Can an immigrant start a business in Washington State?

A 2012 study found that immigrants are twice as likely to start businesses in the U.S. than native-born Americans. Are you ready to join the economy as a business owner?

What type of entity will your business be?

In Washington, we have several options for the type of entity your business will be. We also have an online process through the Washington Secretary of State for forming the entity and obtaining a state business license through the online state Business Licensing Service to begin operating.

Let’s talk “entity”. The three most common types of businesses in Washington are sole proprietorship, limited liability company (LLC) and corporation. The simplest form is sole proprietor, which requires only that you obtain the necessary state business license and perhaps a specialty license, city or county license depending on location and what the business sells or services provided. The trade-off for simplicity is that a sole proprietorship does not provide any legal protection for your personal assets like a home, vehicles, equipment, etc. In a sole proprietorship, you and the business are one and the same-all contracts, accounts, and other official business are taken in your personal name.

A limited liability company (LLC) is simple to form in Washington and maintain with the Washington Secretary of State. A Person or persons who own an LLC are called Members and share the ownership in a percentage they agree to at the start of the LLC. Ownership status and percentage is documented in an Operating Agreement-the agreement between the Members. The Operating Agreement also describes how decisions will be made for the business, how a Member may leave or a new Member enter and what protection the LLC gives its Members. An LLC requires annual renewal with the state and meetings between the Members. The LLC is its own separate entity and owns the assets of the business. The Members own a share of the business, but the business itself stands on its own, like a person does.

A corporation, usually indicated by the abbreviation “Inc.”, is the most complicated entity to form and maintain in Washington, but provides the most protection for your personal assets. A person or persons who own a corporation are shareholders. It is governed by a Board of Directors and/or an Executive Committee including a President, Vice President, Secretary, and Treasurer. The governing documents include the Articles of Incorporation and Bylaws and describe the purpose and how the corporation will be organized, the powers of the Directors, etc. A corporation requires annual renewal and maintenance with the state and meetings of the Board of Directors and Shareholders. Like an LLC, a corporation is its own entity and owns the assets of the corporation. The Shareholders own stock in the corporation.

The type of business you are starting and the number of individuals who will own the business will usually dictate the entity you may want to form. An LLC may be the best choice for a new business owner who is an immigrant. If the LLC owner were to leave the US for an extended period and unable to continue operation, the governance and operation of the LLC may be assigned (transferred) or sold to another person without ending the business.

What information is required to start a business?

LLCs and corporations also apply with the IRS for an Employer Identification Number (EIN). This number acts as the business’s social security number for payment of taxes at the federal and state level. When applying for an EIN number, the owner or if multiple owners, the designated “responsible person” of the business will need to disclose their Social Security or Individual Taxpayer Identification Number (ITIN).

Generally, the state requires the following information: address, physical location of business, full name, date of birth, the purpose of the business, anticipated number of employees, gross revenue, etc. Also required, will be a Social Security number or ITIN of the individual owners.

This is an introduction to starting a business in Washington. If you would like help forming a new business, contact APH Law PLLC at 253-720-3020.

Amy Pivetta Hoffman
Principal Attorney
APH Law PLLC
www.aphoffman.com

Straightforward lawyers for complex businesses, serving the Puget Sound business community since 2010. Business formation, transactions, and litigation counsel.

_{This post is for informational purposes only and is not intended to provide legal advice to the viewer or user. Use of the information in this post does not create or establish an attorney-client relationship or privilege of any nature between the user and owner.}