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In today's blog post, we discuss the basics of how to complete an entity conversion in Washington state.

In a previous post, we discussed how the entity conversion bill passed by the Washington State Legislature in 2014 allowed companies to complete a conversion (instead of going through a merger) to change a company’s entity structure. You can use a conversion to change your entity structure to a different form (i.e. from an LLC to a corporation) or change your domicile to a different state. We continue the discussion about conversion in this post by going into more detail about the steps to complete a conversion.

Eligible Entities

Washington law allows conversions between domestic limited liability companies (LLCs), corporations, and limited partnerships. Washington law also allows these domestic entities to convert to foreign entities (a foreign entity is an entity incorporated in…

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Entity Conversion

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Today we will discuss the frequency and type, notice requirements, and voting protocol of shareholder meetings in Washington State.

As a shareholder in a corporation it is important to know your rights. One of those rights is the right to attend shareholder meetings. Today we will discuss the frequency and type, notice requirements, and voting protocol of shareholder meetings in Washington State.

Washington corporations are governed by the Washington Business Corporation Act, which is codified in RCW 23B. Shareholder meetings are specifically outlined in RCW 23B.07.

Frequency and Type of Shareholder Meeting

The two types of meetings that shareholders attend are “annual” and “special” meetings. RCW 23B.07.010 lays out the requirements for annual shareholder meetings and is summarized as follows:

1) Corporations must hold an annual shareholder meeting;

2) Meetings can be held in or out of state but if the place is not…

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In today’s post we’ve highlighted the key issues you’ll want to consider when forming a Washington corporation.

A few weeks back, we provided a checklist for forming an LLC. In today’s post we’ve highlighted the key issues you’ll want to consider when forming a Washington corporation.

Check the Business Name. As we mentioned with LLCs, you’ll want to make sure the name you want for your corporation isn’t already registered with the Secretary of State (which you can check here). For corporations, you’ll need to include some reference to the fact that the company is a corporation, such as “Inc.” “Corp.” or “Co.”

Articles of Incorporation. The “Articles of Incorporation” is the document you file with the Secretary of State in order to form your corporation. This document must include (at the bare minimum) the name of the corporation, the…

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Building a house

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In today's post, we provide a Washington LLC Formation Checklist that includes the major steps to form your LLC and start doing business in Washington.

The Washington Secretary of State has created a streamlined process for businesses to create limited liability companies. If you’re forming a LLC in Washington, the following Washington LLC formation checklist might be helpful to review to ensure you consider the steps for proper LLC formation:

1) Check the Business Name. Before settling on a business name, you’ll want to make sure that the name is available and conforms with statutory requirements. An easy way to check if your name is available is by running a business search here.

2) Certificate of Formation. Prepare and file the Certificate of Formation with the Secretary of State to “create” the LLC. You can file the Certificate of Formation online here. When you file your Certificate…

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LLC Checklist

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In today's blog post, we discuss the recent changes made to the Washington Limited Liability Company Act.

Earlier this year, the Washington state legislature unanimously passed and the governor signed legislation making changes to the Washington Limited Liability Company Act—the most sweeping changes to Washington LLC law in recent history.

The Washington State Bar Association requested that the state make changes to the Washington Limited Liability Company Act. The bar association’s goal was to make the law easier to understand and more flexible by modifying provisions that the association described as creating pitfalls and unnecessary problems. The Washington state Senate and House eventually passed legislation making those changes, and Governor Inslee signed the law on May 7, 2015. The new changes will go into effect on January 1, 2016.

Some of the major changes to the Washington Limited Liability…

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Limited Liability Company Act

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LLCs are attractive because of LLC basics, including liability protection, pass-through taxation, flexible management, and simple statutory requirements.

Over the last 20+ years, LLCs have become one of the most popular types of business entity. Entrepreneurs find LLCs appealing because they offer limited liability, pass-through taxation, flexibility in management and operations, and have relatively simple statutory requirements. We’ve highlighted the “LLC basics” in today’s post.

Limited Liability Protection

Like corporations and other limited liability entities, limited liability companies offer owners (also referred to as “members”) protection against personal liability. If the owner of a sole proprietorship or general partnership gets sued, then their personal assets  are at risk. But if the owner of an LLC gets sued, the business assets would be at risk, but their personal assets will generally not be subject to the lawsuit.

Pass-Through Taxation

The federal government does not…

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LLC tax structure

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Today's post highlights some important distinctions between corporations and LLCs to help you choose the right entity structure for your company.

It’s important to understand the significant (and sometimes subtle) differences between the various choices when determining the right entity structure for your new venture. Today’s post details some important distinctions between corporations and LLCs.

The Distinction Between State Entities vs. Federal Tax Elections 

For state law purposes, there are two primary entities that the choice of entity generally comes down to: corporations and LLCs. Corporations and LLCs both offer limited liability to owners of the company. This means that (absent extraordinary circumstances) if the business is sued, only business assets are at risk and the ownerss personal assets will be shielded from the company’s liabilities.

For federal tax purposes, there are three primary tax classifications that most companies are organized under: C corporations, S corporations, and…

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Liability shield

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Today’s post highlights some of the reasons why you may want to consider incorporating in Washington versus Delaware.

One of the first steps when forming a company is to decide which state is best to “register” your company. Today’s post highlights some of the reasons why you may want to form your company in Washington state versus Delaware.

I heard Delaware was the best state to incorporate my company, is that true?

It is true that Delaware has a specialized court that handles corporate disputes (the “Court of Chancery”) and is recognized as the nation’s preeminent forum for determining internal corporate and other business disputes. Delaware also has friendly corporate statutes and a well-developed, widely understood, and closely followed body of corporate law. But Washington state also offers advantages unmatched by Delaware (and many other states).

Two of these advantages are…

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Investing locally

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If your business' primary objective is to promote social values, you should consider forming a social purpose corporation ("SPC").

Prior to the emergence of the Washington social purpose corporation (“SPC”) and similar corporate forms in other states, entrepreneurs who wanted to build for-profit companies with specific social values faced a dilemma. They could create a business structured to focus primarily on profits, a corporation. Alternatively, they could create a business focusing on a social mission, a non-profit corporation. But the non-profit corporation could not operate for profit. So if they wanted to be profitable, they couldn’t as effectively capitalize on the socially responsible reputation that non-profits achieved, even if it was an important part of their business identity. However, SPCs can now bridge that gap. In today’s blog post we discuss how a SPC allows a company to more…

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Social purpose corporation

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Starting a brewery involves a number of legal issues; today we will be discussing which entity is the right choice for your brewery.

This is our first post in our Brewery Law 101 series. Starting a brewery is fun and exciting, especially when you get to the beer brewing part, but first you should take some time to select the right entity. Selecting the best entity for a brewery or distillery involves a number of considerations, including (1) taxation, (2) owner liability, (3) governance, (4) capital structure, and (5) potential exit strategies, to name a few.

Below is a primer on some of the various entities that are available for Washington breweries. I have highlighted some of the main features of the primary entity options. You can find a more robust analysis of each entity by clicking on the hyper-linked terms.

The Sole Proprietorship

A sole proprietorship…

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Brewery Law