Forming an LLC in Spokane Washington
Forming an LLC in Spokane Washington (or a limited liability company in the entire state, for that matter) can be the best way to protect all of your personal assets. If you started a business, any kind of business, and have not make a filing with the state of Washington, you have set up your business as a sole proprietorship, and you’re taking a huge — and unnecessary — risk.
Say your employee has an accident in the company truck, and gets sued. Or maybe someone slips and falls on the steps leading to your business’s front door, and sues you. Or perhaps a customer isn’t pleased with the outcome of a service or product you provided, and files a lawsuit.
What would you stand to lose? Everything, if your business is a sole proprietorship. Because, if the plaintiff wins the suit against you and the award is greater than your business is worth, you might have to sell your house or car the cash, dip into — or deplete your savings and in some circumstances your retirement account, or worse.
In Washington, a community property state, your spouse might have his or her wages garnished to pay the award.
Cover your assets with a Limited Liability Company (LLC) status
To protect yourself and your family, consider forming a Limited Liability Company. An LLC can shield small businesses, even with only one member, against losses of personal property in legal disputes. As the name implies, liability is limited to the assets held by the company.
Likewise, if members of an LLC are sued as individuals, the business’s assets aren’t in danger.
Frankly, no one should run a business as a sole proprietorship — unless the “business” is actually more of a hobby, and doesn’t make much money.
Forming an LLC isn’t complicated, but it does entail a bit of paperwork. You’ll have to choose a name that hasn’t already been registered to someone else.
The Washington Secretary of State could does not require an operating agreement, but it is a good idea to have one. They can be complicated if your LLC will have more than one member, so you should seek advice to have one properly drafted.
What happens, for instance, if you and the other members disagree on some aspects of the business — whether to expand, for instance, or even to close up shop? Will a simple majority vote decide the matter, or will you want a supermajority to rule?
A good lawyer is key
For ironing out the details, an attorney is your best bet. A lawyer with experience and expertise in LLC formation can gracefully juggle the balls for you and advise you in all aspects of the process.
What’s more, your lawyer can serve as your “registered agent,” a licensed professional in the state that Washington requires you to designate to act on your behalf. The registered agent is Washington’s form of insurance, making sure that, if litigation is filed, someone will be here to respond.
An attorney can also keep your LLC filing current, renewing it every year on your behalf.
And he or she can advise you on matters such as bank accounts. Commingling money between your business and personal accounts, for instance, can cause a judge to question the authenticity of your LLC, and refuse to protect your personal assets.
The best kind of insurance
Without a lawyer’s help, all these details can seem daunting, even intimidating. Forming an LLC, and forming it right, takes time and expertise. Then, once it’s all done, you can rest easy, knowing you’re covered in case of an unforeseen event.
In a way, designating your business as an LLC is the same as buying health insurance, or car insurance, or life insurance.
In fact, for businesspeople, an LLC is the cheapest form of insurance one can buy. Once established, it costs almost nothing to maintain — but in the face of a lawsuit, it can pay for itself many times over. If you need help deciding if forming an LLC in Spokane Washington is a good option for you, please contact our office at (509) 927-3840 for a free consultation.
To learn more about Limited Liability Corporations and the State of Washington’s requirements, go to the Washington State Secretary of State Website.