How to Form an S Corporation in Washington

Introduction

An S corporation is a distinct type of corporation that offers several benefits, including pass-through taxation and limited liability. In Washington, you can make an S corporation by filing Articles of Incorporation with the Washington Secretary of State. This guide will walk you through each step of forming your own company as an S corporation in the Evergreen State.

1. Select a Name

A good name will communicate your business’s purpose and goals. Some things to keep in mind:

• Your name must be unique—no matter how creative you are, there can only be one S corporation with that name in Washington State. As a general rule of thumb, use first letters from the owner(s) or founder(s)’ last names for a company name if it is an LLC or corporation, or initials for sole proprietorships.
• Avoid words like “corporation” and “incorporated,” as well as any other words that might give away the fact that your business has formed as a limited liability company (LLC).

2. Appoint Directors

You can appoint directors for your newly formed corporation. A board of directors is a group of individuals who make decisions on behalf of the corporation. The board’s responsibilities include making sure that the company operates in accordance with its purpose and direction, approving major financial transactions, approving major contracts and hiring key executives.

Directors are typically elected by shareholders at an annual meeting, but you can choose to elect them by written consent instead. They may be officers or other employees, independent contractors or even owners or investors who have no power over day-to-day operations. Directors must meet certain qualifications:

• They must be 18 years old.
• They must have access to sufficient funds to pay their expenses while serving as a director.
• They must not be an employee of your company.
• They should not have any conflict of interest with your company.
• They do not owe any money to your company (unless it has been fully repaid).
• They are not barred from serving due to bankruptcy proceedings.
• They cannot officers or employees of any competing business within five years prior to joining yours as a director.

3. File Articles of Incorporation

File Articles of Incorporation with the Washington Secretary of State. To start off, you’ll need to file articles of incorporation for your business. This is a document that includes basic information about your corporation and its officers. You can file this document using the Secretary of State’s website or by mail at the address listed below:

You must file your articles within 90 days from when you form your corporation. If you fail to do so, then you will be required to pay $50 plus an additional $10 for each week that passes without filing them!

4. Adopt Bylaws

It’s also a good idea to adopt Bylaws for your corporation. Bylaws are the rules that govern the internal operations of your company, and they can be amended by either shareholders or directors. They’re like a contract between you and your business—nobody else needs to sign it.

Bylaws are usually adopted at the same time as the articles though they may be adopted at any time after formation. You don’t have to adopt bylaws unless you want them in place before conducting business; if they weren’t adopted initially, there is no requirement that they be adopted later if not desired (although doing so may make it easier for investors).

5. Hold an Organizational Meeting

• Hold an Organizational Meeting. In order to form an S corporation in Washington, you must hold an organizational meeting within 180 days after the date of incorporation. This is where the shareholders of your new company will be formally elected and granted their stock certificates. You should have at least one shareholder and one director present at this meeting, but they’re not required to be there in person—it’s fine if they’re represented by proxies (people who are authorized to vote on their behalf).
• File Your Articles of Incorporation with the State Department of Revenue (DOR). Once you’ve held your organizational meeting, it’s time to submit your articles of incorporation with DOR via mail or fax. If you file electronically with DOR Online Services Center, the process will take only 30 seconds!

6. Transfer Real Estate to the Corporation

If you own real estate, personal property, or a business that was previously owned and operated by another entity (such as a sole proprietorship), you must transfer title to the corporation so that it owns these assets. To do this, you will need to fill out a form called an assignment of beneficial interest in real property. This document will transfer ownership from whatever entity previously held it to your S Corporation.

7. Issue Shares of Stock

When you’re ready to issue shares of stock, the process is fairly straightforward. First, you need to decide how many shares you want to issue and what their value will be (typically $1 per share). Then, if there are no shareholders yet, they’ll need to be nominated as directors and officers. Finally, you can create a certificate for each shareholder by filling out a simple form online or by printing one out yourself. When all that’s done, your company is officially formed!

8. Create Shareholder Agreements

To make sure your corporation is following the rules and that everyone involved has the same expectations, it’s a good idea to draft a shareholder agreement before you start. A shareholder agreement will help you decide how much of the company each shareholder owns, when shareholders can sell their shares or transfer them to someone else (if at all), and what happens if there’s a dispute between shareholders. Here are some things that should be included in your shareholder agreement:

• The amount each owner contributes to buy into the business.
• How often they’ll get dividends.
• What happens if one person wants to leave or take part of his/her share of the company out early on (for example, if they want their portion back).

You can’t just form an S Corporation in Washington. You must form your Washington S Corporation legally, and this guide can help you do that.

Conclusion

The process of forming a corporation in Washington is not difficult, but it does require some time and attention to detail. This article will walk you through each step of the way so that your business can be up and running in no time at all.