Entity Structure

Click the headings below for information from the U.S. Small Business Administration (SBA) on corporate entity structuring. Further down this page you will find information on filing your corporate structure in the State of Washington, and how to file for state and local licenses if applicable to your business.

Sole Proprietorship
Individually owned and operated, with legal and fiscal responsibility for assets and responsibilities.
  Limited Liability Company (LLC)
Able to be owned and operated by an individual or in partnership; more limited personal liability than a sole proprietorship.
  Cooperative
Collectively owned by the members; typically with a board of directors that provide guidance and administration. Profits and earnings can be distributed and/or reinvested by the members.
         
Corporation
Independent legal entity with shareholders, with the corporation responsible/liable for the assets and debts. Typically larger, with many employees.
  Partnership
Single business with two or more persons/entities sharing ownership. Shared contributions, and shared profits and losses.
  S Corporation
Similar to a corporation with shareholders, but with the entities taxation on profits and losses passed through to the shareholders. Federal and Washington State administration of S Corporations differ slightly.

 

Differences between corporate structure, business licensing, and paying taxes

A business operating in Washington State must typically file a corporate structure for their busienss entity, apply and obtain a business license from the state and city, and register with the Washington Department of Revenue and the U.S. Internal Revenue Service. These required filings may be done in succession, and provide the business and its owners with the documentation needed to pass through each step.

Corporate structure filing is performed to declare the function and execution of liability, tax status, and structure of the entity. Business licensing is performed to ensure the business is legally operating in the state and/or city, and to provide the business with a Unified Business Identifier (UBI). A Business License allows the business to:

  • Apply for a Washington State Unified Business Identifier (UBI) number or tax registration number.
  • Open or reopen a business.
  • Change ownership of a business.
  • Open a new business location.
  • Change business locations.
  • Register or change a trade name.
  • Hire employees.
  • Get a Minor Work Permit.
  • Add licenses to an existing business location.
  • Get optional insurance coverage for the business owner.
  • Hire people to work in or around your home.

Once a business has received their UBI, they are able to register to pay applicable taxes in Washington State and register with the U.S. Internal Revenue Service for a Federal Employer Identification Number (FEIN).

 

Profit and Non-Profit corporate filings in Washington State

You may file your corporation or partnership in Washington State by visiting the Secretary of State website. Sole proprietors and certain partnerships are not required to register with the State, but can and should file a trade name with the Washington Business Licensing Service if doing business in a name other than the individuals own legal name. Further, most businesses will still need to register for a state and local business license regardless of their corporate structure.

 

Business Licensing

Visit the business portal section on licensing by clicking here.