The Corporate form of business has the benefit of limited liability and has certain rights, privileges, and liabilities beyond those of an individual. Doing business as a corporation may yield tax or financial benefits. Corporations may be formed for a profit or nonprofit purpose. Forming and operating a corporation requires certain record-keeping requirements and observation of “corporate formalities.” Forming a C-Corporation can also have potentially adverse tax consequences because the corporation is taxed on its income at the entity level and the shareholders are also taxed on any dividends that are distributed in the case of a corporation classified under subchapter C of the Internal Revenue Code (a “C-Corporation”).

For more details on the steps necessary to form a corporation, please refer to the links below:

Choose a Corporate Name

Your corporate name can play an important role in the marketing of your goods and services, so you should choose your business name carefully.

You could be sued if you use a business name that is too similar to the name or trademark of another business. Below is a partial list of resources to help you search for a business name and to avoid names currently being used.

  • Search the Secretary of State database for names of corporations, limited liability companies, limited partnerships and limited liability partnerships that have already been registered in Washington
  • Search the Department of Revenue database for names of businesses that have already been registered
  • Search for trademarks already registered with the US Patent and Trademark Office
  • Search for trade names already registered with the Department of Licensing
  • You may also contact the Corporations Division at the Office of the Secretary of State to look up trademarks registered in Washington State

Corporate Name Requirements

The State of Washington has a number of requirements for the name of your corporation:

  • A corporate name MUST contain the word “corporation,” “incorporated,” “company,” or “limited,” or the abbreviation “corp.,” “inc.,” “co.,” or “ltd.”
  • A corporate name MAY NOT contain any of the following words or phrases: “Bank,” “banking,” “banker,” “trust,” “cooperative,” or any combination of the words “industrial” and “loan,” or any combination of any two or more of the words “building,” “savings,” “loan,” “home,” “association,” and “society,” or any other words or phrases prohibited by any statute of Washington
  • A corporate name MUST be distinguishable from the name of any other corporation operating in the state
  • Applicable statute can be found at RCW 23B.04.010

If you choose to do business under a name different from your registered corporate name, by using a “trade name”, you must register any trade names with the State of Washington.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

Choose a Director or Directors to serve on the Board of Directors

Under Washington law, a corporation must have at least one director. A director need not be a resident of Washington or a shareholder of the corporation, unless the articles of incorporation or bylaws require these qualifications. Either the articles of incorporation or the corporation’s bylaws should set the number of directors that will make up the corporation’s board of directors. Directors are initially appointed to the position, but are elected in subsequent years by shareholders.

The Board of Directors oversees the activities of the corporation. The Board generally has authority to: govern the organization by establishing broad policies and objectives, approve certain corporate activities and transactions - including contracts and agreements, asset purchases and sales, and approval of new corporate policies; select, appoint, support, and review the performance of corporate officers; ensure the availability of adequate financial resources; approve annual budgets; and account to the stakeholders for the organization’s performance.

The number of directors must be specifically stated in the Corporate Bylaws or Articles of Incorporation.

File the Articles of Incorporation

The articles of incorporation function like the constitution for the corporation. Ordinarily, the document is short and simple, and you can prepare your own in a few minutes by filling in the form provided by the Secretary of State’s website. Generally, all those people who will be initial shareholders may prepare and sign the articles, or they can appoint one person to do so.

As shown in RCW 23B.02.020, the articles of incorporation must set forth:

  • a corporate name for the corporation;
  • the number and class of shares the corporation is authorized to issue;
  • the effective date of incorporation;
  • the tenure of the corporation;
  • the street address of the corporation’s initial registered office and the name of its initial registered agent at that office; and
  • the name and address of each incorporator.

The articles of incorporation must be filed with the Secretary of State along with the applicable filing fees. Unless a delayed effective date is specified, corporate existence begins when its certificate of formation is filed by the Secretary of State. A delayed effective date for a certificate of formation may be no later than 90 days after the date it is filed.

The e-filing fee for forming a corporation is currently $200.

Apply for a Federal Employer Identification Number (EIN)

An EIN is required for any business that hires employees or operates as a corporation.

How to apply for an EIN:

You can get additional information on Federal Employee Identification Numbers from the following publication: http://www.irs.ustreas.gov/pub/irs-pdf/p1635.pdf

Write Corporate Bylaws

Corporate bylaws set forth the operating procedures of the corporation and generally include the number of directors and corporate officers, the procedure for electing and removing directors, the procedures for director and shareholder meetings, and the requirements for keeping corporate records. As noted in RCW 23B.02.060, there are certain default provisions if not otherwise spelled out in the bylaws.

The incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.

The articles of incorporation or bylaws must either specify the number of directors or specify the process by which the number of directors will be fixed, unless the articles of incorporation dispense with a board of directors.

Corporations are required to write and keep a record of their bylaws, but do not need to file them with the secretary of state. Bylaws may be changed without officially filing amendments.

Create a Shareholder Agreement

A shareholder buyout agreement is an agreement between co-owners of the corporation that sets forth the requirements for selling shares of stock if any of the owners leaves the corporation for any reason, including retirement or death. The agreement also provides for a method of valuing the stock in the event of a buyout. Furthermore, the shareholders can include terms in the agreement addressing other rights and duties of the shareholders.

A shareholder agreement is not required, but is suggested as a way to protect shareholders when a change in ownership of the corporation occurs.

A buyout agreement usually controls what events will lead to a buyout, whether a shareholder must be bought out by the other shareholders, who may purchase a departing shareholder’s shares, and what price must be paid for the shares. The buyout provisions can be included in the shareholder agreement.

Elect S-Corporation status if desired

S Corporation Status

An S Corporation offers shareholders limited liability by protecting shareholders’ personal assets from any business claims.

Any profit or loss from an S Corporation is included on the shareholders’ personal income tax returns; the S Corporation itself does not pay income taxes. An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation’s profits and losses “pass through” to shareholders, and profits are taxed at individual rates on each shareholder’s Form 1040 (S-Corporations still pay Washington State Business and Occupation Taxes like all other businesses).

To elect S-Corporation status, the corporation must meet the following requirements:

  • Must be a domestic corporation
  • Has no more than 100 shareholders (a husband and wife (and their estates) can be treated as one shareholder, as can all members of a family (and their estates)
  • Each shareholder must be an individual U.S. citizen or U.S. resident or estate (some trusts are also allowed as shareholders)
  • Has no nonresident alien shareholders
  • Is not an ineligible corporation, i.e., certain financial institutions, insurance companies, or domestic international sales corporations
  • Refer to Internal Revenue Code § 1361(b) for complete eligibility.

    To elect S-Corporation status a corporation must meet all the requirements of an S-Corporation and must submit IRS Form 2553.

    The election must be made within two and one-half months of incorporation to be effective immediately. All shareholders must sign Form 2553.

    Following corporate formalities

    Organizational Meeting - After incorporation:

    (a) If initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting to complete the organization of the corporation by appointing officers, adopting bylaws, and carrying on any other business brought before the meeting;

    (b) If initial directors are not named in the articles, the incorporator or incorporators shall hold an organizational meeting:

    - (i) To elect directors and complete the organization of the corporation; or

    - (ii) To elect a board of directors who shall complete the organization of the corporation. RCW 23B.02.050

    Initial and Annual Reports

    Within 120 days after incorporation the corporation must deliver to the secretary of state for filing an initial report, and thereafter annual reports, that set forth:

    - (a) The name of the corporation and the state or country under whose law it is incorporated;

    - (b) The street address of its registered office and the name of its registered agent at that office in this state;

    - (c) In the case of a foreign corporation, the address of its principal office in the state or country under the laws of which it is incorporated;

    - (d) The address of the principal place of business of the corporation in this state;

    - (e) The names and addresses of its directors;

    - (f) A brief description of the nature of its business; and

    - (g) The names and addresses of its chairperson of the board of directors, if any, president, secretary, and treasurer, or of individuals, however designated, performing the functions of such officers. RCW 23B.16.220

    Corporate Records

    (1) A corporation shall keep as permanent records minutes of all meetings of its shareholders and board of directors, a record of all corporate actions approved by the shareholders or board of directors by executed consent without a meeting, and a record of all corporate actions approved by a committee of the board of directors exercising the authority of the board of directors on behalf of the corporation.

    (2) A corporation shall maintain appropriate accounting records.

    (3) A corporation or its agent shall maintain a record of its shareholders.

    (4) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.

    (5) A corporation shall keep a copy of the following records at its principal office:

    - (a) Its articles or restated articles of incorporation and all amendments to them;

    - (b) Its bylaws or restated bylaws and all amendments to them;

    - (c) The minutes of all shareholders’ meetings, and records of all corporate actions approved by shareholders without a meeting, for the past three years;

    - (d) The financial statements described in RCW 23B.16.200(1), for the past three years;

    - (e) All communications in the form of a record to shareholders generally within the past three years;

    - (f) A list of the names and business addresses of its current directors and officers; and

    - (g) Its initial report or most recent annual report delivered to the secretary of state.

    RCW 23B.16.010

    Filings required for state and local business licenses

    Master Business Application

    The Master Business Application is a simplified form used to apply for many state licenses, registrations, and permits, as well as some city licenses.

    You must file a Master Business Application when you first start your business, or when you change or update your business. You will need to file (or re-file) if you want to:

    • Get a state business license or Unified Business Identifier (UBI) number,
    • Get a new city or specialty license,
    • Change ownership of a business,
    • Open or change business locations,
    • Register or change a trade name,
    • Hire employees (including minors and workers in the home),
    • Change your unemployment or industrial insurance coverage.

    How to file a master business application:

    City and County Licenses and Permits