You might be thinking about converting your limited liability business (LLC) in Washington State to a corporation. You might want to make this move for a number of reasons, including tax advantages, improved credibility, and easier access to finance. Whatever your motivations, upgrading your company’s organizational structure is a rather simple process. Here is a step-by-step instruction manual to assist you.
First step: submit articles of incorporation By submitting Articles of Incorporation to the Washington Secretary of State, you can convert your LLC into a corporation. Your corporation will be formally recognized as a legal person in the state of Washington by virtue of this document. The name of your corporation, the nature of your enterprise, the amount of shares of stock you are authorized to issue, and the names and addresses of your initial directors must all be listed in the articles of incorporation.
The Washington State Department of Revenue will need you to apply for a business license after you have submitted your articles of incorporation. You can operate a business in Washington and pay state taxes with the help of this license.
Step 3: Hold an Organizational Meeting
You must hold an organizational meeting for your new corporation after submitting your Articles of Incorporation and obtaining your business license. You must elect your first board of directors and executives, enact bylaws, and distribute stock certificates to your shareholders during this meeting.
Fourth step: submit a notice of conversion The Washington Secretary of State must receive a Notice of Conversion, which is the last step. The state will receive official notice through this document that your LLC has been transformed into a corporation. Who Exercises the Greatest Control Over a Corporation? In a corporation, the shareholders have the final say in how the company is run. The board of directors is chosen by the shareholders, and they are in charge of selecting officials to oversee the corporation’s daily operations and making important business decisions.
Does a Single Member LLC in Washington State require an Operating Agreement? Although an operating agreement is not legally necessary for a single-member LLC in Washington State, having one in place is still a good idea. The limited liability status of the LLC can be safeguarded and the rights and obligations of the owner can be made clearer via an operating agreement. How are LLCs taxed in the state of Washington? For taxation reasons, LLCs in Washington State are categorized as pass-through entities. As a result, the LLC does not have to pay taxes on its earnings. Instead, the LLC’s gains and losses are distributed to each individual member, who then reports them on their individual tax returns.
Are Employees Required for S Corps? S corporations are exempt from having to hire staff. However, if a S corporation has more than one owner, it is required to pay any owners who work for the company a fair wage. This is done to prevent owners from collecting all of their income in the form of distributions in order to avoid paying payroll taxes.
All corporations and limited liability companies (LLCs) operating in Washington State are required to file the Business & Occupation Tax (B&O) with the Department of Revenue. The B&O tax is a gross receipts tax assessed on a company’s business operations; the rate is determined by the type of business and gross revenue.