, copied below for convenience.

## Register Your Washington State LLC

Visit the Washington Secretary of State website at https://ccfs.sos.wa.gov/ ↗

Select "Create or Register a Business", choose "I would like to form a Washington State business", select "WA Limited Liability Company" and check Defer Initial Report.

You will then be asked for a Unified Business Identifier (or UBI) - select No if you do not have one and it will be assigned.

Choose a Name

In the middle of forming your LLC, you need specify a name for your business that includes "LLC" (or some variant).

The name must contain the words "Limited Liability Company", "Limited Liability" and abbreviation "Co." or the abbreviation "L.L.C." or "LLC". The name is limited to a maximum of 255 characters. If you wish to use a name longer than 255 characters, your application must be filed in paper form instead of electronically.

There is an option that allows you to look up whether somebody else is already using this name in the state of Washington. Depending on the nature of your business, you may be OK as long as you avoid a direct hit.

Although not required to form your entity, you may want to spend some time seeing if you have a reasonable domain name you can associate with business. I use GoDaddy ↗ out of habit, but any domain name provider will work.

My best advice for choosing a name: pick something that you will feel comfortable telling people when you say "Hi, I am building X which helps Y when they have a problem of Z." Find a related domain name that is not terrible (and likely not great either). And if things go amazingly well, you can upgrade your business name and domain name at some point in the future. Alternatively, you can hire a trademark attorney and a brand specialist up front, but given how much businesses change in their initial stages that may end up as burnt money and effort.

### Complete the Submission

Fill in some basic information, likely choosing yourself as the Registered Agent, Executor, and Authorized Person, and you are ready to submit $200 to have a shiny new LLC (with an UBI).

## Registering Your Business in Bellevue

After you have created your Washington LLC, Bellevue business owners must also acquire a city business license.

1. Go to FileLocal ↗ to apply for a Bellevue business license.
2. Click on "Create Business Account"
3. Set up New Business Account.
4. Login to FileLocal with the newly created account.
5. Click "Apply for a General Business License"
6. Complete the application process by submitting payment.

Another $120 and you are off to the races.

Create Your Operating Agreement

Every LLC needs an Operating Agreement. There are a number of places where you can download a template. Alternatively, you can hire an attorney to hand craft a solution which might be important if you have some unique considerations. Assuming you are looking for a standard operating agreement, you can use a chatbot (e.g., that has been trained on previously hand-crafted operating agreements). Here is the output of one chatbot for a "single member operating agreement for Washington State":

Operating Agreement of [Your LLC Name]

• Article I: Formation

  1. Name: The name of the Limited Liability Company ("LLC") is [Your LLC Name, LLC].
  2. Principal Office: The principal office of the LLC is located at [Your Business Address].
  3. Formation: This LLC was formed as a limited liability company pursuant to the laws of the State of Washington on [Formation Date].

  Article II: Member

  1. Sole Member: The sole member and organizer of the LLC is [Your Full Name], whose address is [Your Address].

  Article III: Purpose

  1. Business Purpose: The purpose of this LLC is to engage in any lawful act or activity for which a limited liability company may be organized under Washington law.

  Article IV: Duration

  1. Duration: The LLC shall continue until dissolved in accordance with this Agreement.

  Article V: Management

  1. Management of the LLC: The management of the LLC is vested in the member. The member shall have full authority to make all decisions and to control and manage the business and affairs of the LLC.

  Article VI: Capital Contributions

  1. Contributions: The member has contributed [Specify Contribution] to the LLC in exchange for a 100% membership interest.

  Article VII: Distributions

  1. Distributions: Distributions shall be made to the member at such times and in such amounts as determined by the member.

  Article VIII: Fiscal Affairs

  1. Fiscal Year: The fiscal year of the LLC shall end on the last day of December each year.
  2. Records and Reports: The LLC shall keep correct and complete books and records of account and shall also keep minutes of the proceedings of its members.

  Article IX: Amendments

  1. Amendments: This Operating Agreement may be amended only by a written agreement signed by the member.

  Article X: Miscellaneous

  1. Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Washington.

  In Witness Whereof, the member has executed this Operating Agreement on the date below.

  Date: [Date of Signing]

  [Your Signature] [Your Name, Member]

  ---

  Remember, this is a basic template and might need additional sections or specific clauses based on the nature of your business, local regulations, or personal preferences. Consulting with a legal advisor to tailor this agreement to your specific situation is recommended.

Get a Checking Account

In your operating agreement (above), you specified some amount of money that you used as initial capitalization. At a minimum, you should capitalize it with enough for your initial year's worth of likely expenses.

• $200: Washington LLC Formation
• $120: Bellevue License
• $180: 1 year of Xero accounting software
• $15: 1 year of Domain name
• $150: 1 year of Google Workspace (email, Google Docs, etc)
• $100: Wordpress Hosting at Bluehost
• $240: ChatGPT
• $240: Coffee Budget

The total of all these expenses is $1,225. This is just the beginning, and it's important to budget for additional expenses as well as unexpected costs that may arise as you establish and grow your business. It's wise to regularly review and adjust your budget as your business evolves.

Set Up Your Books

Xero: $15/month

I will revisit this page and fill out the details of how to set up your accounting so that it is easy to file all of your required taxes. Stay tuned!

Still To Do

• Annual report. Washington requires LLCs to file an annual report on or before the last day of the anniversary month of the company’s incorporation. The cost is $69.

• Submit Initial Report within 120 days. See RCW 23.95.255. ↗

• Pay Your Annual Taxes: see details at https://dor.wa.gov/file-pay-taxes/filing-frequencies-due-dates ↗

• Set up your website: subject of a future post.

• Set up Google Workspace: subject of a future post.

If you are interested in more details of anything mentioned in this topic, email me using the link above or grab time from my calendar at meet.dyor.com ↗. Good luck with your venture!