Once you’ve decided to start a business, one of your first decisions will be to decide what type of business entity you wish to form.
Under Washington law, some of the available choices include:
•Limited Liability Company
•Nonprofit Corporation
•Limited Partnership
•Limited Liability Partnership
Among other concerns, your selection of business entity will affect whether you have personal liability for your business’s financial obligations. You will also want to consult with an accountant to determine the tax consequences of your selection.
WHAT IS A CORPORATION?
A corporation is one type of business entity. The shareholders are the owners of the corporation, and they have the ultimate say in the corporation’s business. However, the shareholders elect a board of directors to run the corporation. Usually the board “acts” through corporate officers, such as the president, vice-president, and secretary, who are the persons who run the corporation’s day-to-day operations. This may sound like a lot of people. However, in reality, a corporation can consist of just one or two people who each wear many different hats.
One advantage to a corporation is that, unlike a partnership or sole proprietorship, the shareholders are not normally liable for the corporation’s obligations. This “corporate shield” is one of the primary reasons why many business owners will select this entity. However, a “Limited Liability Company” (“LLC”) can also afford this same protection. An experienced business attorney at Deno Millikan can help you determine what the best entity will be, based on your specific circumstances.
HOW DO I CREATE A CORPORATION?
The process of creating a corporation is called, “incorporation”. In order to incorporate your business in Washington, you must file the Articles of Incorporation with the Washington Secretary of State. These “Articles” include information such as the name of the corporation, the names of the directors, the names of the incorporators, and the name and address of your Registered Agent.
The Registered Agent is the person who agrees to receive legal documents on your behalf. The Registered Agent can be anyone, and is frequently one of the directors. An attorney can also serve as the Registered Agent.
You will also need to issue stock and create bylaws. The bylaws provide more detail about how the corporation operates, and can be quite lengthy and complex. Finally, as with any other business entity, you may need to apply for specific business licenses and permits through state organizations, and pay taxes.
Finally, simply forming the corporation is not enough, it is also necessary to maintain the corporation. This includes requirements such as annual meetings, board resolutions, and annual reports. If you fail to follow these rules, your corporation could be administratively rendered “inactive”.
CONSULT AN EVERETT BUSINESS ATTORNEY
If you are considering forming a business in Everett, Snohomish County, Skagit County, or King County, speak with one of the business law attorneys at the Deno Millikan Law Firm, PLLC early on in the process. The earlier that you get an experienced attorney involved, the better we can assist you. Give us a call today at 425-259-2222 or use our online contact form.