Starting a business in Washington offers exciting opportunities, especially when you choose the right legal structure. For entrepreneurs seeking tax advantages and liability protection, forming an S Corporation in Washington can be a smart move. This guide walks you through each step of the process, ensuring your startup is compliant, efficient, and ready to grow.
What Is an S Corporation?
An S Corporation is a tax designation granted by the IRS to eligible corporations and LLCs. It allows profits, losses, deductions, and credits to pass through to shareholders, avoiding double taxation. Unlike a C Corporation, an S Corporation is not taxed at the corporate level, making it attractive for small business owners in Washington who want to optimize their tax strategy.
Why Choose Washington for Your S Corporation?
Washington is known for its business-friendly environment, skilled workforce, and access to global markets. Key benefits include:
- No personal income tax
- Strong infrastructure and tech ecosystem
- Streamlined online business registration
Whether you’re launching a tech startup in Seattle or a retail business in Spokane, forming an S Corporation in Washington can offer both flexibility and financial efficiency.
Step-by-Step Guide to Forming an S Corporation in Washington
1. Choose a Business Name
Your business name must be unique and distinguishable from existing entities registered in Washington. You can check name availability using the Washington Secretary of State’s Business Search.
Tip: Include “Corporation,” “Incorporated,” or an abbreviation like “Inc.” in your name.
2. Appoint Directors and Registered Agent
You’ll need to appoint at least one director to oversee corporate affairs. Additionally, Washington requires a registered agent—a person or business entity authorized to receive legal documents on behalf of your corporation.
Your registered agent must:
- Be located in Washington
- Have a physical address (P.O. boxes not accepted)
- Be available during normal business hours
3. File Articles of Incorporation
To legally form your corporation, file the Articles of Incorporation with the Washington Secretary of State. This document includes:
- Corporation name
- Registered agent information
- Number of authorized shares
- Names and addresses of incorporators
You can file online or by mail. The filing fee is typically around $180 for expedited service.
4. Create Corporate Bylaws
Bylaws outline how your S Corporation will operate, including rules for meetings, voting, and officer responsibilities. While not filed with the state, bylaws are essential for internal governance and legal protection.
5. Hold Initial Board Meeting
During your first board meeting, you’ll:
- Adopt bylaws
- Appoint officers (President, Treasurer, Secretary, etc.)
- Authorize issuance of shares
- Approve the S Corporation election
Document all decisions in meeting minutes to maintain compliance.
6. Obtain an EIN from the IRS
Apply for an Employer Identification Number (EIN) through the IRS website. This number is required for tax filings, opening a business bank account, and hiring employees.
7. File IRS Form 2553 to Elect S Corporation Status
To be taxed as an S Corporation, file Form 2553 with the IRS within 75 days of incorporation. All shareholders must sign the form. Once approved, your business will be taxed under Subchapter S of the Internal Revenue Code.
8. Register with Washington State Agencies
Depending on your business type, you may need to:
- Register with the Washington Department of Revenue for state taxes
- Apply for a Washington Business License
- Comply with industry-specific regulations
Use the Washington Business Licensing Wizard to determine your requirements.
9. Stay Compliant with Annual Filings
Washington requires S Corporations to file an Annual Report with the Secretary of State. This keeps your business in good standing and updates key information. The report is due by the end of your anniversary month each year.
Final Thoughts
Forming an S Corporation in Washington is a strategic move for entrepreneurs who want liability protection and tax efficiency. By following these steps—from choosing a name to filing IRS Form 2553—you’ll set your business up for long-term success. Washington’s supportive business climate makes it an ideal place to launch and grow your venture.
