If you're starting a new business, you should probably operate the business through a limited liability entity. Examples of limited liability business entities include LLCs, corporations (S corporations and C corporations), limited liability partnerships, and limited partnerships. There are many choices available. One of the most popular choices of business is the limited liability company, or LLC. This is how you do it:

STEP 1: NAME AVAILABLE? The first step in the process is determining whether the business name you want is available. You can do a very simple google search to see whether someone’s online presence could be confused with your anticipated business name. It’s also a good idea to check whether the web domain you want is available. After doing a generic online, you should look up your desired business name on the State of Washington’s Department of Licensing website and the Washington Secretary of State’s Corporation Search. This will tell you if any other businesses are operating in Washington under the name you are thinking of, or have reserved the name. Finally, check whether the name you are thinking of is trademarked. Find that by going onto both the applicable federal website and state website.

STEP 2: DRAFTING THE LLC AGREEMENT. The next step in the process of forming an LLC is drafting an LLC agreement, the operating agreement for the business. It’s akin to a corporation's bylaws. That is, it relates the entity’s core operating principles, which typically cannot be changed without at least a super-majority vote (a 2/3 majority vote).

An LLC agreement usually contains some of the following core decisions, among others:

* Whether either a manager or the members (owners) of the business make daily decisions. Larger businesses often run more smoothly if a manager can make simple decisions, as it reduces the need for frequent owners’ meetings.

* What decisions require an ownership (members) vote, and how the voting process will take place.

* Who makes tax decisions.

* How profits and losses are divided among owners.

You don’t need a LLC agreement; it is not a requirement under the Washington Limited Liability Company Act. If you don’t have one, statutes and case law provide the unstated terms of the LLC agreement. But you will want an LLC agreement if any of the following apply:

* You prefer to determine your own outcomes rather than operating under default rules.

* The business has or might have multiple owners.

* You anticipate buying real estate through the business. Escrow agents usually want to see an LLC’s operating agreement as part of the closing process.

And of course, make sure all the owners sign the LLC agreement before progressing to the next step.

STEP 3: REGISTERING WITH THE STATE. The third step in the process of creating your LLC would be to register with the Washington Secretary of State. The easiest way is online. The Secretary of State has a checkbox online registration system. You can also register by means of paper and mail, but that takes longer and costs more money. Almost everybody does it online instead.

The registration process entails some basic questions, the answers to which are probably in your LLC agreement. For example , you’ll need to indicate:

* Whether your LLC is “manager managed" or "member managed." That is, whether a manager makes everyday decisions or whether nearly all decisions require a more democratic vote of the owners.

* Who the members (owners) of the business are.

* Who will act as your LLC’s registered agent. You must select a registered agent—the person who can be served with any legal process. If you don’t have a registered agent, you can’t form an LLC.

If you have questions about setting up an LLC to operate your new business, give us a call at 253.858.5434 to set up an appointment today.